Please answer the following question with a minimum of 150 – 250 word count. A cover page/title page is not needed. Use APA format with scholarly articles to support your answer, include in-text citations and a reference page. Please use the reference that I provided in the attached file, here is the reference: Solomon, M. R., Marshall, G. W., & Stuart, E. W. (2012). Marketing: Real people, real choices. New Jersey: Prentice Hall. Please use an additional scholarly article for the second reference, total of 2 references, the one I provided you and another from your research! No PLAGIARISM and let me know if you have any questions or concerns!Explain the basics of Customer relationship management (CRM). What is the purpose of CRM?What do companies gain from it? What do CONSUMERS gain from it? What are some potential disadvantages to the customer? Be specific and provide EXAMPLES. Include scholarly research on customer relationship management. You may NOT use examples or references previously used by students who have already posted!!!Chapter
|7
Sharpen the Focus:
Target Marketing Strategies and Customer
Relationship Management
+
Real People Profiles
Jim Multari
Profile
W
R
I
G
H
T
,
A Decision Maker
at PBS Kids Sprout
S
H
E
R
R
Y
Jim Multari is the director of research for
PBS Kids Sprout, the first 24-hour preschool destination available on TV, on
demand, and online for kids ages 2–5
and their parents and caregivers. Sprout’s
programming features trusted favorites
like The Wiggles and Sesame Street, plus
innovative originals such as The Sunny
Side Up Show and The Good Night Show.
Jim manages marketing, programming, and ad sales research for Sprout.
He collaborates with all internal business
units and has been a contributor to numerous initiatives related to custom
studies and new methodologies. Sprout’s recent research on kids’ usage of video on
demand (VOD), alternative media viewership metrics, and creative concept testing
has been a key driver of network strategy and has won multiple industry awards, including a silver David Ogilvy Award (the Advertising Research Foundation’s award
for excellence in advertising research) and the Cable & Telecommunications Association for Marketing (CTAM) Research Case Study Award. He received a BA in communications and psychology from Marymount University in Arlington, VA, and an
MBA from Saint Joseph’s University.
2
7
9
3
B
U
Info
Jim’s Info
What do I do when I’m not working?
A) Running.
First job out of school?
A) Research analyst for a customer satisfaction research company. In
those days, surveys were still paper and pencil!
Career high?
A) Winning a David Ogilvy Award.
Business book I’m reading now?
A) 7 Habits of Highly Effective People by Stephen Covey.
My motto to live by?
A) Your answer to the question “What are you reading?” should
never be “Nothing.”
What drives me?
A) My family.
My management style?
A) Collaborate, communicate, and think strategically.
Don’t do this when interviewing with me?
A) Not ask questions.
ISBN 1-256-36591-2
182
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
Here’s my problem. . .
ISBN 1-256-36591-2
Real People, Real Choices
The Sprout marketing team faced three significant
challenges when they launched the channel in
2005. First, Sprout was (and still is today) considered an “emerging network,” relatively small compared to the more established kids’ networks
(Disney Channel, Nickelodeon, etc.). As a result, the marketing team had to
develop creative ways to reach viewers of the
network, nonviewers of the network, as well
Things to remember
as cable and satellite TV operators, to comSprout is a relatively small
municate Sprout’s unique content and forpresence in the childrens TV
mat. Sprout’s programming is designed to
programming market. Jim
foster parent-preschooler interaction through
needs to weigh the value of
gold-standard, curriculum-based shows and
providing more value to the
short-form original programs. It inspires concurrent viewership versus
versation, activities (i.e., making crafts), exattracting new viewers.
ploration/discovery, play, learning, exercise,
There are really two
healthy eating, and so on. Sprout is different
segments of viewers—young
from other networks because it really is an
kids and their parents. Both
active viewing experience and truly a netgroups play different roles in
work “made for you, by you.” Whether it’s
deciding what shows the kids
sharing homemade birthday cards and crafts
will watch.
with Chica on The Sunny Side Up Show,
watching viewer-submitted videos on The
Sprouts position in the
Sprout Sharing Show, or making a craft and
market is a bit ambiguous. It
is affiliated with PBS (Public
reading bedtime stories on The Good Night
Broadcasting) but it also
Show, Sprout is the only network that actuoffers other programming.
ally shares with its audience, while also encouraging parent-child interaction at home.
The second marketing challenge was
that Sprout is essentially a “library channel”; its programming mainly consists of previously aired kids’ shows, repackaged and represented around
short original content and brand identity links. Although the presentation
makes the entire package feel new and fresh, there was a risk that parents
wouldn’t see a reason to tune in, and cable and satellite providers wouldn’t
see a reason to launch the channel. Sprout needed to find a way to break
through and be heard by both audiences in order to support its unique claim
that it fosters parent-child interaction.
The third and most significant challenge was that Sprout is not a brand
that is fully distributed (available in all U.S. television households). Early on,
Sprout was available in just 30 million households. Thus, the channel’s target audiences consisted of both preschool families that were aware of
watching Sprout and families that were unaware of Sprout and/or had never
interacted with the brand.
In early 2007, Sprout began work on its first-ever consumer-targeted
brand awareness advertising campaign. The critical marketing decision was
to decide which audience to target: Should the upstart channel target viewers of Sprout, nonviewers of Sprout, or should it somehow find a way of
reaching both audiences with the same campaign?
Current viewers understand and enjoy the Sprout brand, are seamlessly
navigating across all of Sprout’s platforms, and are likely submitting content.
Reaching them with the campaign would likely mean television spots on
Sprout, print ads in parenting and other relevant magazines, as well as a
highly targeted digital media approach (banner ads, promotions via social
media outlets, etc.).
Nonviewers have little understanding at all of Sprout, though they may
have immediate positive associations due to Sprout’s relationship with PBS
Kids (Sprout is a partnership in which PBS has an interest) Because moms are
the key media decision makers in preschool households, the campaign
would need to resonate with them (both functionally and emotionally) while
also indirectly being of some interest to preschoolers. Reaching this audience
would require a broader mix of media and markets to maximize the campaign’s reach.
As director of research, Jim’s role was to ensure that all strategic decisions were supported by actionable consumer insights.
Jim and the Sprout marketing
W team considered their Options 1 2 3


R
Target Sprout viewers with the marketing campaign. This
option would enable the channel to develop a tightly focused
I
campaign that its core audience could rally behind. Hopefully
this identification would be a catalyst to motivate them to tell
G
their friends and family about Sprout, invite them to further parOption
H
ticipate in the Sprout experience, and so on. But Sprout’s viewer
T base at the time was relatively small. Also, there was no guarantee that busy
families would be motivated to help “spread the word” about the
, Sprout
programming.
S
H
E
R
R
Y
2
7
9
3
B
U
Produce a campaign that was specifically designed for
nonviewers of Sprout. This approach would require a more
functionally descriptive campaign that introduced consumers to
the network, its unique programming format, the different usage platforms, and so forth. A campaign that targeted nonviewOption
ers would attract a much larger audience. If it was executed
properly, families in general (regardless of whether they already viewed
Sprout) would be interested in the message. Of course, the marketing team
would need to do a lot of heavy lifting to educate unaware audiences about
Sprout, how the brand works, and how they could participate. This approach
would not engage Sprout enthusiasts, so there would not be an opportunity
to reinforce them for their loyalty.
Target both Sprout viewers/awares as well as nonviewers, all within the same creative campaign. An all-inclusive
campaign would maximize Sprout’s exposure and attract families in general. However, speaking to two audience segments
with the same campaign would be complicated. The campaign
Option
would need to communicate both the functional benefits of the
brand to attract nonviewers and also reinforce the emotional rewards that
Sprout viewers receive when they watch the channel’s programs with their
preschoolers.
You Choose
Which Option would you choose, and why?
1.
YES
NO 2.
YES
NO 3.
YES
NO
See what option Jim chose on page 209
183
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
184
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Chapter 7
Objective Outline
1
OBJECTIVE
1. Identify the steps in the target
marketing process. (pp. 184–185)
TARGET MARKETING STRATEGY:
SELECT AND ENTER A MARKET (p. 184)
2. Understand the need for market
segmentation and the approaches
available to do it. (pp. 185–198)
STEP 1: SEGMENTATION (p. 185)
3. Explain how marketers evaluate
segments and choose a targeting
strategy. (pp. 198–201)
STEP 2: TARGETING (p. 201)
4. Understand how marketers
develop and implement
a positioning strategy. (pp. 201–204)
STEP 3: POSITIONING (p. 201)
5. Explain how marketers increase
long-term success and profits
by practicing customer relationship
management. (pp. 204–208)
CUSTOMER RELATIONSHIP MANAGEMENT (CRM):
TOWARD A SEGMENT OF ONE (p. 204)
market fragmentation
The creation of many consumer groups due to a
diversity of distinct needs and wants in modern
society.
target marketing strategy
Dividing the total market into different segments
on the basis of customer characteristics,
selecting one or more segments, and developing
products to meet the needs of those specific
segments.
Identify the steps in
Target Marketing
Strategy: Select
and Enter a Market
the target marketing
By now, you’ve read over and over that the goal of the
marketer is to create value, build customer relationships,
and satisfy needs. But in our modern, complex society,
it’s naive to assume that everyone’s needs are the same.
Understanding people’s needs is an even more complex
task today because technological and cultural advances in modern society
create a condition of market fragmentation. This means that people’s diverse
interests and backgrounds divide them into numerous groups with distinct
W
needs and wants. Because of this diversity, the same good or service will not
R
appeal to everyone.
Consider,
I for example, the effects of fragmentation in the health-andfitness industry—one that has gained increasing attention due to recent data
G
about skyrocketing rates of obesity among adults and children. Back in the
H was simple. Pritikin was a best-selling weight loss system that
1960s, dieting
emphasizedTvery low fat and high fiber, and health-conscious consumers
thought that this combination would surely yield a lean body and good
,
health. Today’s consumers, however, have a cornucopia of diets from which
to choose including such brands as NutriSystem, Weight Watchers, Jenny
Craig, Optifast,
S FitAmerica, the Atkins diet, and many more. Calories, fat,
carbs, or all of the above—which to cut?
