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Dr. H. Ronald Moser Cumberland University Kleppner’s Advertising Procedure
Chapter 4 Target Marketing Kleppner’s Advertising Procedure, 18e Lane * King * Reichart
Learning Objectives – 1 Define target marketing. Identify important population trends revealed by the U.S. Census. Define and provide examples of generational marketing. Explain the importance of the marketing concept to advertising.
Learning Objectives – 2 Identify the five ways markets are segmented. Discuss the importance of positioning to advertising. Discuss the role of heavy users in target marketing. Explain why psychographic research is important to target marketing.
Targeting in a Changing Environment – Know Your Market What information do you need to reach your prospects successfully? Do you understand their problems? Have you thought about what you want people to think and feel about your brand? We have to remember that changes are absolutely everywhere: The kinds of people advertisers are trying to reach, their behavior, and the way we reach them are only part of the story. Some Marketing Generalizations we need to know about our target market:
Defining Prime Prospects – Where Do We Start –Target Marketing Target Marketing means identifying and communicating with groups of prime prospects, but the question for marketers is where are the information sources to help plan integrated marketing programs aimed at individual users or groups.
Census Data: A Good Place to Start based on census data which aids in finding prime prospects: Acxiom. Claritas. ESRI. Experian. MapInfo. Services
Defining Prime Prospects – Where Do We Start – Census Data One of the most sophisticated geodemographic tools to help marketers pinpoint direct marketing prospects based on U.S. census data is TIGER. The TIGER?Line Shapefiles contains coding of the country’s natural, political, and statistical boundaries, including every street, road, and subdivision. TIGER also provides the data for computer maps to plan sales territories and pinpoint direct-marketing prospects.
Defining Prime Prospects – Where Do We Start – Population Generalizations According t U.S. Census data projections, by the year 2030, 70 percent of the growth in the United States will occur in the South and West. Projections for 2030 indicate that California will have the highest population. If projections hold true, the population of the United States will climb to at least 370 million by The population for the next quarter century will be larger, older, and more diverse than ever before in the United States; it will present many opportunities and challenges for businesses. A large opportunity for marketers in the next few decades will be in the age 65 and older set. United States
Defining Prime Prospects – Population Generalizations – Demographic Snapshots Based on ancestry, the largest ancestral group in the United States claims to have German roots. One in 8 residents is an immigrant (12.4% of the population). The median age in the U.S. is Seventeen percent of U.S. adults (age 25 and older) have a bachelor’s degree; 10 percent have an advanced degree. Massachusetts ranks high among states in percentage of residents with bachelor’s (21.4 percent) or advanced degrees (16 percent). Considering large cities, San Francisco is among the most educated. Germany
Defining Prime Prospects – Demographic Snapshots – African American Population 13.4% of U.S. population. 55% live in the South. Median age is % own their homes. Median income is $30, % in the middle- and upper-income status. The top five population cities are New York, Chicago, Detroit, Philadelphia and Houston.
Defining Prime Prospects – Demographic Snapshots – Hispanic Population 16% of U.S. population. Median age is 27.2 (34% under age 18). 64% from Mexico. Hispanic is an ethnic designation; it does not reflect race. It is fastest- growing ethic minority. Purchasing power was $870 billion in Largest minority segment.
Population Generalizations – Demographic Snapshots – Hispanic Population By 2010, Hispanics will be about 16 percent of the population. They have various cultural differences based on their countries of origin. By 2050, Hispanics will be about 30 percent of the total U.S. population. Hispanics can be of any race.
Demographic Snapshots – Asian and Pacific Islander Population 5% of U.S. population. 51% live in the West. 15 distinct ethnic groups. 26% under age % of men and 44% of women earn at least a bachelor’s degree. Population figure is about 14 million. According to an official from the Bank of American, the Asian market is extremely wealthy and affluent but relatively untapped. According to a Walt Disney executive, marketing to multicultural populations is increasingly difficult as the population becomes even more diverse.
Defining Prime Prospects – Population Generalizations – Target Information Household income. Spending. Married. Birthrate. Aging. Women. Men. Single-Person Households. EXHIBIT 4.5. Applebee’s touts, “Make dinner before you even get home.
Defining Prime Prospects – Population Generalizations – Other Target Information According to findings from American Demographics, some generalization about the average U.S. metropolitan household: More money is spent on shelter than on transportation. The same amount of money is spent on apparel as for utilities. Combined spending on entertainment and household operations is less than that spent on personal insurance. Spending patterns can vary strongly based on age and income of the consumer. When it comes to aging in the United States, it is apparent that by 2050, there will be a least twice as many people 65 and older than there are today. Studies and statistics show that women account for 51 percent of all management positions and influence 85 percent of all products. Characteristics that applies to 18-to-34-year-old men is they have relatively high disposable income. A characteristic of the consumer segment that comprise single- person households include about 80 percent are working-class men.
