target marketing process: linking customer needs to marketing action
TRANSCRIPT
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Target Marketing Process: Linking Customer Needs to Marketing Action
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Market segmentation links market needs to an Market segmentation links market needs to an organization’s marketing programorganization’s marketing program
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Segmentation
• process of dividing a larger market into smaller pieces based on one or more meaningful, shared characteristics and that will respond similarly to a marketing action
• Segmentation variables are used to divide the market into smaller slices: demographics, psychographics, behavior, etc.
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Why Segment Markets?
– One Product and Multiple Market Segments– Multiple Products and Multiple Market
Segments– Segments of One: Mass Customization– The Segmentation Trade Off: CRM versus
synergies
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Demographic Dimensions
• Age
• Gender
• Family structure
• Income and social class
• Race and ethnicity
• Geography
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Age
• Children
• Teens
• Generation X, Y
• Baby Boomers
• Elderly
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Psychographics
• Psychographic segments market in terms of shared attitudes, interests, and opinions
• Segments include demographic information such as age and income, but also includes richer descriptions
• Some organizations develop their own psychographic segments for their consumers, but others utilize national systems (VALS by SRI International)
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Segmenting by Behavior
• Behavioral segmentation slices consumers on the basis of how they act toward, feel about, or use a product– Users versus nonusers– Heavy, moderate, light users – Usage occasions
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Segmenting Industrial Markets
• Organizational demographics– firm size– number of facilities– domestic or multi-national– type of business– production technology utilized
• NAICS characteristics
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Criteria for Forming Segments
• Potential for increased profit and ROI
• Similarity of needs of potential buyers in a segment
• Difference of needs of buyers among segments
• Feasibility of a marketing action reaching segment
• Simplicity and cost of assigning buyers to markets
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Evaluating Market Segments
• A viable target segment should satisfy these requirements:– Are members of the segment similar to each other but
different from other segments?
– Can marketers measure the segment?
– Is the segment large enough to be profitable?
– Can marketing communications reach the segment?
– Can the marketer serve the segment’s needs?
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Targeting
• Evaluating Market Segments
• Developing Segment Profiles
• Choosing a Targeting Strategy
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Targeting Strategies
• Undifferentiated Marketing
• Differentiated Marketing
• Concentrated Marketing
• Customized Marketing
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Undifferentiated Marketing
• Appeals to a broad spectrum of people
• Efficient due to economies of scale
• Effective when most consumers have similar needs
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Differentiated Marketing
• Develops one or more products for each of several customer groups with different product needs
• Appropriate when consumers are choosing among well-known brands with distinctive images and it is possible to identify one or more segments with distinct needs for different types of products
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Concentrated Marketing
• Entails focusing efforts on offering one or more products to a single segment
• Useful for smaller firms that do not have the resources to serve all markets
• Example: Hard Candy
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Customized Marketing• Segments are so precisely defined that products
are offered to exactly meet the needs of each individual– Example: Levi’s Original Spin (custom) jeans, hair stylists
• Mass customization is a related approach in which a company modifies a basic good to meet the needs of an individual– Example: Gateway computers, Proctor & Gamble’s products at
Reflect.com Form Products to Be Sold into Groups
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Select Target Markets
– Criteria to Use in Picking the Target Segments• Market size
• Expected growth
• Competitive position
• Cost of reaching the segment
• Compatibility with objectives and resources
– Choose the Segments
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Targeting
• Form Products to Be Sold into Groups
• Develop a Market-Product Grid and Estimate Size of Markets
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Market-product grid showing how different Reebok shoes Market-product grid showing how different Reebok shoes reach segments of customers with different needsreach segments of customers with different needs
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Comparison of various kinds of users and nonusers for Wendy’s, Comparison of various kinds of users and nonusers for Wendy’s, Burger King, and McDonald’s restaurantsBurger King, and McDonald’s restaurants
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Positioning
• Developing a marketing strategy aimed at influencing how a particular market segment perceives a product in comparison to the competition
• Strategy may also consider creating a “barrier to entry” for competitors
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Product Positioning
• Head-to-head
• Differentiation
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Developing a Positioning Statement
• Analyze the competitors’ positions in the marketplace
• Offer a product with a competitive advantage
• Finalize the marketing mix• Evaluate the target market’s response so
modifications to the positioning strategy can be made (repositioning)
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The Brand Personality
• A Positioning Strategy attempts to create a brand personality for a product - a distinctive image that captures its character and benefits
• How do marketers determine where their products actually stand in the minds of consumers?
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Perceptual Map
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Customer Relationship ManagementUS companies spend about 75% of marketing $$
on existing customers
• CRM strategy allows a company to identify its best customers, stay on top of their needs, and increase their satisfaction
• CRM is about communicating with customers one on one
• CRM views customers as partners
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Characteristics of CRM
• Share of Customer
• Lifetime Value of the Customer
• A Greater Focus on High-Value Customers
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Steps in the CRM Process
Identify customers
Differentiate customers
Interact with customers
Customize for your customers