Transcript of Sharpen the Focus: Target Marketing Strategies and Customer Relationship Management Chapter Seven.
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- Sharpen the Focus: Target Marketing Strategies and Customer
Relationship Management Chapter Seven
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- Chapter Objectives 1. Identify the steps in the target
marketing process 2. Understand the need for market segmentation
and the approaches available to do it 3. Explain how marketers
evaluate segments and choose a targeting strategy 4. Understand how
marketers develop and implement a positioning strategy 5. Explain
how marketers increase long-term success and profits by practicing
customer relationship management 7-2
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- Market Segmentation Market Segment Market Segment Market
Segmentation Market Segmentation People or organizations with needs
or wants and the ability and willingness to buy. A subgroup of
people or organizations sharing one or more characteristics that
cause them to have similar product needs. The process of dividing a
market into meaningful, relatively similar, identifiable segments
or groups. 1
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- The Importance of Market Segmentation Markets have a variety of
product needs and preferences Marketers can better define customer
needs Decision makers can define objectives and allocate resources
more accurately 2 7-4
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- Why Market Segmentation? Marketers can identify customers with
similar needs Marketers can design marketing mixes matched to a
specific segment Segmentation is consistent with the marketing
concepts of satisfying customer needs and wants 2 7-5
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- Target Marketing Strategy: Selecting and Entering a Market
Market fragmentation: The creation of many consumer groups due to
the diversity of their needs and wants Because of diversity, the
same goods/services will not appeal to everyone 7-6
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- 2012 Pearson Education, Inc. publishing as Prentice-Hall.7-7
Figure 7.1 Three Steps in the Target Marketing Process
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- 7-8 Figure 7.2 Step 1-Segmenting Consumers Markets Remember
factors influencing consumer decision making?
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- Segmenting by Demographics: Age and Generational Marketing
Children Teens Tweens Generation Y: born between 1979 and 1994 Why
do marketers engage in generational marketing? Because different
age groups have different needs and wants Members of a generation
share the same outlooks & priorities
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- Segmenting by Demographics: Age and Generational Marketing
Generation X: born between 1965 and 1976 Baby boomers: born between
1946 and 1964 Older consumers 7-10
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- Segmenting by Demographics: Gender Many products appeal to one
sex or the other Metrosexual: A straight, urban male who is keenly
interested in fashion, home design, gourmet cooking, and personal
care 7-11
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- Segmenting by Demographics: Other Variables Family life cycle:
Family needs change over time Different product categories ascend
or descend in importance over the life cycle Income Strongly
correlated with buying power Social Class Consumers buy according
to image they wish to portray rather than where they fall in the
framework 7-12
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- Segmenting by Demographics: Race and Ethnicity Race and
ethnicity African Americans Asian Americans Hispanic Americans
Cultural diversity is increasing 7-13
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- Segmenting by Demographics: Place of Residence Geodemography:
Combines geography with demographics PRIZM website -
http://www.zillow.com/ PRIZM website http://www.zillow.com/
Geocoding: Customizes Web advertising so people who log on in
different places see ad banners for local businesses Search engine
marketing example: Google Google 7-14
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- Segmenting by Psychographics Psychographics use psychological,
sociological, and anthropological factors to segment a market 7-15
http://www.youtube.com/watch?v=Mig7E5FtaAI
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- 7-16 Figure 7.3 VALS TM Framework (Values & Lifestyles)
Learn more about each segment by visiting Strategic Business
Insights (VALS types)VALS types VALS TM survey by visiting Take the
VALS TM survey by visiting Strategic Business Insights (survey
link)survey link
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- Segmenting by Psychographics Niche markets may be defined by a
single characteristic Psychographic segmentation can be industry
specific Situations, such as a bad economy, can create
opportunities for psychographic segmentation 7-17
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- Segmenting by Behavior Behavioral segmentation: Segments
consumers based on how they act toward, feel about or use a product
User status 80/20 rule and segmentation by usage status Long tail
concept Usage occasions 7-18
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- Segmenting B2B Markets Segmentation helps B2B firms understand
the needs and characteristics of potential customers Firms can be
segmented by: Organizational demographics Production technology
used Whether targeted business firm is a user/nonuser of product
7-19
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- 2012 Pearson Education, Inc. publishing as Prentice-Hall.7-20
Figure 7.4 Step 2-Phases of Targeting a. b. c.