H
Marketers must balance the efficiency of mass marketing where they
E items to everyone, with effectiveness that comes when they ofserve the same
fer each individual
exactly what he or she wants. Mass marketing certainly
R
costs much less; when we offer one product to everyone we eliminate the
R
need for separate advertising campaigns and distinctive packages for each
Y consumers see things differently; from their perspective the
item. However,
best strategy would be to offer the perfect product just for them. Unfortunately, that’s often not realistic. To this day, Burger King touts its longtime
2
motto “Have It Your Way,” but BK can only deliver this promise to a point:
“Your way”7is fine as long as you stay within the confines of familiar condiments such 9
as mustard or ketchup. Don’t dream of topping your burger with
blue cheese, mango sauce, or some other “exotic” ingredient.
3
Instead of trying to sell something to everyone, marketers select a target
B
marketing strategy
in which they divide the total market into different segments based
on
customer
characteristics, select one or more segments, and
U
develop products to meet the needs of those specific segments.
Figure 7.1
illustrates the three-step process of segmentation, targeting, and positioning,
and it’s what we’re going to check out in this chapter. Let’s start with the first
step—segmentation.
process.
(pp. 184–185)
ISBN 1-256-36591-2
Check out chapter 7 Study Map on page 210
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
CHAPTER 7
Figure 7.1
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SH A RPEN TH E FOCUS
185
Process | Steps in the Target Marketing Process
Target marketing strategy consists of three separate steps. Marketers first divide the market into segments based on
customer characteristics, then select one or more segments, and finally develop products to meet the needs of those
specific segments.
1. Segmentation
Identify and
describe
market
segments
2
Step 1:
2. Targeting
Evaluate
segments and
decide which
to go after
3. Positioning
Develop a marketing
mix that will create
a competitive advantage
in the minds of the
selected target market
W
R
I
G
H
T
,
Segmentation
Segmentation is the process of dividing a larger market into smaller
S characteristics. This
pieces based on one or more meaningfully shared
Understand the need process is a way of life for almost all marketers
H in both consumer and
business-to-business
markets.
The
truth
is
that
you can’t please all the
for market
E
segmentation and the people all the time, so you need to take your best shot. Just how do marR the whole pie into
approaches available keters segment a population? How do they divide
smaller slices they can “digest”? The marketer must decide on one or
R
to do it.
more useful segmentation variables—that is, dimensions that divide
Y each with different
(pp. 185–198)
the total market into fairly homogeneous groups,
needs and preferences. In this section, we’ll take a look at this process, beginning with the
types of segmentation variables that marketers use to divide up end-user consumers. Then
2
we’ll move on to business-to-business segmentation.
OBJECTIVE
segmentation
The process of dividing a larger market into
smaller pieces based on one or more
meaningfully shared characteristics.
segmentation variables
Dimensions that divide the total market into
fairly homogeneous groups, each with different
needs and preferences.
ISBN 1-256-36591-2
7
Segment Consumer Markets
9
At one time, it was sufficient to divide the sports shoe market into3athletes and nonathletes.
But take a walk through any sporting goods store today: You’ll quickly see that the athlete
B
market has fragmented in many directions. Shoes designed for jogging, basketball, tennis,
Uaisles.
cycling, cross training, and even skateboarding beckon us from the
During the late 1990s Converse began falling well behind its competitors such as
Reebok and Nike, which successfully targeted the younger demographic as they tied their
shoes (pun intended!) to popular athletes who acted as marketing machines for the brands.
Converse needed to find a way to appeal to the younger generation as well. More specifically, the marketers at Converse (which Nike acquired in 2003) wanted to target Generation Y—
people born between 1979 and 1994.1 They found their stride when they reminded these
consumers that cultural icons they admired like Kurt Cobain and Jackson Pollock once wore
Converse shoes. These messages appealed to Gen Y “optimistic rebels” who were looking
for a “blank canvas for self-expression.”2
We need several segmentation variables if we want to slice up the market for all the
shoe variations available today. First, not everyone is willing or able to drop $150 on the
latest sneakers, so marketers consider income. Second, men may be more interested in
Generation Y
The group of consumers born between 1979
and 1994.
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
186
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Snapshot |
Segmenting Consumer Markets
Segmenting
Consumer
Markets
Figure 7.2
Consumer markets can be segmented by
demographic, psychographic, or
behavioral criteria.
Demographics
Psychographics
Behavior
• Age
• Gender
• Family life cycle
• Income and social class
• Ethnicity
• Place of residence
(geography)
demographics
Statistics that measure observable aspects of a
population, including size, age, gender, ethnic
group, income, education, occupation, and
family structure.
generational marketing
Marketing to members of a generation, who
tend to share the same outlook and priorities.
W
R
basketball shoes while women snap up the latest Pilates styles, so marketers also consider
I groups are equally interested in buying specialized athletic
gender. Because not all age
shoes, we can slice the larger
G consumer “pie” into smaller pieces in a number of ways, including demographic, psychographic, and behavioral differences. In the case of demoH
graphic segmentation there are several key subcategories of demographics: age (including
generational differences), T
gender, family life cycle, income and social class, ethnicity, and
place of residence, sometimes
, referred to separately as geographic segmentation. Figure 7.2
summarizes the various approaches to segmenting consumer markets.
In the sections that follow we’ll consider each of these segmentation approaches in
Scaution. When it comes to marketing to some groups—in particuturn, but first a note of
lar, lower income individuals,
the poorly educated, non-native language speakers, and
H
children—it is incumbent on marketers to exercise the utmost care not to take undue adE
vantage of their circumstances. Ethical marketers are sensitive to the different conditions
in which people findR
themselves and proactively work to uphold a high level of honesty
and trust with all segments
R of the public. Doing so is nothing short of marketing’s social
responsibility.
Y
AFP/Getty Images
Segment by Demographics: Age
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
ISBN 1-256-36591-2
Apple is a masterful marketer to teens, yet its product line
appeals to other age groups as well. The iPod in its various
forms enables teens to be content creators and empowers
them to be masters of their own music world. This satisfies a
strong need among this age group for individuality. The
iPhone is coveted by youth as the smartphone du jour—any
other brand is viewed as subpar. Teens don’t particularly like
to be marketed to, which is a great fit for Apple’s approach of
letting fans and the media do their marketing for them. The
iPod and iPhone are iconic symbols of modern youth—
stylish, nonconforming, and an expression of a clear difference from the past.
As we stated in Chapter
2 3, demographics are statistics that measure observable aspects of a population, including size, age, gender, ethnic group, income, education, oc7
cupation, and family structure. These descriptors are vital to identify the best
potential customers9
for a good or service. Because they represent objective characteristics, they usually are
3 easy to identify, and then it’s just a matter of tailoring messages
and products to relevant groups. Let’s take a quick look at how marketers use each of
B
these dimensions to slice up the consumer pie.
U
Consumers of different
age groups have different needs and wants. Members of
a generation tend to share the same outlook and priorities. We call such a focus
generational marketing.
As Jim Multari’s experience with Sprout TV programming shows, children are an
attractive age segment for many marketers. Although kids obviously have a lot to say
about purchases of toys and games, they influence other family purchases as well (just
watch them at work in the grocery store!). By one estimate, American children aged 4
to 12 have a say in family-related purchases of more than $130 billion a year.3 The ongoing popularity of shows such as Disney’s Hannah Montana propelled Miley Cyrus
into a wildly successful singing career and has also successfully translated into a
booming toy business including blond wigs, replicas of Hannah’s tour van, and even
toy musical instruments. The music on the show has spawned several new musical
acts—including the Jonas Brothers—and sold millions of CDs and tens of millions of
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SH A RPEN TH E FOCUS
187
downloads. The younger girl market segment loves the idea of being a pop
star, and the girls live their dream vicariously through Hannah as well as
American Idol and the High School Musical movie series, which lives on, immortal even though its stars are now all twenty-somethings.4
Teens are also an attractive market segment. The 12- to 17-year-old age
group is growing nearly twice as fast as the general population—and teens
and tweens (kids between the ages of 8 and 14) spend an average of $3,000
per year.5 Much of this money goes toward “feel-good” products: cosmetics,
posters, and fast food—with the occasional tattoo thrown in as well. Because
they are so interested in many different products and have the resources to
obtain them, many marketers avidly court the teen market.6
As we said, Generation Y consists of people born between the years 1979
and 1994. Sometimes labeled the “baby boomlet,” Generation Y is made up
W
of the 71 million children of the baby boomers.7 They are the first generation
to grow up online and are more ethnically diverse than earlier generations.
R
Generation Y is an attractive market for a host of consumer products because
I
of its size (approximately 26 percent of the population) and free-spending
nature—as a group they spend about $200 billion annually.
G
But Generation Y consumers are also hard to reach because they resist
H
reading and increasingly turn off the TV. When they do watch TV, they tend
T which
toward alternative fare such as the late-night lineup on Adult Swim,
is consistently the number-one show on basic cable for this age
, group—
outperforming even the Late Show with David Letterman with young men.8 As
a result, many marketers have had to develop other ways to reach this genS chat
eration “where they live,” including through social networking, online
rooms, e-mail promotions, and a variety of other new-age marketing
H com- This Israeli skincare product targets adolescents.
munications techniques we’ll talk about later in this book.
