This presentation is about the demand of the existing business: Potential customers and actual consumers. What are the optimal groups of people who we are seeking as consumers? Those people that are the most satisfied with our service or product as it does fulfill their need in their own perception. As a result they may have the tendency to become loyal

1. Analysis of the current situation c h a p t e r o n e Marketing Plan NOW d anny abramovich Chapter 1out of 4 Segmenting Targeted Audiences

2. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n www.MarketingPlanNOW.com

4. 1.4 Segmenting targeted audiences Segmenting is dividing a market into distinct groups with distinct needs, characteristics or behaviors. Targeting is selecting those market segments that represent most value . “ Most value ” for the customer means that your offer has a high correlation with their needs (high level of involvement). “ Most value ” for your business means that these customers tend to loyalty with a low level of complains. a n a l y s i s o f t h e c u r r e n t s i t u a t i o n www.MarketingPlanNOW.com

5. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Demand in the market

6. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting S-1 S-2 S-3 www.MarketingPlanNOW.com

7. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n What is a relevant segment ? It has to be … - Measurable - size, purchasing power. - Accessible - can be reached and served. - Differentiable - can respond differently. - Actionable - effective programs can be developed.

8. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segment(s) providing most value S-1 S-2 S-3 www.MarketingPlanNOW.com

9. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Four Segmentation Strategies P = product/ service/ brand; S = segment  P3  P3  P3 P3  P2  P2  P2    P2  P1  P1  P1 P1 S3 S2 S1 S3 S2 S1 S3 S2 S1 S3 S2 S1 Diff. P’ s per ind. S Diff. P’ s to same S Diff. P’ s to diff. S’ s Same P to diff. S’ s Micro Niche Segmented Mass

10. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n How to segment ? Here are five methods ! - Segmenting “by the book” - Segmenting by needs - Segmenting by loyalty - Segmenting by mapping - Segmenting by using supportive models www.MarketingPlanNOW.com

11. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n - “by the book” - by needs - by loyalty - by mapping - by using supportive models 118 countries 152 diff. items 500 regular suppliers 1954 est. 30,000 outlets 50,000,0000 daily meals

12. 1.4 Segmenting targeted audiences > 1 /5 a n a l y s i s o f t h e c u r r e n t s i t u a t i o n What is segmenting by the book ? The basic attributes that are recommended in the marketing books , and are part of our common reasoning, are never ending lists based on a statistical approach ! www.MarketingPlanNOW.com

13. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by the book ! Classification: Private, industrial, gov, org… Geography: Trade areas, regional climate… Demography : Age, gender, life cycle… Sociography: Income, education, religion… Psychography: Personality, values… Technography: Technological preference… It was claimed that the above are never ending lists ! Let’s have a closer look at demographic attributes…

14. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by demographic attributes  age Generation Y (Technology boom, terrorism) - fashion & style are important to them  ages under 28 Generation X (Energy crisis, environmentalism) - careful shoppers looking for bargains  ages 29-48 Baby Boomers (Booming economy 50’s-60’s) - wants multiple choices and to feel in control  ages 49-66 Silent Generation (Rebuilding economy post WWII) - great savers so now it’s their turn  ages 66-82 War Generation (WWII) - feeling guilt if they are wasteful  ages over 83 updated 2009 by DA www.MarketingPlanNOW.com

15. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by demographic attributes  gender - Connecting your female consumers to each other connects them to your brand. - If you’re marketing to one of her lives, you are missing all the others. - If she has to ask, it’s too late. - Market to her peripheral vision and she will see you in a whole new light. - This generation of female consumers will lead you to the next. Marketing to Women

16. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by demographic attributes  life cycle www.MarketingPlanNOW.com

17. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting “by the book”  - Segmenting by needs - Segmenting by loyalty - Segmenting by mapping - Segmenting by using supportive models

18. 1.4 Segmenting targeted audiences > 2 /5 a n a l y s i s o f t h e c u r r e n t s i t u a t i o n What is segmenting by needs ? Needs is a key word in understanding consumer behavior. If we can segment and target by the real needs of the individual who purchases expensive branded shoes or becomes a member of a fitness club, we can better profit from understanding this behavioral science called marketing ! www.MarketingPlanNOW.com

19. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by needs ! Approaching customers and re-phrasing them the question “why do buy this product or service?” being prepared to ask “why?” once you have got an answer to the first question. Approaching those that are involved in the act of purchasing of your customers and re-phrasing them the same questions, but who are they ?

20. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by needs ! Those that are involved in the act of purchasing of your customers can also be approach by you info gatherer influencer decider purchaser user www.MarketingPlanNOW.com

21. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by needs ! Example: The mother is abroad on a business trip - she ( info gatherer & influencer ) asks her husband if he can buy a toy for their daughter - he ( decider ) asked his mother ( purchaser ) to buy a doll for her 5-year old grandchild ( user ). info gatherer influencer decider purchaser user

22. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by needs ! There are several models illustrating the basic set of human needs. As marketing is a behavioral science, this issue is a major one - understanding or developing present and forecasted needs. Abraham Maslow's “hierarchy of needs” is a theory in psychology (1943) www.MarketingPlanNOW.com

23. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by needs ! Internet Behavioral Segmentation . Discussion …

24. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting “by the book”  Segmenting by needs  - Segmenting by loyalty - Segmenting by mapping - Segmenting by using supportive models www.MarketingPlanNOW.com

25. 1.4 Segmenting targeted audiences > 3 /5 a n a l y s i s o f t h e c u r r e n t s i t u a t i o n What is segmenting by loyalty ? When there is a potential to develop loyalty (a repetitive need can be fulfilled) there is a need to distinguish among customers upon their level of loyalty . Furthermore, if management favorites technological tools, it is more likely to succeed to segment by loyalty !

26. 1.4 Segmenting targeted audiences > 3 /5 a n a l y s i s o f t h e c u r r e n t s i t u a t i o n When does loyalty start ? A cus t omer is a person with m oney to buy, a uthority to buy & n eed - but these conditions represent only the potential to buy. A co n sumer is a person that has activated the potential to buy. But how can we define various levels of loyal consumers ? www.MarketingPlanNOW.com

27. 1.4 Segmenting targeted audiences > 3 /5 a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by loyalty Pyramid of loyalty ! Stake- holder “ Friend” Recommending consumer Loyal consumer Return consumer Consumer Customer The right to become a customer

28. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by loyalty ! www.MarketingPlanNOW.com

29. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting “by the book”  Segmenting by needs  Segmenting by loyalty  - Segmenting by mapping - Segmenting by using supportive models

30. 1.4 Segmenting targeted audiences > 4 /5 a n a l y s i s o f t h e c u r r e n t s i t u a t i o n What is segmenting by mapping ? Sometimes using a “trial & error learning method” (active experimentation) can lead to breakthrough findings. This may happen when moving from one known rule to another in the hope to locate new distinct groups to target along the map . How can we develop such a functional map ? www.MarketingPlanNOW.com

31. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by mapping ! Let’s take an example of an online jeans store > www.truejeans.com Initially, we are interested to map those who might be interested to purchase jeans online, have a credit card, are of a certain age group, gender, etc.

32. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by mapping ! We located a segment to target: Oversized women, aged 31-40, holding a credit card. Comment : You should use basic attributes from “Segmenting by the Book” (method # 1 /5). www.MarketingPlanNOW.com People who wear jeans No Internet Internet Credit card 18-30 31-40 men No credit card >45 women oversize İdeal size

33. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by mapping ! We located two segments to target when promoting incoming tourism to Lyon, France.

34. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by mapping can also clarify inter-relations between several targeted audiences. It’s impossible to seize possible interaction among the segments in the table unless we can illustrate it as a map. See next two slides. www.MarketingPlanNOW.com

35. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by mapping !

36. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by mapping ! www.MarketingPlanNOW.com

37. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting “by the book”  Segmenting by needs  Segmenting by loyalty  Segmenting by mapping  - Segmenting by using supportive models

38. 1.4 Segmenting targeted audiences > 5 /5 a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by using supportive models There are few quantitative consumer marketing models that can facilitate segmentation with specific types of products & services. Let’s look at two of them : - Segmenting by diffusion of innovations - Segmenting by lifestyles www.MarketingPlanNOW.com

39. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by using supportive models : Diffusion of innovations, Everett M. Rogers (1962) What does this model come to show ? The process by which an innovation is adapted over time among the potential target audiences within a market (originally referred to as “a social system”). What type of business activity can this model support segmentation with ? New ventures, new products/ services/ ideas, new brands.

40. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by diffusion of innovations www.MarketingPlanNOW.com

41. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by diffusion of innovations When launching a new venture, product/ service/ idea or brand, the first two potential target audiences comprise some 15% of the market (mainly technological products were tested) : - Innovators are venturesome types that enjoy being on the cutting edge. - Early adapters are often leaders of opinion, visionaries.

42. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by diffusion of innovations According to Geoffrey A. Moore (1991), author of Crossing the Chasm: Marketing and selling high-tech products to mainstream customers, the most difficult step is making the transition between early adopters (visionaries) & early majority (pragmatists). This is the chasm (gap) that he refers to. www.MarketingPlanNOW.com

43. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Techies “ Try it” Visionaries Move ahead of the heard Pragmatists Move with the heard Conservatives Move only when necessary Skeptics Move only when there is no choice! This is the chasm, that according to Moore, caused the high-tech bubble to explode in the late 1990’s - it’s all about the importance of segmenting targeted audiences!

44. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by using supportive models : VALS ( V alues, A ttitudes & L ifestyles) Stanford Research Institute - SRI (1970’s) Does the following clarify what are VALS ? - In your 20’s you should try it all, - In your 30’s you should figure out what you do best, - In your 40’s you make money at what you do best, - In your 50’s you just don’t “do”, it’s when you should enjoy life. (no ! ) www.MarketingPlanNOW.com

45. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by VALS (Values, Attitudes & Lifestyles) What does this model come to show ? A research method which psychologically categorizes consumers into eight lifestyle groups (psychographic segmentation). What type of business activity can this model support segmentation with ? Existing businesses wishing to expand into new niche markets.

46. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting by Values, Attitudes & Lifestyles (VALS) Comment : “ Resources” = income & education & self-confidence www.MarketingPlanNOW.com

47. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Thinkers - one example out of eight These consumers are the high-resource group of those who are motivated by ideals. They are mature, responsible, well-educated professionals. Their leisure activities center on their homes, but they are well informed about what goes on in the world and are open to new ideas and social change. They have high incomes but are practical consumers and rational decision makers. 1 - descriptive phase

48. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Thinkers - one example out of eight - Estimated % of the population in a given country - Socioeconomic factors of this group - Typical neigbourhoods where this group lives - Consumer habits such as brand preferences - Mass communication preferences 2 - marketing orientation www.MarketingPlanNOW.com

49. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Segmenting “by the book”  Segmenting by needs  Segmenting by loyalty  Segmenting by mapping  Segmenting by using supportive models 

50. 1.4 Segmenting targeted audiences a n a l y s i s o f t h e c u r r e n t s i t u a t i o n Ultimate goal : To segment by using two methods or more out of the proposed five www.MarketingPlanNOW.com Seg men tat ion by supportive models Seg men tat ion by mapping Seg men tat ion by loyalty Seg men tat ion by needs Seg men tat ion by the book

51. a n a l y s i s o f t h e c u r r e n t s i t u a t i o n www.MarketingPlanNOW.com