E Marketing Ch8 Segmentation Targeting


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Strauss Emarketing Ch8 Segmentation Targeting

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E Marketing Ch8 Segmentation Targeting

  1. 1. E-Marketing 4/E Judy Strauss, Adel I. El-Ansary, and Raymond Frost Chapter 8: Segmentation & Targeting Strategies
  2. 2. Chapter 8 Objectives <ul><li>After reading Chapter 8 you will be able to: </li></ul><ul><li>Outline the characteristics of the three major markets for e-business. </li></ul><ul><li>Explain why and how e-marketers use market segmentation to reach online customers. </li></ul><ul><li>List the most commonly used market segmentation bases and variables. </li></ul><ul><li>Outline five types of usage segments and their characteristics. </li></ul><ul><li>Describe the four coverage strategies e-marketers can use to target online customers. </li></ul>
  3. 3. <ul><ul><li>Utilized data mining software to identify customer segments for better targeting. </li></ul></ul><ul><ul><li>As a result of segmentation and targeting strategies, customer retention increased by 15% and sales by 13.8% in 2003. </li></ul></ul><ul><ul><li>Web site attracted 13.1 million new customers and the repeat order rate increased to 43%. </li></ul></ul><ul><ul><li>Why do you think better segmentation and targeting lead to reduced phone time and lower costs? </li></ul></ul>1-800-Flowers
  4. 4. Segmentation & Targeting Overview <ul><li>Marketing segmentation is the process of grouping individuals or businesses, according to use, consumption or benefits of a product or service. </li></ul><ul><li>Targeting is the process of selecting market segments that are most attractive to the firm. </li></ul>
  5. 5. Three Basic Markets <ul><li>Business Market </li></ul><ul><li>Government Market </li></ul><ul><li>Consumer Market </li></ul>
  6. 6. <ul><li>Geographic location. </li></ul><ul><li>Demographics. </li></ul><ul><li>Psychographics. </li></ul><ul><li>Behavior with regard to the product. </li></ul><ul><li>Companies can combines bases, such as geodemographics (geography and demographics). </li></ul>Segmentation Bases
  7. 7. Geographic Segments <ul><li>Product distribution strategy is a driving force behind geographic segmentation. </li></ul><ul><li>Countries may be segmented based on Internet usage. </li></ul><ul><ul><li>U.S. has 186 million users. </li></ul></ul><ul><ul><li>China has 95.6 million users. </li></ul></ul><ul><ul><li>Japan has 77.9 million users. </li></ul></ul><ul><li>Geographic markets may also be evaluated by infrastructure variables. </li></ul><ul><li>Language spoken may also be a variable. </li></ul>
  8. 8. Top Internet Languages
  9. 9. <ul><li>In developed nations, users are much like the mainstream population demographically. </li></ul><ul><li>Three market segments are of great interest to e-marketers. </li></ul><ul><ul><li>Millenials </li></ul></ul><ul><ul><li>Ethnic groups </li></ul></ul><ul><ul><li>Influentials </li></ul></ul>Demographic Segments
  10. 10. Millenials <ul><li>Of those born between 1979 and 1994, over 75% use the Internet. </li></ul><ul><li>They grew up with the Internet. </li></ul><ul><li>80% have cell phones and 36% use text messaging. </li></ul><ul><li>Most have broadband for downloading music and watching videos online. </li></ul><ul><li>This group is a proving ground for the future. </li></ul>
  11. 11. Ethnic Groups <ul><li>59% of Hispanics use the Internet; 55% use the Spanish language online. </li></ul><ul><li>African Americans have 43% rate of adoption and tend to be younger, more highly educated and more affluent than African Americans not using the Internet. </li></ul><ul><li>More than half of Chinese Americans have Internet access and high purchasing power. </li></ul>
  12. 12. Influentials <ul><li>Influentials are individuals who influence others. </li></ul><ul><li>Represent 10% of the population and 15% of Internet users. </li></ul><ul><li>They serve as opinion leaders for the rest of the population. </li></ul>
  13. 13. Psychographic Segments <ul><li>User psychographics include: </li></ul><ul><ul><li>Personality </li></ul></ul><ul><ul><li>Values </li></ul></ul><ul><ul><li>Lifestyles </li></ul></ul><ul><ul><li>Activities </li></ul></ul><ul><ul><li>Interests </li></ul></ul><ul><ul><li>Opinions </li></ul></ul>
  14. 14. Interest Communities <ul><li>Interest communities attract like-minded individuals who post comments on Web sites or send e-mails to other members. </li></ul><ul><li>Exhibit 8.7 lists ten important types of online communities. </li></ul><ul><li>There are 3 ways to target online communities. </li></ul><ul><ul><li>Provide online chats and events. </li></ul></ul><ul><ul><li>Advertise on another firm’s community site. </li></ul></ul><ul><ul><li>Join the community and post as a member (stealth or guerilla marketing). </li></ul></ul>
  15. 15. <ul><li>Some marketers believe that a segment’s attitudes toward technology determine buying behavior. </li></ul><ul><li>Forrester Research measures attitudes toward technology with a system called Technographics ™. </li></ul><ul><li>Their findings provide a number of clues about online purchasing behavior. </li></ul>Attitudes and Behaviors
  16. 16. <ul><li>Two common segmentation variables are benefits sought and product usage. </li></ul><ul><ul><li>Online shopper can be bargain hunters or convenience shoppers. </li></ul></ul><ul><ul><li>Marketers often segment by light, medium and heavy product usage. </li></ul></ul>Behavior Segments
  17. 17. Usage Segments <ul><li>Marketers can segment according to how consumers use the Internet. </li></ul><ul><ul><li>Home vs. work access </li></ul></ul><ul><ul><li>Access speed </li></ul></ul><ul><ul><li>Preferred receiving device </li></ul></ul><ul><ul><li>Time spent online </li></ul></ul><ul><ul><li>Industry specific usage </li></ul></ul>
  18. 18. Usage Segments, cont. <ul><li>Approximately 56 million U.S. users access the Internet from work and 202.4 million from home. </li></ul><ul><li>Broadband users operate differently from narrowband users online. </li></ul><ul><ul><li>75% play audio CDs. </li></ul></ul><ul><ul><li>60% play online games. </li></ul></ul><ul><ul><li>48% download music and watch streaming video or DVDs. </li></ul></ul>
  19. 19. User Segments Based on Online Viewing Behavior 7.1 hours per month. 4% of active user population. Sportsters 9.8 hours per month. 6% have purchased online. They visit fewer domains. Routiners Less than the average of 9.8 per month. 8% of active user population. 52% are eBay users . Bargainers Less than the average of 9.8 per month. 36% active user population. 40% have been online under two years. 42% have made online purchases. Connectors More than the average of 9.8 hours per month. 8% of active user population. 32% of online time usage—far more than any other segment. Surfers 7 hours per month. 50% of total online purchases. 49% have been online for over five years. Longest online tenure. Simplifiers Online Time Important Facts Segment
  20. 20. Targeting Online Customers <ul><li>E-marketers may select from among 4 different approaches for a targeting strategy. </li></ul><ul><ul><li>Mass marketing or undifferentiated targeting </li></ul></ul><ul><ul><li>Multisegment marketing </li></ul></ul><ul><ul><li>Niche marketing </li></ul></ul><ul><ul><li>Micromarketing </li></ul></ul><ul><li>The Internet’s big promise is individualized targeting. </li></ul>