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Chapter 7 Sharpen the Focus: Target Marketing Strategies and Customer Relationship Management.

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Presentation on theme: "Chapter 7 Sharpen the Focus: Target Marketing Strategies and Customer Relationship Management."— Presentation transcript:

1 Chapter 7 Sharpen the Focus: Target Marketing Strategies and Customer Relationship Management

2 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-2 Chapter Objectives  Identify the steps in the target marketing process  Understand the need for market segmentation and the segmentation approaches available  Explain how marketers evaluate segments and how to choose a targeting strategy  Understand how marketers develop and implement a positioning strategy  Explain how marketers increase long-term success and profits by practicing customer relationship management

3 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-3 Real People, Real Choices: Decision Time at NutriSystem, Inc.  Which strategy should NutriSystem implement: –Option 1: Air testimonial ads from men who tried the 28-day weight loss program on cable –Option 2: Don’t enter the men’s market –Option 3: Develop a men’s program and launch it with a big splash on national television

4 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-4 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  Target marketing strategy: –Dividing the total market into different segments based on customer characteristics, selecting one or more segments, and developing products to meet those segments’ needs

5 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-5 Steps in the Target Marketing Process Step 1: Segmentation  Segmentation: –The process of dividing a larger market into smaller pieces based on one or more meaningful shared characteristics  Segmentation variables: –Dimensions that divide the total market into fairly homogeneous groups, each with different needs and preferences

6 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-6 Steps in the Target Marketing Process Step 1: Segmentation  Segmentation variables include: –Demographics—size, age, gender, ethnic group, income, education, occupation, family structure Generational marketing –Psychographics—psychological, sociological, and anthropological factors –Behavioral characteristics

7 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-7 Segmenting by Demographics: Age and Generational Marketing  Children  Teens  Tweens  Generation Y: born between 1977 and 1994  Generation X: born between 1965 and 1976  Baby boomers: born between 1946 and 1964  Older consumers

8 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-8 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

9 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-9 Segmenting by Demographics: Other Variables  Family life cycle: –Family needs change over time  Income –Strongly correlated with buying power  Social Class –Consumers buy according to image they wish to portray  Race and ethnicity –African Americans –Asian Americans –Hispanic Americans  Place of residence –Geographic regions –Geodemography –Geocoding

10 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-10 Segmenting by Place of Residence  Geodemography: –Combines geography with demographics  Geocoding: –Customizes Web advertising so people who log on in different places see ad banners for local businesses

11 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-11 Segmenting by Psychographics  Psychographics: The use of psychological, sociological, and anthropological factors to construct market segments –Members of psychographic segments typically share activities, interests, and opinions, or AIOS –The VALS2 system segments U.S. consumers into eight unique groups

12 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-12 Segmenting by Behavior  Behavioral segmentation: –Segments consumers based on how they act toward, feel about, or use a product  80/20 rule: –20% of purchasers account for 80% of a product’s sales

13 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-13 Segmenting by Behavior  Long tail concept: –Firms CAN make money selling small amounts of items IF they sell enough different items  User status: –Heavy, medium, and light users and nonusers of a product  Usage occasions

14 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-14 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 customer is a user/nonuser of product –North American Industry Classification System (NAICS)

15 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-15 Steps in the Target Marketing Process Step 2: Targeting  Targeting: –A strategy in which marketers evaluate the attractiveness of each potential segment and decide in which segment they will invest resources to try to turn them into customers –The customer group(s) selected are referred to as the target market

16 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-16 Evaluation of Market Segments  A viable target segment should: –Have members with similar product needs/wants –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

17 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-17 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

18 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-18 Choosing a Targeting Strategy  Undifferentiated targeting strategy –Appealing to a broad spectrum of people  Differentiated targeting strategy –Developing one or more products for each of several customer groups  Concentrated targeting strategy –Offering one or more products to a single segment

19 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-19 Choosing a Targeting Strategy  Custom 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

20 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-20 Steps in the Target Marketing Process Step 3: Positioning  Positioning: Developing a marketing strategy to influence how a particular market segment perceives a good/service in comparison to the competition

21 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-21 Steps in Developing a Positioning Strategy  Analyze competitors’ positions  Offer a good or service with a competitive advantage  Finalize the marketing mix by matching mix elements to the selected segment  Evaluate target market’s responses and modify strategies as needed

22 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-22 Modifying Positioning Strategies  Repositioning is commonly used to change the brand image –Requires redoing a product’s 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

23 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-23 The Brand Personality  Brand personality: A distinctive image that captures the brand’s character and benefits  Perceptual map: –A technique used to visually describe where products/brands are “located” in consumers’ minds relative to competing brands

24 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-24 Customer Relationship Management (CRM)  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 individual’s unique wants and needs  CRM facilitates one-to-one marketing

25 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-25 Four Steps in One-to-One Marketing  Identify customers and get to know them in as much detail as possible  Differentiate customers by their needs and value to the company  Interact with customers; find ways to improve cost efficiency and the effectiveness of the interaction  Customize some aspect of the products you offer each customer

26 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-26 CRM: A New Perspective on an Old Problem  CRM systems use computers, software, databases, and the Internet to capture information at each touchpoint –Touchpoints are any direct interface between customers and a company (online, by phone, in person, etc.)  CRM proposes that customers are relationship partners, with each partner learning from the other every time they interact

27 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-27 CRM vs. CEM  Customer Relationship Management (CRM) Characteristics: –Share of customer (vs. share of market) –Lifetime value of the customer –Customer equity –Focus on high-value customers  Customer Experience Management (CEM): –Concept of holistically aligning a firm’s people, processes, systems and strategies to maximize the customer’s experience with all aspects of your firm and its brands

28 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-28 Real People, Real Choices: Decision Made at NutriSystems, Inc.  Tom chose option 1 –No one felt that marketing weight loss to men would result in a successful campaign, so the firm minimized marketing costs by limiting the campaign to cable ads featuring testimonials –Implementation: Ads were run on Bravo, Discovery, FX, National Geographic, Outdoor Life, Spike TV, Sci-Fi, and Speed channels –Measuring success: Media acquisition cost and length of stay per customer

29 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-29 Keeping It Real: Fast-Forward to Next Class Decision Time at Bossa Nova Beverage Company  Meet Palo Hawken, co-founder and VP of research and innovation at Bossa Nova Beverage Company  Firm markets premium guarana flavored carbonated energy drinks  The decision to be made: How to fit the new açai juice into the current product line

30 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall7-30 Copyright © 2009 Pearson Education, Inc. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.


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