1. Sharpen the Focus: Target Marketing Strategies and Customer Relationship Management Chapter Seven

2. 7-2 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Chapter Objectives  Identify the steps in the target marketing process  Understand the need for market segmentation and the approaches available to do it  Explain how marketers evaluate segments and choose a targeting strategy  Understand how marketers develop and implement a positioning strategy  Explain how marketers increase long-term success and profits by practicing customer relationship management

3. 7-3 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Real People, Real Choices: Decision Time at PBS KIDS Sprout  Which strategy should Jim select for Sprout’s first ever consumer-oriented brand campaign? Option 1: Target only Sprout viewers with the marketing campaign Option 1: Target only Sprout viewers with the marketing campaign Option 2: Produce a campaign that is specifically designed for nonviewers Option 2: Produce a campaign that is specifically designed for nonviewers Option 3: Target both those who view or are aware of Sprout, as well as nonviewers, with the same campaign Option 3: Target both those who view or are aware of Sprout, as well as nonviewers, with the same campaign

4. 7-4 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Target Marketing Strategy: Selecting and Entering a Market  Market fragmentation: The creation of many consumer groups due to the diversity of their needs and wants The creation of many consumer groups due to the diversity of their needs and wants

5. 7-5 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 7.1 Steps in the Target Marketing Process

6. 7-6 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 7.2 Segmenting Consumers Markets

7. 7-7 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Segmenting by Demographics: Age and Generational Marketing  Children  Teens  Tweens  Generation Y: born between 1979 and 1994 Ford Fiesta Movement

8. 7-8 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Segmenting by Demographics: Age and Generational Marketing  Generation X: born between 1965 and 1976  Baby boomers: born between 1946 and 1964  Older consumers Visit NintendoNintendo

9. 7-9 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. It’s Debatable Class Discussion Question As the baby boomers age, many marketers are going to have to decide whether or not they should adapt their products so they continue to appeal to the baby boomer segment as it grows older. Choose a particular product or service that currently appeals to baby boomers. What types of adaptations might be necessary to make this product or service appeal to those 65 years and older?

10. 7-10 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Segmenting by Demographics: Gender  Many products appeal to one sex or the other  Metrosexual: A straight, urban male who is keenly interested in fashion, home design, gourmet cooking, and personal care

11. 7-11 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Segmenting by Demographics: Other Variables  Family life cycle: Family needs change over time Family needs change over time Different product categories ascend or descend in importance over the life cycle Different product categories ascend or descend in importance over the life cycle  Income Strongly correlated with buying power Strongly correlated with buying power  Social Class Consumers buy according to image they wish to portray rather than where they fall in the framework Consumers buy according to image they wish to portray rather than where they fall in the framework

12. 7-12 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Segmenting by Demographics: Race and Ethnicity  Race and ethnicity African Americans African Americans Asian Americans Asian Americans Hispanic Americans Hispanic Americans  Cultural diversity is increasing

13. 7-13 © 2012 Pearson Education, Inc. publishing as Prentice-Hall.  Geodemography: Combines geography with demographics Combines geography with demographics PRIZM website PRIZM websitePRIZM websitePRIZM website  Geocoding: Customizes Web advertising so people who log on in different places see ad banners for local businesses Customizes Web advertising so people who log on in different places see ad banners for local businesses Search engine marketing example: Google Search engine marketing example: GoogleGoogle Segmenting by Demographics: Place of Residence

14. 7-14 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Segmenting by Psychographics  Psychographics use psychological, sociological, and anthropological factors to segment a market

15. 7-15 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 7.3 VALS TM Framework Learn more about each segment by visiting Strategic Business Insights (VALS types)VALS types VALS TM survey by visiting Take the VALS TM survey by visiting Strategic Business Insights (survey link)survey link

16. 7-16 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Segmenting by Psychographics  Niche markets may be defined by a single characteristic  Psychographic segmentation can be industry specific  Situations, such as a bad economy, can create opportunities for psychographic segmentation

17. 7-17 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Segmenting by Behavior  Behavioral segmentation: Segments consumers based on how they act toward, feel about, or use a product Segments consumers based on how they act toward, feel about, or use a product  User status  80/20 rule and segmentation by usage status  Long tail concept  Usage occasions

