Segmenting and Targeting
For use only with Duncan texts. 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin
Chapter Outline
Why are companies moving
away from mass marketing?
Why is segmenting important? How can companies identify
different segments?
How does targeting work?
Chapter Perspective
Targeting everyone is:
Expensive Wasteful Nearly impossible
Teenagers
A more sensible approach:
Identify smaller segments who are most likely to consider your brand (segmentation) and target them with specifically designed MC messages
Opening Case: The Barina
Opening Case: The Barina
Challenge:
Reposition the car as cool in key segment An IMC campaign featuring: Target audience of early 20s females characterized as early adopters adopters BGBarina Girl animated character & logo Multiple media including TV, radio Unique media like a comic strip and festivals 97% in the target liked the campaign 30% sales increase
Answer:
Results:
Why Are Companies Moving Away From Mass Marketing?
Mass marketing: An attempt to sell the same thing to a wide range of customers
Segmenting: Grouping customers or prospects according to common characteristics
Tales From the Real World
Clients often say we have to target everyone
Unless theyre Wal-Mart, thats not true. Its time to dig deeper into the behavior of their consumers. Chances are, segmentation will save them moneyand focus their message on their best customers
Coricidin Targets a Niche Segment
Mass Customization
Mass customization: A manufacturing process that is programmed to choose ingredients/parts to produce custom designed goods
Segmenting Has 3 Key Benefits
Costs Less to Sell to Existing Customers
Key Benefits
Some Customers Are More Profitable
Knowing Whos in Your Segment Can Lead You to Others in the Same Group
Figure 7-2: The 7 Steps of Segmenting
IMC In Action: Midas
IMC In Action: Midas
Challenge: Answer:
Identify and target the best customer segments Conduct research into customer service expectations and satisfaction
Results:
Midas now targets two equal segments Car lovers with a good maintenance message Utilitarians with a no nonsense message
Figure 7-3: The 4 Key Segmentation Variables
L.L. Bean Uses Psychographic Segmentation
Dinkies: Double income no kids Biddies: Baby boomer in debt Skippies: Schoolkids with income and purchasing power Guppies: Gay upwardly mobile professionals Maffies: Middle-aged affluent folks Mossies: Middle-aged, overstressed, semi-affluent suburbanties Dimps: Duel-income with money problems Woopies: Well-off older persons
Geo-Demographic
Relationship segments
No Loyalty Inertia Loyalty (Repeat purchases out of habit) Latent Loyalty (Feels strong attachment but makes few purchases) Premium Loyalty (Strong attachment and frequent purchases)
The 5 Product Adopter Categories
Innovators 2.5% Early Adopters 13.5%
Product Adopters
Early Majority 34% Late Majority 34%
Laggards 16%
How Does Targeting Work?
Targeting: The process used to identify which segments MC messages should be designed to reach and to determine how much MC spending should be used to reach each segment
Profitable Targeting
Measurable Accessible Substantial Differential Actionable
Types of Targeting
Message Targeting Profitability Targeting
B2B Targeting
The smaller the segment, the more the message can target and speak to that group
Focus only on those with best profit potential
NAICS codes are very helpful
Insight: Activity-Based Costing
Some firms go even further than simple profitability targeting and track all costs associated with each customers every contact with the firmeven the organizations cost for the time a customer service rep spends on a phone call from the customer
Final Note:
Segmenting and targeting calls for a careful balancing of two objectives: Acquisition (attracting new customers) Retention (keeping current customers happy)
Questions - 7
Segmentation and Targeting? List and Describe Steps in Segmentation Process Why Start with Current Customers when Segmenting? Five Types of Customer Segmentation? Examples
Contents of Closet or Medicine CabinetBrand TargetingWhy It Works, Why It Speaks to You Personally