Generational Marketing A Generation refers to the number of people in any age group, extending typically 30 years and past a single decade (though some, such as Gen X, are shorter in time frame). Experiences bind people born in continuous years into a Cohort – a group of individuals who have a demographic statistic in common. Demographers and marketers generally agree on the generation timeline but can disagree on generational titles and exact years. Encompasses shared attitudes, common history, and formative experiences.
Generational Marketing – Target Generations Good Warriors ( ) Matures ( ) Baby Boomers ( ) Gen Xers ( ) Gen Yers ( ) Generation Zers (2002+)
Generational Marketing – Target Generations Matures ( ) – Conform for the common good. Baby Boomer ( ) – They are self-assured and self-absorbed. Gen Yers ( ) – Hurting established Boomer brands by ignoring them. Gereration Zers (2002+) – Comes from a wide mix of backgrounds with different experiences. Good Warriors ( ) – Who would be considered a Good Warriors? Gen Xers ( ) – This group is beginning family life, but cautious about marrying.
Marketing Concept and Targeting – Some Generalizations The Marketing Concept is a management orientation that views the needs of consumers as primary to the success of a firm. It is nearly a sixty-year-old management philosophy. At the heart of the New Marketing Concept is to find a need and fill it. Under the Old Marketing Concept of making a sale was the primary objective. Under the new marketing concept, the objective is to develop a customer relationship in which the sale is only the beginning. The essential difference in strategic planning under the New Marketing Concept is customer value. Under the Old Marketing Concept, marketing people a well as top-level management were committed to making the sale for the sale’s sake.
Marketing Concept and Targeting – Some Generalizations – Key Concepts in Marketing What is a Product? A bundle of satisfactions that are psychological, functional and a bundle of ingredients combined for sale to a consumer. What is a Market? Here we are looking at people who can be identified by some common characteristic, interest, or problem. What is Competition? In the broadest sense, competition includes all the forces that are inhibiting the sales of a product. In this section we are going to define and talk about what is a product and how are products used to satisfy customers’ need. We are also going to define a market and who really makes up the market. Finally we will talk about who our competition is.
Planning the Advertising – Market Segmentation and Situation Analysis Market Segmentation – Is the division of an entire market of consumers into groups whose similarity makes them a market for products serving their special needs. A Situation Analysis – Is the part of the advertising plan that answers the questions: Where are we today and how did we get here? Components of a Situation Analysis include: A SWOT analysis, assumptions regarding the future, analysis of major issues, and a description of the present situation.
Planning the Advertising – Steps in the Market Segmentation Process Segment Your Market Target A Segment Position Your Product Communicate Your Positioning Market Segmentation - Is the division of an entire market of consumers into groups whose similarity makes them a market for products serving their special needs. Typically, the market- segmentation process runs through a number of steps:
Planning the Advertising – Segmentation Approaches Demographic – What variables to use for dividing a market. Geographic – The oldest form of marked segmentation. Product-User – Here we are looking at consumption pattern. Brand Loyalty – Will people switch preferences in purchasing products. Lifestyle – Is the major variable used to segment a market. Benefits and Attitudes – Not everyone wants the same thing from a product.
Segmentation Approaches Categories Useful For Geographic Segmentation Census Trace data/areas of Dominant Influence (ADI). Zip Codes/States. Counties/Census Regions. Metropolitan Statistical Areas/total U.S. Geographic Segmentation - Is the oldest form of segmentation; it designates customers by geographic area. It dates back to early days when distribution was the primary concern of manufacturers. Method of Geographic Segmentation include: 11.54% Tennessee Accounted for 11.54% of the U.S. population growth from 2000 to 2010.
Segmentation Approaches Categories Useful for Product-User Segmentation This segmentation strategy is based on the amount of usage and/or consumption patterns of a brand or category. The advertiser is interested in product usage rather than consumer characteristics. FrequencyAdultsMenWomen Heavy (4+ visits/week) 11.4% 14.8% 8.3% Medium (1-3 visits/week) 44.9% 46.5% 43.4% Light (<1 visit/week) 22.8% 20.6% 24.8% Weekly Consumption of Fast Foods
Segmentation Approaches Categories Useful for Brand Loyalty Segments National-Brand Loyal. National-Brand Deal. Private-Label Loyal. Users of a product also can be categorized by the brands they buy. There are numerous ways to estimate the chances of getting a heavy user of one brand to try a new brand. One technique is to define market segments according to their brand loyalty and preference for national over private brands. Studies of brand loyalty for packaged goods found six segments listed below: Private-Label Deal. National-Brand Switcher. Private-Label Switch.
