Chapter 8 segmentation, targeting, differentiation, and positioning strategies - 2

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Chapter 8 segmentation, targeting, differentiation, and positioning strategies - 2

  1. 1. E-MARKETING, 6TH EDITION JUDY STRAUSS AND RAYMOND FROST Chapter 8: Targeting Market Segments and Communities
  2. 2. 10/4/20132 With successive groups of consumers adopting the new technology (shown in blue), its market share (yellow) will eventually reach the saturation level.
  3. 3. 10/4/20133
  4. 4. Segmentation and Targeting Overview  Marketing segmentation - the process of aggregating individuals or businesses along similar characteristics that pertain to the use, consumption, or benefits of a product or service.  Targeting - the process of selecting the market segments that are most attractive to the firm and selecting an appropriate segment coverage strategy.  Companies need to clearly understand the needs and behavior of its target market. It must have :  In-depth market knowledge, A savvy segmentation, and Targeting strategy.  E-marketing strategic planning occurs in two highly interrelated tiers:  Tier I= segmentation, targeting, differentiation, and positioning,  Tier II = the 4Ps and CRM.
  5. 5. Market Segmentation Bases and Variables  Marketers can base their segmentation of consumer markets on:  Demographics,  Geographic location,  Psychographics,  Behavior with regard to the product.  Within each base, there could be many sub-categories.  Companies create segments:  Combining bases + focus on categories = geodemographics.  Using any combination of variables that makes sense for their industry.  That can be used to identify and reach the right people at the right time.  Using any of these four bases alone or in combination + many other variables.
  6. 6. Bases Geographic Demographic Psychographic Behavior Identifying / Profiling Variable Examples City County State Region Country Age Income Gender Education Ethnicity Activities Interests Opinions Personality Values Benefits sought Usage level Brand loyalty User status Segmentation Bases and Examples of Related Variables  VALS Survey (http://www.strategicbusinessinsights.com/vals/presurvey.shtml)
  7. 7. Geographic Segments  Geographic location of computers is not important to users accessing Web sites, but it is very important to organizations with an Internet presence.  Most firms target specific cities, regions, states, or countries with their product offerings  develop multi-segment strategies based on geographics.  Product distribution strategy is a driving force behind geographic segmentation:  Companies want to reach only customers in countries where it distributes products.  Firms offering services online will only sell to geographic areas where they can provide customer service.  Companies must examine the proportion of Net users in its selected geographic targets before deciding to serve the Web community.
  8. 8. Languages on Web Pages  English is no longer the language of most Web pages and online bulletin boards, a major change from just two years ago.  Top Internet languages:  In 2002: English (42%), Japanese (9%), Chinese (9%), Spanish (7%), German (7%).  In 2010: English (28%), Japanese (5%), Chinese (23%), Spanish (8%), German (4%).  Huge implications for e-marketers desiring to reach global markets via the Internet  Until more online text appears in local languages, users in those countries will not able to participate in e-commerce or other online activities.
  9. 9. Local Marketing  Local Search Results  Mobile Apps like foursquare, etc.  Just Dial Services  Google Maps  Yahoo! Local  Yellow Pages.com  Craigslist  Apple Maps
  10. 10. Demographic Segments  In the Internet’s early years, the typical user was:  A young male, college educated, with a high income.  Now, this is true in countries with low levels of Internet adoption.  In developed nations,  93% of 18-49 years old in USA access internet,  94% households earn more than $75,000,  94% of college students are online  Knowing that U. S. Internet users mirror the population, marketers need to identify attractive demographic niches.
  11. 11. Occupation  Few years ago, the Internet was a place for the technologically- and financially-savvy.  Today, internet is a place where U.S. residents from all professions find something of use.  Blue-collar workers:  Are currently the fastest growing online occupational group in the U.S.  This group is busy surfing and exploring,  Represent a major marketing opportunity because segment members have not yet developed site loyalty and have some different product and entertainment needs from users in other professions.  Other fast growing occupational groups include homemakers (49%), service workers (37%), and salespeople (34%).
  12. 12. Differently Abled  Why do marketers target this segment, despite its low income and accessibility challenges?  Social values of full accessibility and potential legal action.  To draw a larger consumer audience.  The huge baby boomer group is headed for some of these problems as they reach age 65 and older.  Most importantly, a market consisting of 54 million Americans has a great deal of purchasing power.