E
As a snapshot on Gen Y values, a recent Pew Research Center study asked
Gen Y respondents whether a variety of elements are one of the mostR
important things in their
lives. Results revealed “Being a good parent” (52 percent), “Having
R a successful marriage”
(30 percent), “Helping others in need” (21 percent), “Owning a home” (20 percent), “Living a
Y
very religious life” (15 percent), “Having a high-paying career “(15 percent), “Having lots of
free time (9 percent), and “Becoming famous” (1 percent). Among other Gen Y tidbits: 38 percent have a tattoo, and half of those have two to five, but 72 percent
2say their tats are hidden
by clothing; 41 percent use only a cell phone and have no landline; and 66 percent voted for
7
Barack Obama for president in 2008, compared with 50 percent of those 30 and older—the
largest disparity between younger and older voters in four decades9of exit polling. They also
vote at a rate higher than did other generations at their age.9
3
The Cutting Edge
ISBN 1-256-36591-2
Ford Fiesta Looks for Gen Y “Where They Live”
Ford’s Fiesta launched in the United States in 2010, but a year earlier the company gave away 100 of the cars to influential Gen Y’s in the hope of building
some buzz from the ground up.The “recruitment call” went out for 100 “agents”
to receive the car in April 2009, complete Ford-assigned “missions,” and chronicle their experiences through their social networks such as Facebook, Flickr, and
YouTube. The company has dubbed this effort its “Fiesta Movement,” and it’s
the anchor of a plan to build excitement and spread the word about the arrival of the new Ford Fiesta to the next generation of customers—clearly
strong targets for this economy-priced vehicle. Sam De La Garza, small car marketing manager for Ford, says, “Socially vibrant campaigns are so important be-
B
U
cause of their power in delivering authentic and genuine messages across a
broad spectrum of media, which will only help us deliver a more positive consumer experience when the car launches in the U.S. next year.”
The company set up a Web site where people could upload a two- to-five-minute
video to explain why they want to become one of the agents. By 2010, Gen Y will
account for 28 percent of the country’s driving population (a total of 70 million new
drivers).The movement gives the company an opportunity to connect with the group
before they have established brand loyalty, while Ford also appeals to their affinity
for social networking and technology. Using social networking as a way to reach
Gen Y is a sound strategy, provided that the company is upfront about its relationship with the agents and is willing to let them craft the message as they see fit.10
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
Courtesy of Shalmor Avnon Amichay/Young & Republican
CHAPTER 7
Courtesy of DeveloPlus, Inc
188
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Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
ISBN 1-256-36591-2
The group of consumers born between 1965 and 1978 consists of 46 million Americans known as Generation X, who unfortunately and undeservedly came to be called slackers, or busters (for the “baby bust” that
followed the “baby boom”). Many of these people have a cynical attitude toward marketing—a chapter in a famous book called Generation X is entitled
“I am not a target market!”11 As one 20-year-old Japanese Xer commented, “I
don’t like to be told what’s trendy. I can make up my own mind.”12
Despite this tough reputation, members of Generation X, the oldest of
whom are now in their late 40s, have mellowed with age. In retrospect, they also
have developed an identity for being an entrepreneurial group. One study revealed that Xers are already responsible for 70 percent of new start-up businesses
in the United States—they led much of the modern technology revolution and
are now highly sought after by firms for their entrepreneurial talents. An industry expert W
observed, “Today’s Gen Xer is both values-oriented and value13
oriented. This
R generation is really about settling down.” Many people in this
segment seem to be determined to have stable families after being latchkey chilI Seven out of ten regularly save some portion of their income, a
dren themselves.
rate comparable
G to that of their parents. Xers tend to view the home as an expression of individuality rather than material success. More than half are involved
H
in home improvement and repair projects.14 So much for Gen Xers as slackers!
T
Baby boomers
, consumers born between 1946 and 1964 and who are
now in their
, 40s, 50s, and 60s, are an important segment to many marketers—
if for no other reason than that there are so many of them who make a lot of
Boomers are willing to invest a ton of money, time, and energy to
money. The baby boom occurred when soldiers came flooding home after
maintain their youthful image
World WarS
II and there was a rush to get married and start families. Back in
the 1950s and
H 1960s, couples started having children younger and had more
of them than the previous generation. The resulting glut of kids really changed the infraGeneration X
E
The group of consumers born between 1965
structure of the country: more single-family houses, more schools, migration to the suburbs,
and 1978.
R
and so on.
baby boomers
One aspect of boomers
Rmarketers should always remember—they never age. At least,
The segment of people born between 1946
that’s the way they look at it. Boomers are willing to invest a ton of money, time, and energy
Y
and 1964.
to maintain their youthful image. For the past several years the show Nip/Tuck on FX has
metrosexual
chronicled the experiences of two cosmetic surgeons in Los Angeles, baby boomers themA straight, urban male who is keenly interested
selves, who crassly market2their surgical fountain of youth to a seemingly endless stream of
in fashion, home design, gourmet cooking, and
50-somethings with whom they begin the patient consult by asking, “Tell us what you don’t
personal care.
7
like about yourself.” Other boomer-appealing TV fare includes Cougar Town, in which
9 a bit since her starring role on Friends, now trolls for younger
Courtney Cox, who has aged
men, and Lost’s cosmic-philosophical
commentary on life, age, and other ultimate questions
3
of the universe, which ended in 2010 with a five-hour reveal-all finale that proved to be a
B
ratings blockbuster with Boomers. Time Warner even formed a separate unit to publish
U Parenting, and Cooking Light, that specifically address baby
magazines, including Health,
boomers’ interests in staying young, healthy, and (relatively) sane.
Currently, there are nearly 40 million Americans aged 65 or older—a 22 percent increase in this age segment since 1990.15 Many mature consumers enjoy leisure time and continued good health. Indeed, a key question today is: Just what is a senior citizen when
people live longer and “80 is the new 60”? As we will see later in the chapter, perhaps it
isn’t age but rather lifestyle factors, including mobility, that best define this group. More
and more marketers offer products that have strong appeal to active-lifestyle seniors. And
they often combine the product appeal with a nostalgia theme that includes music popular
during the seniors’ era of youth. People tend to prefer music that was released when they
were teenagers or young adults, with interest peaking between ages 24–25. Sandals Resorts
uses the song “(I’ve Had) The Time of My Life” in commercials for its romantic vacation destinations in the Caribbean. The song, recorded by Bill Medley and Jennifer Warnes, was
CHAPTER 7
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made famous in the 1987 movie Dirty Dancing. As nostalgia, it does double
duty because the movie itself was set in 1963, so it conjures up memories of
both the 1980s and the 1960s. People who were in their 20s in 1963 are now
in their 60s and 70s. Those in their 20s in 1987 are now in their 40s and 50s.
Both age groups are key demographics for Sandals.16
Many products, from fragrances to footwear, specifically appeal to men or
women. Segmenting by gender starts at a very early age—even diapers come
in pink for girls and blue for boys. As proof that consumers take these differences seriously, market researchers report that most parents refuse to put
male infants in pink diapers.17
In some cases, manufacturers develop parallel products to appeal to
each sex. For example, male grooming products have traditionally
W been
Gillette’s priority since the company’s founder King Gillette (yes, his first
R
name was actually King) introduced the safety razor in 1903.
Metrosexual is a marketing buzzword that gained popularityI in recent
years. The term describes a straight, urban man who is keenly interested
G in fashion, home design, gourmet cooking, and personal care. Metrosexuals are usuH
ally well-educated urban dwellers who are in touch with their feminine side.18
T there’s
While many men are reluctant to overtly identify with the metrosexual,
no denying that a renewed interest in personal care products, fashion
, accessories, and other “formerly feminine” product categories creates many marketing opportunities. Mainstream newspapers such as the New York Times offer
S posting
regular segments dedicated to male fashion and grooming. This Web
19
from The Urban Dictionary sums up the metrosexual stereotype.
H
You might be “metrosexual” if:
Consumers Cellular, Inc. Ad appeared in AARP The Bulletin Fall 2009
Segment by Demographics: Gender
A phone with a feature adapted specifically to the needs of mature
callers.
E
R
purchase.
R
You own 20 pairs of shoes, half a dozen pairs of sunglasses, just as many
Y
watches, and you carry a man-purse.
1. You just can’t walk past a Banana Republic store without making a
2.
3. You see a stylist instead of a barber, because barbers don’t do highlights.
2
7
for breakfast . . . all from scratch.
9
You only wear Calvin Klein boxer-briefs.
3
You shave more than just your face. You also exfoliate and moisturize.
B
You would never, ever own a pickup truck.
U
4. You can make her lamb shanks and risotto for dinner and eggs Benedict
5.
6.
7.
8. You can’t imagine a day without hair styling products.
9. You’d rather drink wine than beer . . . but you’ll find out what estate and
vintage first.
find the thought of actually getting intimate with another man truly
repulsive.
An interesting trend related to gender segmentation has been fueled by
the recent recession. Men now are increasingly likely to marry wives with
more education and income than they have, and the reverse is true for
women. In recent decades, with the rise of well-paid working wives, the economic gains of marriage have been a greater benefit for men. The education
Courtesy of Procter & Gamble
ISBN 1-256-36591-2
10. Despite being flattered (even proud) that gay guys hit on you, you still
Personal care products typically appeal to one gender exclusively.
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
190
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and income gap has grown even more in the latest recession, when men held about three in
four of the jobs that were lost. In 1970, 28 percent of wives had husbands who were better
educated, and 20 percent were married to men with less education. By 2007, the comparable figures were 19 percent and 28 percent. In 1970, 4 percent of husbands had wives who
made more money; in 2007, 22 percent did.20
Segment by Demographics: Family Life Cycle
Because family needs and expenditures change over time, one way to segment consumers
is to consider the stage of the family life cycle they occupy. (You learned about the family life
cycle in Chapter 5.) Not surprisingly, consumers in different life-cycle segments are unlikely
to need the same products, or at least they may not need these things in the same quantities.
Folger’s Classic Roast Coffee Singles are designed for people who live alone and don’t need
to brew a full pot of coffee at a time, while Marriott and other hoteliers actively market vaW
cation ownership (timeshare) opportunities to young couples—because these consumers
R to their changing lifestyles and preferences since they tend
can easily tailor these getaways
to not want to do the sameI trip year after year as many of their parents did.
