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Mass Marketing
Focuses on selling a uniform product to a broad audience.
Targeted Marketing
Tailors products and messages for specific groups of customers.
Shotgun Approach
A term used to describe the wide-reaching strategy of mass marketing.
Rifle Approach
A term used to describe the precision of targeted marketing.
Henry Ford
Pioneered mass production and marketing of the Model T.
Alfred P Sloan
Introduced market segmentation by offering cars at different price points.
Benefits of Segmenting and Targeting Markets
Reduces direct competition, facilitates new product development, revitalizes older products, identifies early adopters, allocates resources effectively, and helps retain at-risk customers.
Data Sources for Market Segmentation
Includes US census bureau and other government reports.
Technology in Market Segmentation
Tools like Google AdSense, online surveys, and consumer browsing data.
Observation and Interaction
Direct engagement with potential buyers in everyday settings.
Acquiring New Customers
Costlier than retaining existing ones.
Personalized Marketing Campaigns
Strategies to retain current customers.
One-to-One Marketing Steps
Includes establishing evaluation metrics, identifying customers, differentiating customers, interacting with key customers, and customizing offerings.
Evaluation Metrics
Measure success using KPIs like customer satisfaction, revenue per customer, or transaction costs.
Behavioral Segmentation
Divides people and organizations into groups according to how they behave with or act toward products.
Demographic Segmentation
Segments buyers by tangible, personal characteristics such as age, income, ethnicity, and family size.
Geographic Segmentation
Segments customers based on their location and the products they buy based on that location.
Psychographic Segmentation
Segments customers based on their thoughts, values, and lifestyles.
Benefits Segmentation
Segments buyers by the benefits they want from products.
Usage Rate Segmentation
Segments buyers by how often they use certain products.
Age
Different age groups have different preferences.
Retro brands
Old brands or products that companies 'bring back' for a period of time.
Baby boomers
A demographic group that marketers believe were appealed to by retro brands during the recent economic downturn.
Customer lifetime value (CLV)
The potential value of customers over their lifetime, particularly relevant for Gen Y.
Income
Indicates a group's buying power and tends to reflect educational levels, occupation, and social classes.
Family life cycle
Affects people's buying behavior, with differences between family vacations and non-family vacations.
Ethnicity
Ethnic background has a huge impact on buying habits, with grocery stores catering to different ethnic groups.
Segmenting by Geography
The process of using geographic data such as zip codes to target prospective customers.
Geocoding
A process that takes data such as zip codes and plots it on a map to help businesses target customers.
PRIZM NE
The most popular geocoding software that classifies the American population into segments using zip codes and demographic information.
Geodemographics
Combining both demographic and geographic information.
Proximity marketing
A technology that firms use to segment buyers and target them within a few hundred feet of their business using wireless technology.
Segmenting by Psychographics
Focuses on why consumers behave the way they do, their priorities, and how they rank the importance of buying criteria.
Psychographic segmentation
Gathers data on activities, interests, opinions, values, and lifestyles to classify consumers into meaningful groups.
VALS framework
Developed by SRI in the late 1980s, categorizes consumers into groups based on their motivations and resources.
Innovators
Sophisticated, successful, and resourceful individuals with high self-esteem, motivated by ideals, achievement, and self-expression.
Thinkers
Mature, reflective, and well-informed individuals motivated by ideals, valuing order, knowledge, and responsibility.
Achievers
Goal-oriented individuals with structured lives centered around career and family, favoring established products.
Experiencers
Young, energetic, and impulsive consumers motivated by self-expression, enjoying variety and excitement.
Believers
Conservative and traditional individuals motivated by ideals, loyal to familiar products and brands.
Strivers
Trendy, fun-loving individuals motivated by achievement but limited by resources, aspiring to emulate wealthier lifestyles.
Makers
Practical and self-sufficient individuals motivated by self-expression, focusing on hands-on activities.
Survivors
Resource-limited consumers prioritizing safety and security.
Loyalty
Loyal to familiar brands and value-oriented purchases.
Applications of Psychographics
Psychographic data complements demographic information and provides deeper consumer insights.
VALS surveys
Tools used to gather psychographic data.
B2B Segmentation
B2B segmentation shares similarities with consumer markets but also has unique characteristics.
Segmentation Criteria
Factors used to classify markets, including demographics, geographic data, and behavior.
Demographics
Example: Goya Foods tailors products based on ethnic demographics.
Geographic Data
PRIZM overlays demographic insights with location-specific information.
Behavior
Companies classify buyers based on usage rates and service needs.
Price-Focused Segment
Small companies prioritizing cost-efficiency.
Quality and Brand-Focused Segment
Firms willing to pay for premium products.
Service-Focused Segment
Companies needing high-quality products and services.