  13. 13. Differently Abled  “The Internet’s next niche” :  Spend 20 more hours a week online than other Internet users.  Fifty-four million U.S. consumers have disabilities, health problems, or handicaps that prevent full participation in work, school, or housework.  Web accessibility guidelines exist to accommodate disabled people.  BUT this segment is a demographically diverse group, and tend to have low incomes, making them difficult and undesirable targets for some firms.
  14. 14. Psychographic Segments  User psychographics include:  Personality  Traits (other-oriented / self-oriented) and habits,  Values  Deeply held convictions (religious beliefs),  Lifestyle  Non-product-related behavior  Activities  playing sports or eating out  Interests  Attitudes and beliefs people hold.  Opinions
  15. 15. Attitudes And Behaviors  Attitudes  Internal evaluations about people, products, and other objects,  Either positive or negative,  Behavior:  Refers to what a person physically does (calling a 1-800 number to order, shopping, or purchasing a product),  Product behaviors are such a vital segment descriptor that they form an entirely separate category.  Psychographics:  The general ways that consumers spend time,  Help e-marketers define and describe market segments so they can better meet consumer needs,  Important for Web page design.
  16. 16. Attitudes Toward Technology  Marketers believe that demographics are not helpful in predicting who will purchase online.  BUT it is important to know which demographic target is online.  Forrester Research measures consumer and business attitudes toward technology.  The system, Technographics, works by combining three specific variables:  Determine if a person is optimistic or pessimistic toward technology,  Measure a user’s income level ( important determinant of online shopping behavior),  Query users about their primary motivation for going online.
  17. 17. Motivation for Using Internet Career Family Entertainment Technology Optimists 52% High Income (>$40,000) Fast Forwards 12% New Age Nurturers 8% Mouse Potatoes 9% Low Income (<$40,000) Techno-Strivers 7% Digital Hopefuls 7% Gadget Grabbers 9% Technology Pessimists 48% High Income Handshakers 7% Traditionalists 8% Media Junkies 5% Low Income Sidelined Citizens 28% Source: Adapted from Modahl (2000) Consumer Technographic Segments and Proportion in the United States
  18. 18. Attitudes Toward Technology Fast Forwards the biggest users of business software New Age Nurturers the most ignored group of technology consumers Gadget Grabbers buy low cost, high-tech toys such as Nintendo Traditionalists use VCRs but not much more Media Junkies love TV and are early adopters of satellite television Exhibit 8.10
  19. 19. Attitudes Toward Technology  Technology optimism declines with age:  Older users tend to have a more negative attitude toward technology,  Their attitudes may be less negative if they use a PC at work or live in one of the largest 50 U.S. cities,  Men tend to be more optimistic,  Peer pressure can increase optimism in all demographic groups,  Income:  40% of high-income citizens are optimistic,  Certain low-income groups such as college students and young families are also optimistic about technology.
  20. 20. Attitudes Toward Technology How do these findings translate to online purchasing?  Twice as many high-income optimists shop online (19%) compared with other groups.  Only 2% of low-income pessimists shop online and, therefore, are not a good target for online firms.  Combining Technographics with adopter categories,  Early adopters = high-income technology optimists = the first consumers to shop online.  Laggards = low-income pessimists = last to shop online.  Technographic segments can be used to profile customers who shop online and to determine where to
  21. 21. Behavior Segments Two behavioral segmentation variables are:  Benefit segmentation: form groups of consumers based on the benefits they desire from the product.  “70% of online shoppers can be segmented into two groups:  Bargain hunters: includes Hooked, Online & Single (16%), Hunter- Gatherers (20%)  Convenience shoppers: includes Time-Sensitive Materialists (17%), brand loyalists (19%), E-Bivalent Newbies (5%), and Clicks & Mortars (23%).”  Product usage:  Light, medium and heavy product usage.  Brand loyal, loyal to the competitive product, switchers (who don’t care which brand they use), and nonusers of the product.
  22. 22. Benefit Segments  On the Internet, there is something for everyone: information, entertainment, news, social meeting places, and more.  Marketers form segments based on the benefits sought by users to design products to meet those needs.  What better way to determine benefits sought than to look at what people actually do online?  Check which Web sites are the most popular.  Sites report monthly on the top online properties displays the top Web site parent companies.  AOL, MSN, and Yahoo! are consistently among the top sites in most countries.