But not all attempts at marketing to the family life cycle succeed. Gerber once tried to
G
market single-serving food jars to singles; a quick meal for one person who lives alone. The
manufacturer called theseHcontainers “Singles.” However, Gerber’s strong identification
with baby food worked against
T it: The product flopped because people misperceived that
Gerber was trying to sell baby food to adults.21
,
As families age and move into new life stages, different product categories ascend and
descend in importance. Young bachelors and newlyweds are the most likely to exercise, go
to bars and movies, and consume
alcohol (in other words, party while you can). Older couS
ples and bachelors are more likely to use maintenance services. Seniors are a prime market
H
for resort condominiums and golf products. Marketers need to identify the family life-cycle
E
segment of their target consumers
by examining purchase data by family life-cycle group.
Cultural changes continually
create
new opportunities as people’s roles change. For exR
ample, Boomer women in their 50s are a hot new market for what the auto industry calls
R
“reward cars”: sexy and extravagant vehicles. These buyers say that for years they had let
Y restrict them to minivans or stodgy family sedans. As their kids
the roles of wife and mother
grow up and leave home, it’s reward time. As one woman who bought a snazzy Mercedes
convertible for herself stated, “I don’t have the disease to please anymore . . . I’m pleasing
2 registration records show that the number of women over age
me.” She’s not alone. Vehicle
45 who purchased cars in 7
the niche known as “mid-sized sporty,” which includes two-door
9models like the Mazda RX-8 and the Chrysler Crossfire, is up
277 percent since 2000. Among women 45 and over earning at
3least $100,000, smaller luxury cars like the BMW 3 Series and the
BAudi A4 are up 93 percent.22
U
A South African ad for a TV show speaks to kids.
The distribution of wealth is of great interest to marketers because it determines which groups have the greatest buying
power. It should come as no surprise that many marketers yearn
to capture the hearts and wallets of high-income consumers.
Perhaps that explains a recent proliferation of ultra-high-end
bottled waters such as Voss—which bills itself as extracted from
a real Norwegian glacier. To taste this delicacy in gourmet
restaurants and mini-bars of top hotels, expect to pay well over
$10 a bottle. Tap water, anybody?23 At the same time, other marketers target lower-income consumers (defined as households
with annual incomes of $25,000 or less), who make up about
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
ISBN 1-256-36591-2
Courtesy of FOXP2
Segment by Demographics: Income and Social Class
CHAPTER 7
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191
40 percent of the U.S. market. Stores such as Sam’s Club and Costco sell generic bottled water in flats of 24 bottles for less than 50 cents per bottle! Baby Boomers in particular lost a big
chunk of their retirement savings in just a few months during the financial “meltdown” of
2008–2009. Although the stock market came back to a degree, Boomers are increasingly
cautious about spending their present income at prerecession levels. Much evidence
exists that they are down-shopping—that is, Walmart can look much more palatable to upscale Boomers when 40 percent of their retirement nest egg has gone up in smoke.
After a 50-year run during which the truly wealthy just kept getting richer, the Great
Recession has taken some of the wind out of their sails due to heavy investment losses. Just
how much poorer the rich will ultimately end up is unclear. Any major shift in the financial
status of the rich could have big implications for some marketers. For example, a drop in
their income and wealth would complicate life for elite universities, museums, and other institutions that received lavish donations in recent decades. Governments—federal and
Wby the affluent.24 Housestate—could struggle, too, because they rely heavily on the taxes paid
holds making $100,000 or more certainly do not in most cases comeR
close to being part of that
“truly wealthy” crowd, but if a recovery is to come, particularly in consumer spending, it will
I
have to come from households making $100,000 or more. They represent
only 20 percent of
U.S. households, but they control more than half of all income and
G are far less likely than
everyone else to be restrained by tight credit markets. On average, the affluent are 2.6 times
H
more likely to buy everything, and when they do, they spend 3.7 times more.25
T segments, such as upper
In the past, it was popular for marketers to consider social class
class, middle class, and lower class. However, many consumers do not
, buy according to where
they actually fall in that framework, but rather according to the image they wish to portray. For
example, over the years readily available credit has facilitated many a sale of a BMW to a consumer whose income doesn’t easily support the steep price tag. TheS
recent financial crisis also
nipped a good portion of this free-flowing credit in the bud. It remains
H to be seen over the long
run how much the new austere era of credit permanently changes consumer buying behavior.
especially when they invoke outmoded stereotypes to appeal to consumers of diverse races and ethnic groups.
2
African Americans, Asian Americans, and Hispanic Americans are the
7
largest ethnic groups in the United States. The Census Bureau projects that
by the year 2050, non-Hispanic whites will make up just less than 50 9
percent
of the population (compared to 74 percent in 1995) as these other3
groups
grow. Let’s take a closer look at each of these important ethnic segments.
B
African Americans account for about 12 percent of the U.S. population.
U conThis percentage has held steady for 20 years. Reflecting the growing
sumer power fueled by the hip-hop and urban scene, magazines such as The
Source and Vibe target this market.26 Television shows that feature African
American heroes and heroines, unheard of until the late 1960s, are commonplace today, and BET is an advertising force to be reckoned with. In many
cities, urban-sound radio stations are among the elite few in audience ratings.
These media examples demonstrate the opportunities that await those
who develop specialized products to connect with segments of consumers
who share an ethnic or racial identity. And what had been the original rap
culture has migrated from the inner-city streets to mainstream hip-hop clubs,
creating substantial opportunities for marketers to parlay what started out as
an urban street trend among the African American community to a broader
cultural phenomenon that appeals to young people of many ethnicities.
AMBI® is a registered trademark of Johnson & Johnson. Used with permission.
ISBN 1-256-36591-2
E
Segment by Demographics: Ethnicity
R
A consumer’s national origin is often a strong indicator of his or her
R preferences for specific magazines or TV shows, foods, apparel, and leisure acY
tivities. Marketers need to be aware of these differences and sensitivities—
Products targeted to African Americans often appear in specialized media
like Ebony magazine.
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
192
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Though their numbers are still relatively small, Asian Americans are the fastest-growing
minority group in the United States. The Asian American population is projected to grow
from 11.3 million in 2000 to 19.6 million in 2020.27 The American advertising industry spends
between $200 million and $300 million to court these consumers.28 Ford set up a toll-free consumer hotline that it staffs with operators fluent in three Asian languages, and JCPenney
holds one-day sales in stores in Asian communities during certain holidays such as the Chinese Moon Festival.29 Wonder Bra even launched a special line it sized for the slimmer Asian
body.30
The Hispanic American population is the real sleeping giant, a segment that mainstream
marketers today actively cultivate. Hispanics have overtaken African Americans as the nation’s largest minority group. In the United States, Hispanics command well over $400 billion in purchasing power. In addition to its rapid growth, five other factors make the
Hispanic segment attractive to marketers:31
W
R
They tend to be highly concentrated by national origin, which makes it easy to fine-tune
the marketing mix toI appeal to those who come from the same country.
This segment is young
G(the median age of Hispanic Americans is 23.6, compared with
the U.S. average of 32), which is attractive to marketers because it is a great potential
H
market for youth-oriented products such as cosmetics and music.
T
The average Hispanic household contains 3.5 people, compared to only 2.7 people for
the rest of the United,States. For this reason, Hispanic households spend 15 to 20 per-
• Hispanics tend to be brand loyal, especially to products made in their country of origin.



cent more of their disposable income than the national average on groceries and other
household products.
S
• In general, Hispanic consumers are very receptive to relationship-building approaches to
H
marketing and selling. For this reason there are many opportunities to build loyalty to
brands and companiesEby emphasizing relationship aspects of the customer encounter.32
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
ISBN 1-256-36591-2
cultural diversity
A management practice that actively seeks to
include people of different sexes, races, ethnic
groups, and religions in an organization’s
employees, customers, suppliers, and distribution
channel partners.
R appeals to Hispanic consumers need to take into account culAs with any ethnic group,
tural differences. For example,
R Hispanics didn’t appreciate the successful “Got Milk?” campaign because biting, sarcastic humor is not part of their culture. In addition, the notion of
Y
milk deprivation is not funny to a Hispanic mother—if she runs out of milk, this means she
has failed her family. To make matters worse, “Got Milk?” translates as “Are You Lactating?”
in Spanish. Thus, new Spanish-language
versions were changed to “And you, have you
2
given them enough milk today?” with tender scenes centered on cooking flan (a popular
7
pudding) in the family kitchen.
9 mainstream culture. Many of these consumers are “young
Latino youth are changing
biculturals” who bounce back
3 and forth between hip-hop and rock en Español, blend Mexican rice with spaghetti sauce, and spread peanut butter and jelly on tortillas. By the year 2020,
B
the Census Bureau estimates, the number of Hispanic teens will grow by 62 percent, comU in teens overall. They seek spirituality, stronger family ties, and
pared with 10 percent growth
more color in their lives—three hallmarks of Latino culture. Music crossovers from the Latin
charts to mainstream lead the trend, including pop idols Shakira and Enrique Iglesias, and Reggaeton sensation Daddy Yankee.
One caution about the Hispanic market is that the term Hispanic itself is a misnomer.
For example, Cuban Americans, Mexican Americans, and Puerto Ricans may share a common language, but their history, politics, and culture have many differences. Marketing to
them as though they are a homogeneous segment can be a big mistake. However, the term
is still widely used as a demographic descriptive.
An important outcome of the increase in multiethnicity in the United States is the opportunity for increased cultural diversity in the workplace and elsewhere. Cultural diversity,
a management practice that actively seeks to include people of different sexes, races, ethnic
groups, and religions in an organization’s employees, customers, suppliers, and distribu-
CHAPTER 7
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193
tion channel partners, is today business as usual rather than an exception. Marketing organizations benefit from employing people of all kinds because they bring different backgrounds, experiences, and points of view that help the firm develop strategies for its brands
that will appeal to diverse customer groups.