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- a.-Evaluation of Market Segments A viable target segment
should: Have members with similar product needs/wants who are
different from members of other segments Be measurable in size and
purchasing power Be large enough to be profitable Be reachable by
marketing communications Have needs the marketer can adequately
serve 7-21
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- b.-Developing Segment Profiles After segments are identified,
profiles or descriptions of the typical customer in a segment are
developed Segment profiles might include demographics, location,
lifestyle, and product-usage characteristics 7-22
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- 2012 Pearson Education, Inc. publishing as Prentice-Hall.7-23
Figure 7.5 c.-Choose a Target Marketing Strategy
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- Choosing a Targeting Strategy Undifferentiated Strategy- The
marketer assumes that people have similar needs, and an attempt is
made to appeal to a broad spectrum of people. (one size fits all)
Efficiency occurs because of economies of scale. (Walmart)
Differentiated Strategy - The firm develops one or more products
(and strategies) for each of several customer groups. This strategy
might involve marketing a single product differently to different
segments, by changing marketing to appeal to each targeted group.
(Toyota) Firms that focus their efforts on a single segment follow
a Concentrated targeting strategy. One or more products may be
promoted to the segment. (Niche marketing) 7-24
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- Choosing a Targeting Strategy (cont) Customized marketing
strategy Tailoring specific products to individual customers Common
in personal and professional services, and in industrial marketing
Mass customization Modifying a basic good or service to meet the
needs of an individual 7-25
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- Step 3-In the Marketing Process Positioning Positioning:
Developing a marketing strategy to influence how a particular
market segment perceives a good/service in comparison to the
competition Also: Developing a specific marketing mix to influence
potential customers overall perception of a brand, product line, or
organization in general. Position: The place a product or group of
products occupies in the consumers minds relative to competing
offerings. 7-26
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- 7-27 Figure 7.6 Stages in a Positioning Decision
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- Modifying Positioning Strategies Repositioning is commonly used
to change the brand image Requires redoing a products position in
response to marketplace changes Repositioning may breathe life into
Retro brands A once-popular brand that has been revived to
experience a popularity comeback, often by riding a wave of
nostalgia (Lava Lamps, Hula Hoops, etc.) Can you name any others?
7-28
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- 2012 Pearson Education, Inc. publishing as Prentice-Hall.7-29
Targeting and Positioning Strategies Must Complement Each Other
Sobes XTC targets 18-35 year olds who want a New Age beverage that
offers an energy boost without unhealthy additives. SoBe was
inspired by herbal ecstasy cocktails made popular in the 1990s, but
positioned as less risky.
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- The Brand Personality Brand personality: A distinctive image
that captures the brands character and benefits Personality
dimensions: Sincerity Example? Excitement Example? Competence
Example? Sophistication Example? Ruggedness Example? 7-30
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- 7-31 Figure 7.7 Perceptual Map
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- CRM-Customer Relationship Management Toward a Segment of One
Customer relationship management: A systematic tracking of
consumers preferences and behaviors over time in order to tailor
the value proposition as closely as possible to each individuals
unique wants and needs 7-32
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- CRM: A New Perspective on an Old Problem CRM systems capture
information Touch-points interface customers and businesses CRM
systems include: Order and delivery tracking websites Call centers
Automatic reminder systems Sales contact management software
7-33
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- CRM: Bottom Line Customer Relationships are important Lifetime
value of a customer Focus on high value customers Cheaper to retain
old customers than get new ones 7-34