Partnership-Focused Segment
Businesses seeking trust and reliability in suppliers.
Modern Techniques
E-mail campaigns, search-engine marketing, and social media engagement.
Psychographic Segmentation
Offers a comprehensive view of consumer behavior, enabling tailored marketing strategies.
Key Characteristics of Attractive Markets
Criteria for selecting markets, including size, growth, competition, accessibility, resource availability, and alignment with objectives.
Sizeable and Profitable Market
Large enough to justify operating costs; Example: China's massive population makes it a leading car market.
Growing Markets
Expanding segments create new opportunities; Example: Young demographics in India boost demand for Bollywood films.
Low Competition or Differentiation Opportunity
Example: IBM exited the crowded PC market and sold its line to Lenovo.
Accessible Markets
Overcoming barriers like geography, politics, technology, or societal norms; Example: Unilever employs local women in rural areas.
Resource Availability
Sufficient capital or capacity to compete; Example: Competing in the wind-power market requires significant investment.
Alignment with Objectives and Mission
Must complement the company's goals; Example: Terra Cycle avoids ventures like coal plants due to its eco-focused mission.
Mass Marketing
Uniform offering for all consumers; Advantage: Cost-efficient.
Multisegmented Marketing
Tailors products for different market segments; Example: Marriott offers diverse brands.
Concentrated Marketing
Focuses on a specific market segment; Advantage: Effective use of limited resources.
Niche Marketing
Targets a very select group of consumers; Goal: Dominate a small, specialized market.
Microtargeting (Narrowcasting)
Uses detailed data to target specific consumer profiles; Example: Acxiom offers segmented lists.
Targeting Global Markets
Companies may adopt mass marketing or tailor offerings for global markets; Example: Barbie dolls customize products for regional preferences.
Emerging Market Focus
Countries like China, India, Brazil, and Russia attract attention due to growing middle classes.
Emerging Markets
Countries like China, India, Brazil, and Russia attract attention due to growing middle classes.
Example of Emerging Market
Avon's largest market is now Brazil.
Innovation for Developing Markets
Companies develop cost-effective products for large markets and introduce them in developed markets.
Example of Innovation for Developing Markets
Tata Nano ($2,500 car for India) and GE's $1,000 electrocardiogram device.
Acquisitions and Partnerships
Buying companies with strong local presence or forming alliances where acquisition is restricted.
Example of Acquisition
Kraft's acquisition of Cadbury for Indian chocolate market access.
Example of Partnership
Heineken's purchase of Femsa for competitive advantage against Corona.
Challenges in Global Markets
Regulatory, cultural, and operational barriers.
Example of Global Market Challenge
IKEA struggled and exited Russia, whereas McDonald's thrived by adapting to the market.
Positioning
The process of tailoring a product to make it stand out from competitors in the minds of consumers.
Perceptual Map
A two-dimensional visual representation of how consumers perceive products based on certain attributes.
Attributes in Perceptual Maps
Attributes may include price, quality, customer service, etc.
Purpose of Perceptual Maps
Helps identify areas where a product can be positioned away from clusters of competitors to avoid direct competition.
Example of Perceptual Map Usage
A map showing quality on one axis and price on another can help determine the optimal combination to appeal to a target audience.
Tagline
A memorable phrase that communicates the essence of a product.
Example of Tagline
Wendy's tagline, 'It's better than fast food,' differentiates it from competitors like McDonald's or Burger King by suggesting superior quality.
Repositioning
Involves altering a product's image to appeal to a different market segment or change consumer perceptions.
Example of Repositioning: Clayton Homes
Clayton Homes introduced the i-house, designed with eco-friendly features like solar panels and rainwater collectors.
Example of Repositioning: Porsche
Porsche's Panamera Line is designed longer than traditional Porsches to cater to affluent Chinese buyers who prefer chauffeur-driven cars.
Why Positioning Matters
It helps differentiate a product in a competitive marketplace.
Why Repositioning May Be Necessary
To address shifts in consumer preferences or expand into new market segments.
Tools to Aid Positioning
Perceptual maps provide a clear view of market gaps and potential positioning strategies.
Target Audience for Nike
Nike's target audience includes athletes and fitness enthusiasts (professional and casual), lifestyle consumers valuing sporty, trendy products, and youth and millennials motivated by performance, innovation, and self-expression.
Segmentation for Nike: Behavioral
High-performance athletes seeking top-quality gear and casual users valuing comfort and style for everyday wear.
Segmentation for Nike: Geographic
Urban areas with high sports participation and fitness awareness and international markets with growing fitness culture.
Segmentation for Nike: Demographic
Primarily 18-34 years old and middle to high-income earners.
Income
Middle to high-income earners.
Gender
Segmented product lines for men, women, and kids.
Psychographic
Aspirational individuals valuing fitness, health, and success.