Segment by Demographics: Place of Residence
Recognizing that people’s preferences often vary depending on where they live, many marketers tailor their offerings to geographic regions. Pabst Brewing Company pushes different
brands of beer in different parts of the country, so drinkers in Texas buy the company’s Lone
Star and Pearl brands, while those in other states buy Old Milwaukee, Olympia, and Stroh’s.
When marketers want to segment regional markets even more precisely, they sometimes combine geography with demographics using the technique of geodemography. A
basic assumption of geodemography is that “birds of a feather flock together”—people who
W
live near one another share similar characteristics. Sophisticated statistical techniques idenR items, magazines, and
tify geographic areas that share the same preferences for household
other products. This lets marketers construct segments of households
I with a common pattern of preferences. This way they can hone in on those customers most likely to be interG
ested in its specific offerings, in some cases so precisely that families living on one block will
H
belong to a segment while those on the next block will not.
Companies can even customize Web advertising by geocoding
T so that people who log
on in different places will see ad banners for local businesses. For example, the Weather
,
Channel links localized ads to 1,300 U.S. weather-reporting stations. A surfer can get both
the local weather forecast and information about businesses in an area by simply typing a
city and state, or an airport code, into the forecast request box. S
One widely used geodemographic system is PRIZM, which is a large database develH
oped by Nielsen Claritas. This system classifies the U.S. population into 66 segments based
E education and houseon various socioeconomic data, such as income, age, race, occupation,
hold composition, as well as lifestyle attributes that are criticalRto marketing strategies,
shopping patterns such as where they vacation, what they drive and their favorite brands,
R
and media preferences.
The 66 segments range from the highly affluent “Upper Crust”
Y and “Blue Blood Estates” to the lower income “Big City Blues or “Low-Rise Living” neighborhoods. To learn
about how the system classifies your ZIP code, visit www.mybestsegments.com.
2 younger consumers
Here are a few thumbnail sketches of different segments of relatively
a marketer might want to reach depending on the specific product 7
or service he or she sells:
geodemography
A segmentation technique that combines
geography with demographics.
geocoding
Customizing Web advertising so that people
who log on in different places will see ad
banners for local businesses.
ISBN 1-256-36591-2
9
• Young Digerati are tech-savvy and live in fashionable neighborhoods
on the urban
fringe. Affluent, highly educated, and ethnically mixed, Young
Digerati
communities
3
are typically filled with trendy apartments and condos, fitness clubs and clothing bouB
tiques, casual restaurants and all types of bars—from juice to coffee to microbrew. The
U consumer to shop at
Young Digerati are much more likely than the average American
Banana Republic, order from J. Crew, read Elle Decor magazine, watch the Independent
Film Channel, and drive a Range Rover SUV.
• Kids & Cul-de-Sacs are upper-middle class, suburban, married couples with children.
With a high rate of Hispanic and Asian Americans, this segment is a refuge for collegeeducated, white-collar professionals with administrative jobs and upper-middle-class
incomes. Their nexus of education, affluence, and children translates into large outlays
for child-centered products and services. They are much more likely than the average
American consumer to shop at The Disney Store, eat at Chuck E. Cheese, read parenting magazines, watch Nickelodeon, and drive a Nissan Armada SUV.
• Shotguns & Pickups scores near the top of all lifestyles for owning hunting rifles and
pickup trucks. These Americans tend to be young, working-class couples with large
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
194
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Other examples of PRIZM clusters are fully described in the Segment Lookup feature at www
.mybestsegments.com.
W
R
I
Over the years, Harley-Davidson has done a great job of understanding buyers on the basis of
psychographics. A Harley user’s profile includes both thrill-seeking and affinity for a countercultural
G
image (at least on weekends). In fact, your doctor, banker, lawyer, or even marketing professor may be a
H the past
member of HOG (the Harley Owners Group). However, demographics also come into play. Over
decade, the age of the typical Harley buyer has risen to about 46, older than the motorcycle industry
T
average of 38. But because the company knows the psychographics of its target buyers, it isn’t lulled into
age stereotypes of safety and conservatism. Harley-Davidson knows that in spite of the older,age
Segment by Psychographics
Demographic information is useful, but it does not
always provide enough information to divide consumers into meaningful segments. Although we can
use demographic variables to discover, for example,
that the female college student segment uses perfume, we won’t be able to tell whether certain college women prefer perfumes that express an image
of, say, sexiness rather than athleticism.
demographic, its buyers are still a thrill-seeking bunch (they may just need a little more time and some
As we said in Chapter 5, psychographics segaspirin to recover after a long ride).
ments consumers in terms of psychological and beS
havioral similarities such as shared activities,
interests, and opinions, or AIOs.33 Marketers often
H
develop profiles of the typical customers they desire to paint a more vivid picture of them.
E
For example, in 2010 Buick’s marketers named their target consumers Greg and Laurie Robbins. They R
say they’re in their early 40s with two kids and together, they make
$130,000 a R
year and live in a $363,000 house. They are Facebook fans of Target, Starbucks, Apple, J. Crew, Whole Foods, and the Westin. This (fictional)
Y
couple is younger than Buick’s current user and their interests extend beyond
the golf course, which is where many older Buick drivers spend their time. To
woo them,2
the company is cutting back on ads in golf magazines and instead
promoting Buick in culinary- and travel-related venues and on The Wall Street
7
Journal’s iPad application. The goal of this psychographic exercise: Put a
9Robbins’s garage where a Lexus is probably parked now.34
Buick in the
Although
3 some advertising agencies and manufacturers develop their
own psychographic techniques to classify consumers, other agencies subB
scribe to services that divide the entire U.S. population into segments and
U of this information to clients for specific strategic applicathen sell pieces
tions. The best known of these systems is VALS™ (Values and Lifestyles). The
original VALS™ system was based on social values and lifestyles. Today,
VALS™ is based on psychological traits that correlate with consumer behavior. If you go to www.strategicbusinessinsights.com and click on
“VALS™ Survey” you can complete a brief, free questionnaire to find out
your own VALS™ type (you might be surprised). VALS™ divides U.S.
adults into eight groups according to what drives them psychologically as
well as by their economic resources.
As
Figure 7.3 shows, three primary consumer motivations are key to
the system: ideals, achievement, and self-expression. Consumers who are motivated primarily by ideals are guided by knowledge and principles. Consumers
Toyota targets consumers who prioritize environmental issues (as well as
who are motivated primarily by achievement look for goods and services that
gas savings) with the Prius hybrid vehicle.
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
ISBN 1-256-36591-2
Courtesy of Chiqusa Mares, Advertising and Planning
Digital enhancement portrait of mature bike couple
families—more than half have two or more kids—
living in small homes and manufactured housing.
Nearly a third of residents live in mobile homes,
more than anywhere else in the nation. They are
much more likely than the average American consumer to own a tent, go to auto races, read North
American Hunter magazine, watch Country Music
TV, and drive a Dodge Ram.
CHAPTER 7
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Figure 7.3
195
Snapshot | VALS™
Framework
VALS™ Framework
INNOVATORS
High Resources
High Innovation
VALS™ uses psychological characteristics to
segment the U.S. market into eight unique
consumer groups.
Source: Strategic Business Insights (SBI);
www.strategicbusiness insights.com/VALS
Primary Motivation
Ideals
Achievement
Self-Expression
THINKERS
ACHIEVERS
EXPERIENCERS
BELIEVERS
STRIVERS
W
R
I
G
H
MAKERS
T
,
ISBN 1-256-36591-2
S
Resources
HLow
Low Innovation
E
SURVIVORS
R
R
Y
demonstrate success to their peers. And consumers who are motivated primarily by selfexpression desire social or physical activity, variety, and risk.
VALS™ helps match products to particular types of people. For
2example, VALS™ survey
data show that 12 percent of American adults (many of whom are on the younger side) are
7
Experiencers who tend to be thrill seekers. VALS™ helped Isuzu market its Rodeo sport-utility vehicle by targeting Experiencers who believe it’s fun to break9rules. The company and
its advertising agency promoted the car as a vehicle that lets a driver
3 break the rules by going off-road. One ad showed a kid jumping in mud puddles after his mother went to great
B
lengths to keep him clean. Another ad showed a schoolchild scribbling outside the lines
U the lines. Isuzu sales
after the teacher made a big deal about coloring carefully within
increased significantly after this campaign, and the company recently introduced a worthy
next-generation SUV called the Ascender.35
As another example of a psychographic segmentation system developed for the luxury
car market, German research firm Sigma categorized consumers in a way that inspired
BMW’s highly publicized product line reinvention and expansion. This system included
“upper liberals” (socially conscious, open-minded professionals who prefer the roominess
and flexibility of SUVs), “postmoderns” (high-earning innovators like architects, entrepreneurs, and artists who like the individualistic statements made by driving convertibles
and roadsters), “upper conservatives” (made up of wealthy, traditional thinkers who like
upper-crust, traditional sedans), and “modern mainstream” (family-oriented up-and-comers
who want a luxury brand but likely can’t afford more than the lowest-end model). Using
this segmentation scheme as an anchor, BMW created vehicles for each category and added
psychographics
The use of psychological, sociological, and
anthropological factors to construct market
segments.
VALS™ (Values and Lifestyles)
A psychographic system that divides the entire
U.S. population into eight segments.
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
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to its success with multiple segments by acquiring Rolls-Royce and the Mini to serve the extreme ends.36
Finally, the recent economic recession sparked the identification of four distinct consumer psychographic segments as consumers emerge from the bad economy. Marketing
strategy and research firm Decitica labels these segments as follows: (1) Steadfast Frugalists,
(2) Involuntary Penny-Pinchers, (3) Pragmatic Spenders, and (4) Apathetic Materialists.