  23. 23. Rank Parent Company Millions of Visitors (2002) Millions of Visitors (2011) 1 Microsoft 39.4 168.8 2 AOL Time Warner 37.2 107,383 3 Yahoo! 33.8 177.5 4 Google 10.9 175.2 5 Facebook Does not exist 150,670
  24. 24. Usage Segments  E-marketers:  Identify segments according to how users behave and use the Internet.  Profile the segments by user characteristics, geographical location, and so on.  When users shop online:  sometimes they browse aimlessly,  but sometimes they have a specific goal.
  25. 25. Home and Work Access  Home and Work:  60% of home users have broadband connectivity at home.  80% of broadband users watch a video online atleast once in a month  69.7 access internet from workA small but growing number of households have more than one PC and are networking them within the home.  People spend nearly twice as much overall time online than those who access only from home.  Mobile Access:  Considered as next generation internet access point  Most common usage include Sent text message to other phone (63.5%), Used Browser (28.6%), Played Games (21.7%), Used Download Apps (19.8), Accessed social networking sites or blogs (17.1%), Listen to music (12.8%)
  26. 26. REFER EXHIBIT 8.11 IN TEXT BOOK (PAGE 189)
  27. 27. Home and Work Access  The most popular sites for U.S. at-work access follow:  Telecom or Internet services (29.7 million visitors)  Finance, insurance, or investment (21.2 million visitors)  Travel (18.4 million visitors)  Corporate information (14.6 million visitors)  Special occasions such as greeting cards, gifts or flowers (14.1 million visitors)  E-marketing strategists can use such information to target their Web site offerings.  Strategies might include special products, the language in sites, and the amount of interactivity and multimedia possible for work users.
  28. 28. Time Online  Although the Internet has been growing, not all the people with access are as active logging on as others.  Six user segments based on the active user’s time online, pages, domains accessed, and the amount of time spent per Web page:  Simplifiers want end-to-end convenience.  Surfers want what’s new.  Connectors are novelty seekers.  Bargainers look for deals..  Routiners want something special..  Sportsters desire highly interactive content.  These segments are likely to overlap because people use the Internet for different purposes at different times—such as research, e-mail, chat, work, and so forth.
  29. 29. Segment Important Facts Online Time Simplifiers 50% of total online purchases. 49% have been online for over 5 years. Longest online tenure. 7 hours per month. Surfers 8% of active user population. 32% of online time usage—far more than any other segment. More than the average 9.8 hours per month. Connectors 36% active user population. 40% have been online under two years. 42% have made online purchases. Less than the average of 9.8 per month. Bargainers 8% of active user population 52% are eBay users Less than the average of 9.8 per month. Routiners 6% have purchased online. They visit fewer domains. 9.8 hours per month. Sportsters 4% of active user population. 7.1 hours per month. User Segments Based on Online Viewing Behavior
  30. 30. Industry Specific Usage Segments  Segmenting by usage vary from one business type to the other.  Visitors to car sites behave differently than visitors to other e- commerce.  Even serious car buyers tend to visit car sites only a few times—64% of all buyers complete their online research in five sessions or fewer.  Three visitor segments for car Web sites:  Explorers are the smallest group, but almost half buy their new vehicle within two months of visiting a car site. They want a convenient, explicit buying process.  Off-roaders tend to do a lot of research online and subsequently are very likely to purchase in an offline showroom.  Cruisers visit car sites frequently but only 15% buy a car in the short term Still, they have a strong interest in cars and heavily influence the car purchases of others, making them important visitors.
  31. 31. Targeting by Usage Occasions  Marketers identify segments based on how consumers are using the Web at particular moments  Behavior patterns  usage occasions  4 key variables for defining discrete clusters of online behavior:  Session length—the time a user stays online.  Time per page—the average time a user spends on each page during a session.  Category concentration—the percentage of time a user spends at sites belonging to the most frequented category.  Site Familiarity—the percentage of total session time a user spends at familiar sites, defined as those previously visited four or more times.
