Lesson 7: Targeted Marketing

Objectives Design a direct mail campaign based on market segments to gather information about specific customers Identify survey segments and their percentage of the total market Describe the benefits associated with targeted marketing based on demographics, geographics, and psychographics Calculate disposable and discretionary income from gross income and expenses Explain how the results of target marketing can impact a store’s product mix and merchandising

1.Identifying the Customer Market – a group of people who have common merchandise needs and wants and the means to buy the merchandise Market segmentation – the process used to classify a broad market into smaller groups Target market – the specific group of people a retailer wants as customers (the marketing will be targeted towards this group) Target market profile – description of the characteristics shared by the target market –This drives most of the retailer’s decisions

Side Note… The tobacco industry has been found guilty of targeting which market? Why did the tobacco industry do this? Despite paying fines, was it still profitable for them?

2.Characteristics in a Target Market Profile Demographics Geographics Pyschographics Info easily obtained from the US Census Bureau

3.Demographics Describes the basic characteristics that identify and distinguish the people in a target market –Age – diff. ages value diff. items / styles –Gender – male vs. female –Income – tells how much $ the target market will spend –Marital Status – difference in spending habits –Ethnic Background – specialized interests –Education and Occupation

4.Types of Income Disposable income – amount of money left to spend after taxes have been taken out –Ie: net income Discretionary income – the amount of money left to spend after taxes AND necessities are paid for –Ie: how much money is left after bills have been paid

5.Geographics Describes the physical location of customers Point out similarities between people in a specific geographical area –Ie: people in Florida don’t need snow tires

6.Psychographics The analysis of customer lifestyles and how they spend their time and money –Customer activities What people enjoy doing during free time Golf vs. playing video games –Attitudes How people feel about topics Do you like organic foods? –Opinions What people think of places and things around them Are you conservative or liberal?

7. Target Marketing and Product Mix Product Mix – the type of merchandise a retailer has for sale Ie: Sporting goods store –Equipment for baseball, football, soccer, volleyball, basketball, golf, tennis, etc. –If the target market is year olds because the store is near an apartment complex, the store could carry less child size equipment

8. Differences in Age for Target Marketing Younger people like vibrant colors, loud music Older people like soft music, to-the-point advertisements (no gimmicks) Celebrity Endorsements are equally effective amongst both age groups

9. Key Math Concepts # Customers Sharing a Characteristic = % of Market Segment x Total # of Customers Amount of taxes paid = % of taxes X gross income Disposable Income = Gross income – Taxes