These categories were derived by analyzing the frequency, satisfaction, and self-efficacy
associated with a variety of spending, purchase, and consumption behaviors. Steadfast
Frugalists are committed to self-restraint, engaging in prudence with unequivocal enthusiasm. They make up about one-fifth of the American consumers, representing all income
and age groups. This group could be quite challenging, as they are the least brand loyal
and most likely to discount marketing messages. Consider how these psychographic segments differ:
W
• Eighty percent of Steadfast Frugalists say the new behaviors they have adopted will
R
likely stay with them for a long time. This is in contrast to 24 percent of Apathetic Materialists who feel thisI way.
G
• Involuntary Penny-Pinchers,
about 29 percent of the population, have been severely
affected by the recession.
H They are mainly made up of households with less than
$50,000 in income, with more women than men. This segment has been forced to emT
brace thrift like never before. Presently, their actual behaviors do not differ widely
, Frugalists. Where they drastically diverge is in their aversion
from those of Steadfast
to expending effort in money-saving strategies. Only 17 percent find buying store or
generic labels to be satisfying, compared to 59 percent of Steadfast Frugalists. Also, the
S
recession has had a heavy emotional impact on Involuntary Penny-Pinchers; they adH (77 percent), stressed (81 percent), and worried (87 percent)
mit to being more scared
about the future thanE
other groups.
• Pragmatic Spenders R
are the most attractive group for marketers because of their
higher spending power. Although it is true that they have also curbed their spending,
R
they are the most capable, both psychologically and financially, to willfully resurrect
Y
their past spending patterns.
This group comprises 29 percent of consumers. Income
has blunted the effects of the recession on this segment. Only 28 percent of Pragmatic
Spenders feel the recession has changed what and how they will buy in the future,
2
compared to 55 percent of Steadfast Frugalists.
7
• Apathetic Materialists seem least changed by the recession. They have not embraced
9 same extent as others and get minimal satisfaction from such
the new frugality to the
behaviors. Only about36 percent in this group find price comparison to be satisfying, in
contrast to 85 percent in the Steadfast Frugalists camp. The Apathetic Materialists segB
ment has more men (55 percent) and younger consumers (72 percent are below the age
U driven by price: Only 8 percent admit to being very focused on
of 40). They are the least
value compared to 30 percent of Pragmatic Spenders and 52 percent of Involuntary
Penny-Pinchers.37
Segment by Behavior
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
ISBN 1-256-36591-2
behavioral segmentation
A technique that divides consumers into
segments on the basis of how they act toward,
feel about, or use a good or service.
People may use the same product for different reasons, on different occasions, and in different amounts. So, in addition to demographics and psychographics, it is useful to study what
consumers actually do with a product. Behavioral segmentation slices consumer segments
on the basis of how they act toward, feel about, or use a product. One way to segment based
on behavior is to divide the market into users and nonusers of a product. Then marketers
may attempt to reward current users or try to win over new ones. In addition to distinguishing between users and nonusers, marketers can describe current customers as heavy, mod-
CHAPTER 7
ISBN 1-256-36591-2
Segment Business-to-Business
Markets
We’ve reviewed the segmentation variables marketers use to divide up the consumer pie, but how
about all those business-to-business marketers out
there? Adding to what we learned about business
markets in Chapter 6, it’s important to know that
SH A RPEN TH E FOCUS
197
80/20 rule
A marketing rule of thumb that 20 percent of
purchasers account for 80 percent of a product’s
sales.
long tail
A new approach to segmentation based on the
idea that companies can make money by selling
small amounts of items that only a few people
want, provided they sell enough different items.
usage occasions
An indicator used in behavioral market
segmentation based on when consumers use a
product most.
The Biltmore Estate in Asheville, North Carolina, increased attendance during its annual Christmas
celebration as part of a strategy to segment by usage occasion. Set on 8,000 acres and featuring four
acres of lavishly decorated floor space under one roof, the Biltmore is the largest private home in
America. Although more than 750,000 people typically visit the house annually, several years ago
attendance was starting to stagnate. Then the estate’s marketers mixed things up; they developed four
separate strategies to target different types of visitors—heavy users such as those who have made a
Christmas pilgrimage an annual family tradition versus light users who have visited only once. Each
segment received a different invitation that included a customized package calculated to appeal to that
segment. As a result, visits increased by 300 percent in one season, resulting in a merry Christmas for
the Biltmore.
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
B. Anthony Stewart/National Geographics/Getty Images
erate, and light users. They often do this according to a rule of thumb we call the 80/20 rule:
20 percent of purchasers account for 80 percent of the product’s sales (the ratio is an approximation, not gospel). This rule means that it often makes more sense to focus on the smaller
number of people who are really into a product rather than on the larger number who are
just casual users. Kraft Foods began a $30 million campaign to remind its core users not to
“skip the zip” after its research showed that indeed 20 percent of U.S. households account
for 80 percent of the usage of Miracle Whip. Are you surprised to learn that in this product
category “heavy” users consume 17 pounds of Miracle Whip a year?38
While the 80/20 rule still holds in the majority of situations, the Internet’s ability to offer an unlimited choice of goods to billions of people has changed how marketers think about
segmentation. An approach called the long tail turns traditional thinking about the virtues of
selling in high volume on its head. The basic idea is that we need no longer rely solely on big
hits (like blockbuster movies or best-selling books) to find profits. Companies can also make
money when they sell small amounts of items that only a few W
people want—if they sell
enough different items. For example, Amazon.com maintains anRinventory of 3.7 million
books compared to the 100,000 or so you’ll find in a Barnes & Noble retail store. Most of these
I that Barnes & Noble
will sell only a few thousand copies (if that), but the 3.6 million books
doesn’t carry make up a quarter of Amazon’s revenues! Similarly, G
about a fifth of the videos
Netflix delivers to its customers are older or obscure titles rather than the blockbusters you’d
H
find at, well, Blockbuster (if there’s still a store in your neighborhood!). Blizzard’s World of
Warcraft’s massively multiplayer online game is another long tail.T
Instead of having to constantly release new sequels, Blizzard only has to release a few updates
, here and there. The
sheer volume of users and the game’s open world/do anything environment allows its users
to constantly keep it interesting at no additional development costs to Blizzard. Other examS that make money on
ples of the long tail include successful microbreweries and TV networks
39
reruns of old shows on channels like Nick at Night.
H
Another way to segment a market based on beE
havior is to look at usage occasions, or when conR
sumers use the product most. We associate many
products with specific occasions, whether time of day,
R
holidays, business functions, or casual get-togethers.
Y
Businesses often divide up their markets according to
when and how their offerings are in demand.
In a similar vein, Google enables its advertising
2
clients to target certain ads to certain segments of
7
search engine users based on data such as Google do9
main, query entered, IP address, and language preference. This way, companies can have Google
3
automatically sort and send the intended ad to certain
B
market segments. Thus, it is possible for advertisers
U
on Google to tailor their automatically targeted ads
based on seasonality—you will see more TurboTax
ads on Google pages during tax season, even if people aren’t querying tax software.40
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segmentation also helps them better understand their customers. Though the specific variables may differ, the underlying logic of classifying the larger market into manageable
pieces that share relevant characteristics is the same whether the product you sell is pesto or
pesticides.
Organizational demographics also help a business-to-business marketer to understand the
needs and characteristics of its potential customers. These classification dimensions include the
size of the firms, either in total sales or number of employees; the number of facilities, whether
they are a domestic or a multinational company, purchasing policies, and the type of business
they are in. Business-to-business markets may also be segmented on the basis of the production
technology they use and whether the customer is a user or a nonuser of the product.
Many industries use the North American Industry Classification System (NAICS) we
discussed in Chapter 6 to obtain information about the size and number of companies operating in a particular industry. Business-to-business marketers often consult information
sources on the Web. ForW
example, Hoovers Online (www.hoovers.com) provides subscribers with up-to-date information
on private and public companies worldwide.
R
3
OBJECTIVE
targeting
A strategy in which marketers evaluate the
attractiveness of each potential segment and
decide in which of these groups they will invest
resources to try to turn them into customers.
target market
The market segments on which an organization
focuses its marketing plan and toward which it
directs its marketing efforts.
Explain how
marketers evaluate
segments and choose
a targeting strategy.
(pp. 198–201)
I
G 2: Targeting
Step
H
We’ve seen that the first step in a target marketing strategy is segmenT
tation, in which the firm divides the market into smaller groups that
share ,certain characteristics. The next step is targeting, in which marketers evaluate the attractiveness of each potential segment and decide
in which of these groups they will invest resources to try to turn them
S
into customers. The customer group or groups they select are the firm’s
targetH
market.
E
Targeting in Three
R Steps
In this section, we’ll reviewRthe three phases of targeting: evaluate market segments, develop
segment profiles, and choose a targeting strategy.
Figure 7.4 illustrates these three phases.
Y
Evaluate Market Segments
2
Just because a marketer identifies
a segment does not necessarily mean that it’s a useful target. A viable target segment
7 should satisfy the following requirements:
Figure 7.4
• Are members of the segment
9 similar to each other in their product needs and wants and, at the
same time, different from consumers in other segments? Without real differences in con3
sumer needs, firms might as well use a mass-marketing strategy. For example, it’s a
waste of time B
to develop two separate lines of skin care products for working
women
and
nonworking
women if both segments have the same complaints
U
Process | Phases of Targeting
about dry skin.
Targeting involves three distinct phases of activities.
Evaluate Market Segments
Choose a Targeting Strategy
• Is the segment large enough to be profitable now and in the future? For example,
a graphic designer who hopes to design Web pages for Barbie-doll collectors must decide whether there are enough hard-core aficionados to make
this business worthwhile and whether the trend will continue.
• Can marketing communications reach the segment? It is easy to select television
programs or magazines that will efficiently reach older consumers, consumers with certain levels of education, or residents of major cities because
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
ISBN 1-256-36591-2
Develop Segment Profiles
• Can marketers measure the segment? Marketers must know something about
the size and purchasing power of a potential segment before they decide if
it’s worth their efforts.
