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