  32. 32. Segmentation by Usage Occasions  7 Occasionalization Segments: 1. Quickies: users concentrate on visits to two or fewer familiar sites extracting specific bits of information or sending e-mail (duration = 1 minute). 2. Just the Facts: users look for specific information from related sites = transaction-oriented or time-consuming sites such as shopping, travel, and sports sites (duration = 9 minutes). 3. Single Mission: users want to complete a certain task or gather specific information (involve more reading), duration = 10 minutes.
  33. 33. Targeting by Usage Occasions 4. Do It Again: users spend 95% of the session at familiar sites for auctions, games, investments (duration = 14 minutes). 5. Loitering: leisure visits to familiar sticky sites, such as news, gaming, and entertainment sites. (duration = 33 minutes). 6. Information Please: used to build in-depth knowledge of a topic by gathering broad information from a range of sites, typical for travel and automotive Web sites (duration = 37 minutes). 7. Surfing: 70 minutes, with few stops at familiar sites with wide, but not deep, exploration. Users gravitate to sites that grab their attention immediately, such as shopping, online communities, and news.
  34. 34. Why Use Occasionalization in Targeting?  None of the session types was dominated by a single demographic group.  Usage occasion data + demographics, online marketers:  Raise the chances of communicating with their target consumers when they are paying attention to and influenced by the message.  Can tailor their environments in real-time to meet the interests of the user + the occasion.  By examining how the four session variables (session length, time per page, category concentration, and site familiarity) define the different segments,  A marketer can identify behavioral patterns that can help in the creation + placement of communications.  Occasionalization allows marketers to reach a larger number of users more effectively by pinpointing when they are most likely to be receptive.
  35. 35. Reaching Users During Sessions  When sessions are long:  Marketers want to post messages to generate click-throughs to their own sites as a way to build brand awareness.  In Surfing occasions, user behavior is impatient, impulsive clicking.  Site or message need to be interesting to appeal to impulse users attracted to novelty.  When the sessions are shorter: Users are less inclined to buy,  Click-throughs should be the goal only in very specific situations.  How can marketers identify usage sessions?  Cookies are small bits of text placed on user hard drives that allow Web sites to identify users and send them the appropriate advertising.
  36. 36. Targeting Online Customers  Marketers must select the best potential segments for targeting:  Review the market opportunity analysis,  Consider findings from the SWOT analysis,  Look for the best fit between the market environment and the firm’s expertise and resources.  Sometimes it is easy to discover a new segment and experiment with offers that might appeal to this group.  Other times it is a lengthy and thorough process.  To be attractive, an online segment must be accessible through the Internet, sizable, growing, and hold great potential for profit.
  37. 37. Targeting Online Customers  E-marketers select among 4 targeting strategy: 1. Mass marketing = undifferentiated targeting = when the firm offers one marketing mix for the entire market. 2. Multi-segment marketing = when a firm selects two or more segments and designs marketing mix strategies specifically for each. Most firms use a multi-segment strategy. 3. Niche marketing = when a firm selects one segment and develops one or more marketing mixes to meet the needs of that segment. 4. Micromarketing, = individualized targeting = when a firm tailors all or part of the marketing mix to a very small number of people.  The Internet’s big promise is individualized targeting =giving individual consumers exactly what they want at the right time and place.
  38. 38. Targeting Communities on the Internet  The Internet is ideal for gathering people with similar interests and tasks into communities.  People join communities to feel connected with others who have the following common interests:  44.8% with folks who share their hobbies;  31.5% with other professionals;  27.2% with family members;  15.7% in support groups.  Targeting can be achieved by building community through online chat rooms, discussion groups, bulletin boards, and online events.  Motivation: value received in both information and social bonding.  A firm needs to build and maintain the watering hole to present products and messages customized to the group’s interests.
  39. 39. Targeting Communities on the Internet  Two of the most publicized consumer community sites include:  Yahoo! GeoCities: Members build Web pages that Yahoo! hosts for free and also join in chats and bulletin board postings geocities.yahoo.com.  Google groups provides Web access to the Usenet with over 35,000 special interest bulletin board discussion groups and 700 million community messages.  Business communities also play a big role in B2B commerce.  Most professionals subscribe to discussion groups containing information in their field, and many Web sites promote community.  In discussion groups, users feel part of the site by posting their own information and responding to other users.  Amazon allows users to write their own book reviews and read the reviews of others.  These kinds of Web sites encourage users to return again and again and see what their cyber friends are discussing and doing online.
  40. 40. QUESTIONS?

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