CHAPTER 7
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the media they prefer are easy to identify. It is unlikely, however, that marketing communications can reach only left-handed blondes with tattoos who listen to Lady Gaga
overdubbed in Mandarin Chinese.
• Can the marketer adequately serve the needs of the segment? Does the firm have the expertise
and resources to satisfy the segment better than the competition? Some years ago,
consumer-products manufacturer Warner-Lambert (now a part of Pfizer) made the mistake of trying to enter the pastry business by purchasing Entenmann’s Bakery. Entenmann’s sells high-end boxed cakes, cookies, pastries, and pies in supermarkets.
Unfortunately, Warner-Lambert’s expertise at selling Listerine mouthwash and Trident
gum did not transfer to baked goods and it soon lost a lot of dough on the deal.
Develop Segment Profiles
Once a marketer identifies a set of usable segments, it is helpful toW
generate a profile of each
to really understand segment members’ needs and to look for business opportunities. This
R
segment profile is a description of the “typical” customer in that segment. A segment profile
I
might, for example, include customer demographics, location, lifestyle
information, and a
description of how frequently the customer buys the product. G
Years ago, when the R.J. Reynolds Company made plans to introduce a new brand of
H
cigarettes called Dakota that it would target to women, it created a segment profile of a posT characteristics: Her fasible customer group: the “Virile Female.” The profile included these
vorite pastimes are cruising, partying, going to hot-rod shows and
, tractor pulls with her
boyfriend, and watching evening soap operas. Her chief aspiration is to get married in her
early 20s.41 Anyone you know?
S
H
A basic targeting decision revolves around how finely tuned the target should be: Should
E
the company go after one large segment or focus on meeting the needs of one or more
smaller segments? Let’s look at four targeting strategies, which RFigure 7.5 summarizes.
A company like Walmart that selects an undifferentiated targeting
R strategy appeals to
a broad spectrum of people. If successful, this type of operation can be very efficient because
Y
segment profile
A description of the “typical” customer in a
segment.
ISBN 1-256-36591-2
Choose a Targeting Strategy
production, research, and promotion costs benefit from economies of scale—it’s cheaper to
develop one product or one advertising campaign than to choose several targets and create
separate products or messages for each. But the company must be2
willing to bet that people
have similar needs so the same product and message will appeal to many customers.
7
A company that chooses a differentiated targeting strategy develops one or more prod9 A differentiated stratucts for each of several customer groups with different product needs.
egy is called for when consumers choose among well-known brands
3 that have distinctive
images, and the company can identify one or more segments that have distinct needs for difB
ferent types of products.
U historically has been
Despite its highly publicized product safety issues in 2010, Toyota
a leader in differentiated strategy with distinct product lines that cater to multiple customer
groups. Its Lexus product line caters to consumers who want luxury, performance, and the
newest technology. The Prius hybrid provides value to drivers who want to save gas money
and the environment. And finally, the Scion product line caters to younger drivers who look
for a relatively inexpensive car that is highly customizable and stylish.42
Differentiated marketing can also involve connecting one product with different segments by communicating differently to appeal to those segments. Again using the “Got
Milk?” campaign as an example, one of their most classic ads featured Aerosmith’s Steven
Tyler to appeal to both aging boomers who got into the band in the 1970s and Gen Yers who
discovered the band in the 1990s due to Run-DMC’s remake of “Walk This Way.”
When a firm offers one or more products to a single segment, it uses a concentrated targeting strategy. Smaller firms that do not have the resources or the desire to be all things to
undifferentiated targeting strategy
Appealing to a broad spectrum of people.
differentiated targeting strategy
Developing one or more products for each of
several distinct customer groups and making
sure these offerings are kept separate in the
marketplace.
concentrated targeting strategy
Focusing a firm’s efforts on offering one or more
products to a single segment.
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
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UN DE R S TA ND C O N S U M E R S ’ VA L U E N EED S
Snapshot | Choose a
Targeting Strategy
Figure 7.5
Marketers must decide on a targeting
strategy. Should the company go after one
total market, one or several market
segments, or even target customers
individually?
Undifferentiated Marketing
W
R
I
G
H
T
,
S
H
E
R
R
Y
Differentiated Marketing
Concentrated Marketing
2
7
9 Customized Marketing
3
B
all people often do this. Blacksocks.com is a mail-order sock company that only makes black
U
dress socks; it targets businessmen
who are too busy to go to the store and buy new socks
custom marketing strategy
An approach that tailors specific products and
the messages about them to individual
customers.
positioning
Develop a marketing strategy to influence how a
particular market segment perceives a good or
service in comparison to the competition.
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
ISBN 1-256-36591-2
mass customization
An approach that modifies a basic good or
service to meet the needs of an individual.
when their old ones wear out. Blacksocks ship 3-packs of black socks once a month to its
“sockscribers.” The company argues that every guy who wears a business suit wears socks,
and most wear black socks. For these busy men, going to the store just to buy socks is boring, time-consuming, and simply unnecessary. Periodically the company wrestles with the
dilemma of whether or not to also sell white socks because this expansion will dilute the
brand (and force the company to change its name!).43
Ideally, marketers should be able to define segments so precisely that they can offer
products that exactly meet the unique needs of each individual or firm. This level of concentration does occur (we hope) in the case of personal or professional services we get from doctors, lawyers, and hairstylists. A custom marketing strategy also is common in industrial
contexts where a manufacturer often works with one or a few large clients and develops
products that only these clients will use.
CHAPTER 7
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201
Ripped from the Headlines
Ethical/Sustainable Decisions in the Real World
Most major brands are gearing up to more deeply target consumers in emerging
markets. China has 1.3 billion people. India has 1.1 billion. Other nations such as
Brazil and Russia offer the dazzling prospect of massive revenue for savvy brands.
Coca-Cola is particularly known for successful targeting for many reasons, including the firm’s ability to identify untapped target markets and win over consumers
not only by aggressively pursuing them, but also by wanting to know them.
Currently 30 million people, one in three of India’s population, constitute
the BOP “bottom-of-pyramid” marketplace. The BOP refers to the masses in
developing countries that account for over 65 percent of the world’s population. Buyers at the BOP not only behave differently from their counterparts in
developed countries but also from the upper and middle income consumers in
their own societies.
Now, Coke is reaching out to this group in India with Vitingo, a new drink
aimed at low-income consumers. Coke isn’t alone as it pursues this target market, and for good reason. Statistics show that 40 million Indian families are mov-
ing from outright poverty to the BOP demographic every year. Remember, that’s
not 40 million people, that is 40 million families. Each year. Like Coke, Glaxo
Smith Kline, the pharmaceutical firm, knows there is no greater brand advocate
than a family member. In fact, GSK is launching its own milk-based drink, Asha,
in India that is designed to appeal to the BOP demographic. Also like Coke, GSK
is doing more than offering a product. It is selling the product to a specific group
of consumers that the brand values and actively targets. Says Zubair Ahmed,
managing director at GSK India: “We are building a robust go-to-market model
to ensure the products reach the right consumers because it’s not enough just to
have the right products.”
Other familiar brands investing in India’s
BOP market are Nestlé, Pepsi, and Hindustan ETHICS CHECK:
Unilever with the idea that the successful brands Find out what other students
of tomorrow are already courting these up-and- taking this course would do
coming BOP consumers and demographics that and why on www
.mypearsonmarketinglab
will provide important revenue streams in the
.com
years to come.
W
R
I
G
H
T
Of course, in most cases this level of segmentation is neither practical nor possible when
, However, advances in
mass-produced products such as computers or cars enter the picture.
computer technology, coupled with the new emphasis on building solid relationships with
customers, have focused managers’ attention on devising new ways to tailor specific prodS
ucts and the messages about them to individual customers. Thus, some forward-looking,
H in which they modconsumer-oriented companies are moving toward mass customization
44
ify a basic good or service to meet the needs of an individual. Dell
E does this when it offers
customized computer products over the Internet at Dell.com where users configure their
R
own computers—everything from personal computers to networking systems. We’ll return
R the idea of customer
to the issue of customization later in this chapter when we introduce
relationship management.
Y
OBJECTIVE
Understand how
marketers develop
and implement a
ISBN 1-256-36591-2
positioning strategy.
(pp. 201–204)
Yes
No
Step 3: Positioning
2
7
The final stage of developing a target marketing strategy is to provide consumers who belong to 9
a targeted
market segment with a good or service that meets
3 their
unique needs and expectations. Positioning means deB
veloping a marketing strategy to influence how a particular market segment perceives a good or U
service in
comparison to the competition. To position a brand,
marketers have to clearly understand the criteria target
consumers use to evaluate competing products and then convince them that
their product, service, or organization will meet those needs. In addition, the
organization has to come up with way to communicate this “position” to its
target market.
Positioning happens in many ways. Sometimes it’s just a matter of making sure that cool people use your product—and that others observe them doing this. After finding out that a close friend was flying to Los Angeles to
audition for the film Any Given Sunday, the president of the high-performance
sportswear company Under Armour sent along with him a bunch of free
samples of its athletic wear to give to the film’s casting director as a gift. The
Courtesy of Blacksocks US
4
Is it appropriate for
firms such as Coke
and GSK to target the
BOP market in
countries like India?
Blacksocks practices a highly concentrated targeting strategy.
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
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Figure 7.6
Process | Stages in a
Positioning Decision
Four key elements comprise the decision-making
process in positioning.