Segmentation Approaches Categories Useful for Determining Lifestyle Characteristics Lifestyle segmentation makes the assumption that if you live a certain way, so do your neighbors and, therefore, any smart marketer would want to target clusters filled with these clones, but what are some of the approaches to determine lifestyle characteristics? One approach to determining lifestyle characteristics is to identify consumers’ activities, interests and opinions (AIO). Measures period include the following : Activities – Hobbies or leisure-time preferences, community involvement. Interests – Family orientation, sports interest, and media usage. Opinions – Political preferences and views on various social issues.
Planning the Advertising – Niche Marketing Niche Marketing is a flanking strategy that focuses on narrow windows of opportunity within a broad market. Niches usually are small groups of consumers with narrowly defined needs or unique combinations of needs.
Planning the Advertising – Niche Marketing It is a flanking strategy. It essentially is a way to engage competitors at their point of weakness. It can create a specific product through variations that help the product meet a specific niche’s needs. It focuses on narrow windows of opportunity within a broad product, market, or industry.
Positioning – Some Generalizations Positioning – Means segmenting a market by creating a product to meet the needs of a select group or by using a distinctive advertising appeal to meet the needs of a specialized group. In Positioning, you must fit the product into the lifestyle of the buyer. Challenges in Positioning that advertisers could face include damaging a product image by changing the appeals. According to David Aaker, the most-used positioning strategy is to associate an object with a product attribute or characteristic.
How to Approach a Positioning Problem What position, if any, do we already own in the prospect’s mind? What position do we want to own? What companies must be outgunned if we are to establish that position? Do we have enough marketing money to occupy and hold that position? Do we have the guts to stick with one consistent positioning concept? Does our creative approach match our positioning strategy? Advertisers thinking about positioning, the key questions to ask include:
4-33 Exhibit Positioning a Bank – How to Approach a Positioning Problem EXHIBIT How is Security Bank uniquely positioning itself?
Positioning Examples Dove soap is the moisturizing beauty bar. All State insurance is the good hands people. Cheer is the detergent for all temperatures. Intel is the computer inside. Ace Hardware is the helpful place.
Marketing Profiling Market Profile – Market profiles contain information about the people within the market with special attention directed toward current users. The size and scale of the market depends on the product’s availability: national, regional, or local.
Marketing Profiling Market Profile – Market profiles contain information about the people within the market with special attention directed toward current users. Buyer Profile – Some characterizes of heavy users: Are actually more important than commonly thought. Sometimes referred to as the 80/20 rule. Exact percentages vary with the product and product category. Identified by who they are, when they buy, and where they are.
Marketing Profiling – Heavy Users – Profiles: Users of Brand X The following table shows that the heavy users of brand X are women aged 55 and older. In addition, the most effective selling is done from January through June in the South and Northeast regions.
Beyond Demographics: Psychographics - Some Generalizations Psychographics – Are descriptions of a market based on factors such as attitudes, opinions, interests, perceptions, and lifestyles of consumers comprising that market. Some Psychographic generalizations are: It is an attempt to explain the significance of difference in demographics. It sharpens the search for prospects beyond demographic data. It challenges good copywriters to appeal to the interests of a specific segment’s lifestyle. Reveals the soul of a person.
Beyond Demographics: Psychographics – Characteristics of Top Test Markets A city’s demographics must fall within 20 percent of national average. The city somewhat isolated. Local media should be relatively inexpensive. Citizens should not be extremely loyal to any particular brand. Supermarkets should be willing to give new products good shelf space on their shelves. Although extremely helpful, psychographic research cannot replace market testing as the ultimate guide to successful advertising and marketing. It is difficult to say which cities are best for testing, but to make the list the following should apply.
Beyond Demographics: Psychographics – Top 10 Test Market Cities Albany-Schenectady- Troy, NY. Rochester, NY. Greensboro-Winston- Salem-High Point, NC. Birmingham, AL. Syracuse, NY. Charlotte-Gastonia- Rock Hill, NC-SC. Nashville, TN. Eugene-Springfield, OR. Wichita, KS. Richmond-Petersburg, VA. The top 10 test market cities which represent American consumers as a whole are as follows. The number one test market city that represents American consumers as a whole is Rochester, New York.
WHAT ABOUT THOSE REVIEW QUESTIONS? THEY WILL BE THERE! “S” DRIVE The End!