18. 7-18 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Segmenting B2B Markets  Segmentation helps B2B firms understand the needs and characteristics of potential customers  Firms can be segmented by: Organizational demographics Organizational demographics Production technology used Production technology used Whether targeted business firm is a user/nonuser of product Whether targeted business firm is a user/nonuser of product

19. 7-19 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 7.4 Phases of Targeting

20. 7-20 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Evaluation of Market Segments  A viable target segment should: Have members with similar product needs/wants who are different from members of other segments Have members with similar product needs/wants who are different from members of other segments Be measurable in size and purchasing power Be measurable in size and purchasing power Be large enough to be profitable Be large enough to be profitable Be reachable by marketing communications Be reachable by marketing communications Have needs the marketer can adequately serve Have needs the marketer can adequately serve

21. 7-21 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Developing Segment Profiles  After segments are identified, profiles or descriptions of the “typical” customer in a segment are developed Segment profiles might include demographics, location, lifestyle, and product-usage characteristics Segment profiles might include demographics, location, lifestyle, and product-usage characteristics

22. 7-22 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 7.5 Choose a Target Marketing Strategy

23. 7-23 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Choosing a Targeting Strategy  Customized marketing strategy Tailoring specific products to individual customers Tailoring specific products to individual customers Common in personal and professional services, and in industrial marketing Common in personal and professional services, and in industrial marketing Mass customization Modifying a basic good or service to meet the needs of an individual Mass customization Modifying a basic good or service to meet the needs of an individual

24. 7-24 © 2012 Pearson Education, Inc. publishing as Prentice-Hall.  Positioning: Developing a marketing strategy to influence how a particular market segment perceives a good/service in comparison to the competition Steps in the Target Marketing Process Step 3: Positioning Sprout Video

25. 7-25 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 7.6 Stages in a Positioning Decision

26. 7-26 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Modifying Positioning Strategies  Repositioning is commonly used to change the brand image Requires redoing a product’s position in response to marketplace changes Requires redoing a product’s position in response to marketplace changes  Repositioning may breathe life into Retro brands A once-popular brand that has been revived to experience a popularity comeback, often by riding a wave of nostalgia A once-popular brand that has been revived to experience a popularity comeback, often by riding a wave of nostalgia

27. 7-27 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Targeting and Positioning Strategies Must Complement Each Other Sobe’s XTC targets 18-35 year olds who want a “New Age” beverage that offers an energy boost without unhealthy additives. SoBe was inspired by “herbal ecstasy” cocktails made popular in the 1990s, but positioned as less risky.

28. 7-28 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. The Brand Personality  Brand personality: A distinctive image that captures the brand’s character and benefits  Personality dimensions: Sincerity Example? Sincerity Example? Excitement Example? Excitement Example? Competence Example? Competence Example? Sophistication Example? Sophistication Example? Ruggedness Example? Ruggedness Example?

29. 7-29 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 7.7 Perceptual Map

30. 7-30 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Customer Relationship Management (CRM): Toward a Segment of One  Customer relationship management: A systematic tracking of consumers’ preferences and behaviors over time in order to tailor the value proposition as closely as possible to each individual’s unique wants and needs A systematic tracking of consumers’ preferences and behaviors over time in order to tailor the value proposition as closely as possible to each individual’s unique wants and needs

31. 7-31 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Table 7.1 The Four Steps of 1-to-1 Marketing

32. 7-32 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. CRM: A New Perspective on an Old Problem  CRM systems capture information  Touchpoints interface customers and businesses  CRM systems include: Order and delivery tracking websites Order and delivery tracking websites Call centers Call centers Automatic reminder systems Automatic reminder systems Sales contact management software Sales contact management software

33. 7-33 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 7.8 Characteristics of CRM LVC Tool

34. 7-34 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Real People, Real Choices: Decision Made at NutriSystems, Inc.  Jim chose option 3 Why do you think Sprout chose to target both current viewers and nonviewers with the same brand awareness campaign? Why do you think Sprout chose to target both current viewers and nonviewers with the same brand awareness campaign?

35. 7-35 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Keeping It Real: Fast-Forward to Next Class Decision Time at Bossa Nova Beverage Company  Meet Palo Hawken, co-founder and VP of research and innovation at Bossa Nova Beverage Company  Firm markets premium guarana flavored carbonated energy drinks  The decision to be made: How to fit the new açai juice into the current product line

36. 7-36 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America