Stage 1: Analyze competitors’ positions
director liked the quality of the clothes so much he gave them to the wardrobe company the filmmakers hired and they also really liked the clothes. The next thing you
know, the movie (starring Al Pacino and Jamie Foxx) featured both the actors wearing
Under Armour clothes on screen—and there was even a scene in the film when Jamie
Foxx undressed in the locker room with a clear shot of the Under Armour logo on his
jock strap. After the movie’s release, hits on Under Armour’s Web site spiked, and, as
they say, the rest is history.45
Steps in Positioning
Stage 2: Offer a good or service with a
competitive advantage
Stage 3: Finalize the marketing mix
Stage 4: Evaluate responses and
modify as needed
Jim
Multari
APPLYING
Figure 7.6 shows the stages marketers use to decide just how to position their
product or service: analyze competitors’ positions, offer a good or service with a
competitive advantage, finalize the marketing mix, and evaluate responses and
modify as needed. Let’s take a closer look at each of the positioning stages.
W
Analyze Competitors’
R Positions
The first stage is to analyze competitors’ positions in the marketplace. To develop an
I
effective positioning strategy, marketers must understand the current lay of the land.
What competitors G
are out there, and how does the target market perceive them?
Aside from direct competitors
in the product category, are there other goods or serH
vices that provide similar benefits?
T
Sometimes the indirect competition can be more important than the direct, especially if it represents an ,emerging consumer trend. For years, McDonald’s developed positioning strategies based only on its direct competition, which it defined as other large
fast-food hamburger chains (translation: Burger King and Wendy’s). McDonald’s failed to
S
realize that in fact many indirect competitors fulfilled consumers’ needs for a quick, tasty,
H
convenient meal—from supermarket
delis to frozen microwavable single-serving meals to
call-ahead takeout from full-service
restaurants
like T.G.I. Friday’s, Outback, and Chili’s.
E
Only recently, McDonald’s has begun to understand that it must react to this indirect comR
petition by serving up a wider variety of adult-friendly food and shoring up lagging service.
RMcCafe concept, with coffee products aimed squarely at taking
Their latest home run is the
business away from morning
Y mainstays Starbucks and Dunkin Donuts.
Define Your Competitive Advantage
Compettive Advantage
Sprout offers a different viewing experience
than its larger competitions as it tries to
encourage a lot of parent/child interaction. It
is also essentially a “library channel”; its
programming mainly consists of previously
aired kids’ shows, repackaged and
represented around short original content
and brand identity links.
The second stage is to offer2a good or service with a competitive advantage to provide a reason why consumers will perceive the product as better than the competition. If the company
7
offers only a “me-too product,” it can induce people to buy for a lower price. Other forms of
9 offering a superior image (Giorgio Armani), a unique product
competitive advantage include
feature (Levi’s 501 button-fly
3 jeans), better service (Cadillac’s roadside assistance program), or
even better-qualified people (the legendary salespeople at Nordstrom’s department stores).
B
Finalize the MarketingUMix
Evaluate Responses and Modify as Needed
In the fourth and final stage, marketers evaluate the target market’s responses so they can
modify strategies as needed. Over time, the firm may find that it needs to change which segments it targets or even alter a product’s position to respond to marketplace changes. ConMarketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
ISBN 1-256-36591-2
Once they settle on a positioning strategy, the third stage for marketers is to finalize the marketing mix by putting all the pieces into place. The elements of the marketing mix must match
the selected segment. This means that the good or service must deliver benefits that the segment values, such as convenience or status. Put another way, it must add value and satisfy
consumer needs. Furthermore, marketers must price this offering at a level these consumers
will pay, make the offering available at places consumers are likely to go, and correctly communicate the offering’s benefits in locations where consumers are likely to take notice.
CHAPTER 7
sider this classic example: Macho Marlboro cigarettes originally were a smoke for women—
complete with a red tip to hide lipstick stains!
A change strategy is repositioning, and it’s fairly common to see a company try to modify its brand image to keep up with changing times. Take as an example Charles Schwab,
which used to be pegged primarily as a self-service stock brokerage. Competition in the
budget broker business, especially from online brokers, prompted Schwab’s repositioning
to a full-line, full-service financial services firm that still pays attention to frugal prices for
its services. Think of it this way: There’s not much value Schwab can add as one of a dozen
or more online providers of stock trades. In that environment, customers simply will view
the firm as a commodity (i.e., just a way to buy stocks) with no real differentiation. Schwab
still has its no-frills products, but the real growth in sales and profits comes from its expanded product lines and provision of more information—both online and
through personal selling—that warrant higher fees and build deeper customer relationships. Repositioning also occurs when a marketerW
revises a
brand thought to be dead or at least near death. Sometimes theseRproducts
arise from their deathbeds to ride a wave of nostalgia and return to the marketplace as retro brands—venerable brands like Oxydol laundry Idetergent,
Breck Shampoo, Ovaltine cereal, and Tab cola have gotten a new lease
G on life
in recent years.46
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203
repositioning
Redoing a product’s position to respond to
marketplace changes.
retro brand
A once-popular brand that has been revived to
experience a popularity comeback, often by
riding a wave of nostalgia.
ISBN 1-256-36591-2
In a way, brands are like people: We often describe them in terms of personality traits. We may use adjectives such as cheap, elegant, sexy, or cool when we
S
talk about a store, a perfume, or a car. That’s why a positioning strategy
often tries to create a brand personality for a good or service—a distinctive
H image that captures its character and benefits. An advertisement for Elle, which
E
bills itself as the number-one fashion magazine for women, proclaimed, “She
R Elle is
is not a reply card. She is not a category. She is not shrink-wrapped.
not a magazine. She is a woman.”
R
Products as people? It seems funny to say, yet marketing researchers
Y
find that most consumers have no trouble describing what a product would
be like “if it came to life.” People often give clear, detailed descriptions, including what color hair the product would have, the type of house
2 it would
live in, and even whether it would be thin, overweight, or somewhere in be7
tween.47 If you don’t believe us, try doing this yourself.
9 for the
Part of creating a brand personality is developing an identity
product that the target market will prefer over competing brands.
3 How do
marketers determine where their product actually stands in the minds of
B
consumers? One solution is to ask consumers what characteristics are imporU too.
tant and how competing alternatives would rate on these attributes,
Marketers use this information to construct a perceptual map, a vivid way to
construct a picture of where products or brands are “located” in consumers’
minds.
For example, suppose you wanted to construct a perceptual map of how
American women in their 20s perceive magazines to help you develop an
idea for a new publication that these readers would like. After you interview
a sample of female readers, you might identify two key questions women
ask when they select a magazine: (1) Is it “traditional,” that is, oriented toward family, home, or personal issues, or is it “fashion-forward,” oriented toward personal appearance and fashion? (2) Is it for “upscale” women who
are older and established in their careers or for relatively “downscale”
women who are younger and just starting out in their careers?
Ruaridh Stewart/ZUMA Press/Newscom
H
T
Bring a Product to Life: The Brand Personality
,
To summarize the steps we take to position a product, look at the strategy
the SoBe Beverage Company developed. SoBe is a small drink
manufacturer based in Connecticut that offers a line of teas, elixirs, and
power drinks. The company first segmented the market in terms of age
and psychographics. Then it targeted a segment of 18- to 35-year-olds
whose profiles indicated they were into “New Age” beverages that would
give them a feeling of energy without unhealthy additives. SoBe created
XTC, a drink inspired by “herbal ecstasy” cocktails of extracts and amino
acids first made popular at 1990s’ “raves” featuring all-night gyrations to
techno music. As an industry executive noted, this strategy provides a
unique position for the elixir: “People are taking something that provides
a four-times-removed high without having to get arrested or wrecking
their bodies. It carries the image of being a little further out there without
carrying the risk.” Today, XTC has given way to an amazing line of
products in various flavors under such thematic purposes as Purify,
C-boost, N-Dure, Electrify, Lean Machine, and D-Fence for the evermoving and multitasking Gen Y as well as a line of teas and elixirs with
broader generational appeal.
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
204
PART TWO
|
UN DE R S TA ND C O N S U M E R S ’ VA L U E N EED S
Snapshot | Perceptual Map
The perceptual map in
Figure 7.7 illustrates
how
these
ratings
might
look
for a set of
Perceptual mapping allows marketers to identify consumers perceptions of their brand in
major
women’s
magazines.
The
map
provides
relation to the competition.
some
guidance
as
to
where
you
might
position
Upscale
your new magazine. You might decide to compete directly with either the cluster of “service
Vogue
magazines” in the lower left or the traditional
Architectural
Self
Digest
fashion magazines in the upper right. In this
Cosmopolitan
case, you would have to determine what benefits your new magazine might offer that these
Glamour
existing magazines do not. Condé Nast, for example, positioned Allure to compete against
Mademoiselle
fashion magazines by going into more depth
Ladies’ Home Journal
W
than they do on beauty issues, such as the menService
Fashion
tal, physical, and emotional dangers of cosmetic
R
surgery.
Harper’s
I
Bazaar
You might try to locate an unserved area in
Family Circle
G
this perceptual map. There may be room for a
magazine that targets “cutting-edge” fashion for
Redbook
H
college-age women. An unserved segment is the
Seventeen
T
“Holy Grail” for marketers: With luck, they can
Woman’s
move quickly to capture a segment and define the
,
World
standards of comparison for the category. This
tactic paid off for Chrysler, which first identified
Downscale
S
the minivan market for soccer moms; JetBlue,
which found a spot for low
brand personality
H fares and high tech without the poor-boy service attitude and
A distinctive image that captures a good’s or
cattle-call boarding procedure of other budget airlines; and Liz Claiborne, which pioneered
E
service’s character and benefits.
the concept of comfortable, “user-friendly” clothing for working women. In the magazine
R comes closest to this position.
perceptual map
category, perhaps Marie Claire
Figure 7.7
A technique to visually describe where brands
are “located” in consumers’ minds relative to
competing brands.
R
Y
5
OBJECTIVE
Explain how
Customer
Relationship
2
7
Management
(CRM):
9
Toward
a Segment of One
3
marketers increase
1. Identify customers and get to know them in as much detail as possible.
2. Differentiate among these customers in terms of both their needs and their value to the
company.
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
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