TARGETING STRATEGIES: DEMOGRAPHIC, BEHAVIORAL,

AND RELATIONSHIP

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Introduction

▮Market - Group of people with sufficient purchasing power, authority, and willingness to buy

Identify, evaluate & selecting

▮Target market - Group of people a firm believes is most likely to buy its goods and services

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Types of Markets

▮Consumer products

▮Business products

EXAMPLES OF BOTH

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The Role of Market Segmentation

▮Marketing strategies must be adjusted

• Needs, preferences, purchase power

▮Market segmentation - Division of the total market into smaller, relatively homogenous groups

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Criteria for Effective Segmentation

1. Measurable purchasing power and size

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1:18http://www.youtube.com/watch?v=jii3pTY_F64

Criteria for Effective Segmentation

2. Find a way to effectively promote and serve the market segment

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http://adsoftheworld.com/media/tv/firestone_working_mom

Criteria for Effective Segmentation

3. Marketers must then identify segments large enough to give them good profit potential

FEMALES INFLUENCE 80-90 PERCENT OF HOME PURCHASES

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http://www.designbasics.com/bookstore/her_home_magazine.asp

Criteria for Effective Segmentation

4. The firm must aim for segments that match its marketing capabilities

Fastest growing market?

Harley Davidson

1 in 4 motorcyclists

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Segmenting Consumer Markets

FOUR COMMON BASES FOR SEGMENTING

• Geographic segmentation

• Demographic segmentation

• Psychographic segmentation

• Product-related segmentation

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Geographic Segmentation

▮Homogenous groups based on locationhttp://www.youtube.com/watch?v=V8SjkDq2ZwI

▮Marketers look at:• Economic variables (ex: size of market)

• Population indicates size

• Geographic indicators (useful to know job growth)

• Migration patterns

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Using Geographic Segmentation

▮Demand varies by region• Focus on core regions, those from which they draw 40

to 80 percent of sale• Tex-Mex, Cheerwine

▮Residence location within a region is an important variable• Coffee, ice cream, public transportation, gardening

▮Provides useful distinctions when regional preferences or needs exist• Snow blower, sun block, flood insurance

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Geographic Information Systems (GISs)

▮Computer systems that assemble, store, manipulate, and display data by location

▮Simplifies the job of analyzing geographic marketing information

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Geographic Information Systems (GISs)

▮Number of companies benefit from using a GIS

• Locate new outlets

• Assign sales territories

• Plan distribution centers

• Map out the most efficient delivery routes

Consumers

• Interactive Foursquare • https://foursquare.com/

• Google

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Demographic Segmentation

▮Division of an overall market into homogenous groups based on:

• Gender and age

• Income and occupation

• Education

• Sexual orientation

• Household size

• Stage in the family life cycle

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Segmenting by Gender

▮Lines blurring in recent years

▮Example: Men buying skin-care products and women buying power tools and trucks

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Segmenting by Age

▮Has become blurred as consumers’ roles and needs change

• Example: St. Joseph’s baby aspirin now marketed to adults to help prevent heart disease

▮School-age children have significant influence over family purchases

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Tweens and Teens

▮Influence billions of dollars of family purchases

▮Marketers could describe this group as being interactive

▮Companies that target this group have expanded their product lines

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Generation X

▮Born between 1968 and 1979

▮Family-oriented, well educated, and optimistic

▮Raised on TV, good marketing tool

▮Prefer goods and services that support certain causes

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Baby Boomers

▮Born between 1946 and 1964

▮Popular segment because of their numbers and income levels

▮Lucrative segment for many marketers

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Seniors

▮High discretionary income

▮High rates of home ownership

▮Spend money conservatively, but indulge in luxury

▮Not likely to be the first to try new products

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Segmenting by Ethnic Group

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Hispanics and African Americans

▮Largest ethnic/minority groups in U.S.

• Majority-minority counties

▮Hispanic population is growing much faster than the African American population

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http://www.adweek.com/adfreak/dont-mess-danny-trejo-and-dont-mess-miller-time-153309

http://www.adweek.com/news/advertising-branding/nearly-half-second-gen-hispanics-feel-ads-dont-target-them-149338

Asian Americans

▮Fastest growing segment of the U.S. population between 2000-2010

▮Fastest-growing income

▮Population is concentrated in fewer geographic areas than other ethnic markets

• Half live in California, Texas, and New York

▮Very diverse group

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Native Americans

▮Current population 5 million, 1.7 percent of the total U.S. population

▮Businesses are growing

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People of Mixed Race

▮The ability to select more than one racial category on census forms has been recently introduced

▮About 9 million U.S. residents classify themselves this way

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Segmenting by Family Life Cycle Stages

▮Family lifecycle - Process of family formation and dissolution

▮Life stage, not age, is primary concern of marketer

▮Empty nesters may have higher disposable incomes and spend more on premium items

▮Increase in "boomerangs"—grown children who have returned home to live with their parents

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Segmenting by Household Type

▮Average household size in U.S. has decreased from 5.8 in 1790 to less than 3 today

▮U.S. households embody a wide range of diversity

▮Growing number of same-sex couples who share households

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What is Psychographic Segmentation?

▮Division of a population into groups that have similar attitudes, values, and lifestyles

• ATTITUDE

• VALUE

• LIFESTYLE

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Using Psychographic Segmentation

▮Quantify aspects of consumers’ personalities and lifestyles

▮Plan and promote more effectively

▮Acts as a good supplement to geographic and demographic segmentation

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Product-Related Segmentation

▮Groups based on relationships to a product/service

• Usage

• Loyalty

• Benefit

• Example: Gyms (look good, feel healthy, weight loss)

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