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Marketing: Real People, Real Choices 3rd edition 8-1©2003 Prentice Hall, Inc
Chapter 8
Sharpening The Focus: Target Marketing Strategies and
Customer Relationship Management
Marketing: Real People, Real Choices 3rd edition 8-2©2003 Prentice Hall, Inc
Chapter Objectives_1
Understand the need for market segmentation in today’s business environment
Know the different dimensions marketers use to segment consumer and industrial markets
Explain how marketers evaluate and select potential market segments
Marketing: Real People, Real Choices 3rd edition 8-3©2003 Prentice Hall, Inc
Chapter Objectives _2
Explain how marketers develop a targeting strategy
Understand how a firm develops and implements a positioning strategy
Know how marketers practice customer relationship management to increase long-term success and profits
Marketing: Real People, Real Choices 3rd edition 8-4©2003 Prentice Hall, Inc
Segmentation
Segmentation is the process of dividing a larger market into smaller pieces based on one or more meaningful, shared characteristics
Segmentation variables are used to divide the market into smaller slices
Marketing: Real People, Real Choices 3rd edition 8-5©2003 Prentice Hall, Inc
Dimensions for Segmenting Consumer
Markets
Demographics
Psychographics
Behavior
Marketing: Real People, Real Choices 3rd edition 8-6©2003 Prentice Hall, Inc
Demographic Dimensions
Age
Gender
Family structure
Income and social class
Race and ethnicity
Geography
Marketing: Real People, Real Choices 3rd edition 8-7©2003 Prentice Hall, Inc
Segmenting by Psychographics
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)
Marketing: Real People, Real Choices 3rd edition 8-8©2003 Prentice Hall, Inc
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
Marketing: Real People, Real Choices 3rd edition 8-9©2003 Prentice Hall, Inc
Dimensions for Segmenting Industrial Markets
Organizational demographics
– firm size– number of facilities– domestic or multi-national– type of business– production technology utilized
NAICS characteristics
Marketing: Real People, Real Choices 3rd edition 8-10©2003 Prentice Hall, Inc
Targeting
Evaluating Market Segments
Developing Segment Profiles
Choosing a Targeting Strategy
Marketing: Real People, Real Choices 3rd edition 8-11©2003 Prentice Hall, Inc
Evaluating Market Segments
Are members 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?
Marketing: Real People, Real Choices 3rd edition 8-12©2003 Prentice Hall, Inc
Developing Segment Profiles
A profile is a description of the typical customer in that segment– RJ Reynolds’ Dakota Profile of the “Virile
Female”: Her favorite pastimes are cruising, partying, going to hot-rod shows and tractor pulls with her boyfriend, and watching evening soap operas. Her chief aspiration is to get married in her early twenties.”
Marketing: Real People, Real Choices 3rd edition 8-13©2003 Prentice Hall, Inc
Choosing a Targeting Strategy
Undifferentiated Marketing
Differentiated Marketing
Concentrated Marketing
Customized Marketing
Marketing: Real People, Real Choices 3rd edition 8-14©2003 Prentice Hall, Inc
Undifferentiated Marketing
Appeals to a broad spectrum of people
Efficient due to economies of scale
Effective when most consumers have similar needs
Example: Walmart
Marketing: Real People, Real Choices 3rd edition 8-15©2003 Prentice Hall, Inc
Differentiated Marketing
Develops one or more products for each of several customer groups with different product needs
Appropriate when it is possible to identify one or more segments with distinct needs for different types of products
Example: L’Oreal (Elseve, L’Oreal, Lancome)
Marketing: Real People, Real Choices 3rd edition 8-16©2003 Prentice Hall, Inc
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
Marketing: Real People, Real Choices 3rd edition 8-17©2003 Prentice Hall, Inc
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
Marketing: Real People, Real Choices 3rd edition 8-18©2003 Prentice Hall, Inc
Mass Customization
An approach, related to customized marketing, 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
Marketing: Real People, Real Choices 3rd edition 8-19©2003 Prentice Hall, Inc
Positioning
Developing a marketing strategy aimed at influencing how a particular market segment perceives a product in comparison to the competition
Marketing: Real People, Real Choices 3rd edition 8-20©2003 Prentice Hall, Inc
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?
– Perceptual mapping
Marketing: Real People, Real Choices 3rd edition 8-21©2003 Prentice Hall, Inc
Customer Relationship Management
A 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
Marketing: Real People, Real Choices 3rd edition 8-22©2003 Prentice Hall, Inc
Characteristics of CRM
Share of Customer
Lifetime Value of the Customer
A Greater Focus on High-Value Customers
