Agenda
1.
2.
3.
4.
5.
Housekeeping: readings, team name &
e-e-mail,
etc.
News
1. Surveillance data mining
2. Shopping basket analysis
Segmentation marketing
1. Basics of segmentation
2. Geographics
3. Demographics
4. Lifecycle
5. Cohorts
6. Psychographics & behavior
Team discussion questions
1. Profile yourself as consumer
2. Profile your customers: How does this enable you to
respond to their needs better
Next week: consumer behavior– why we buy what we buy
Group discussion
questions for tonight
Use the various consumer
profiling methods to:
1.
Profile yourself as a consumer (use VALS-2, Prism, and other
demographic, psychographic, and lifestyle descriptors).
2.
What are the implications for marketers (e.g., how is this reflected in how
they do/can market to you more effectively)?
3.
Profile the customers in your business (or department).
4.
How does this information about your customers enable you to provide
better products/services to them?
5.
What more do you need to know? How could you find out?
What is
?
You might understand the parts, but might miss the whole chicken
Methods of
Seg-men-ta-tion
Demographic/Geographic refers to age, sex, income, education, race,
martial status, size of household, geographic location, size of city, and
profession.
Life stage refers to chronological benchmarking of people's lives at
different ages (e.g., pre-teens, teenagers, empty-nesters, etc.).
Lifestyle refers to the collective choice of hobbies, recreational
pursuits, entertainment, vacations, and other non-work time pursuits
Psychographics refers to personality and emotionally based behavior
linked to purchase choices; for example, whether customers are risktakers or risk-avoiders, impulsive buyers, etc.
Belief and value systems includes religious, political, nationalistic,
and cultural beliefs and values.
Behavior analysis includes what behaviors consumers actually
engage in (after all is said and done)
Requirements for segmentation
Identifiable: the differentiating attributes of the
segments must be measurable so that they can be identified.
Relevant/Accessible: the segments must be reachable through
communication
and distribution
channels.
Question:
What are
some criteria that could be
used to ensure that a segmentation has utility?
Substantial: the segments should be sufficiently large to justify the
resources required to target them.
Unique needs: to justify separate offerings, the segments must respond
differently to the different marketing mixes.
Durable: the segments should be relatively stable to minimize the cost of
frequent changes.
Pitfalls of Segmentation
• appeal to segments that are too small
• misread consumer similarities and differences
• become cost inefficient
• spin off too many imitations of their original products or brands
• become short-run rather than long-run oriented
• unable to use certain media (due to small segment size)
• compete in too many markets
• confuse people
• become locked in to a declining market
• too slow to seek innovation possibilities for new products
Sample Segmentation Services & Systems
Claritas (Prizm demographic
profile by Zipcode)
Mosaic Segmentation
SRI VALS Survey (lifestyle profiling)
Ricercar geodemographic profiling
Nielson
Yankelovich
AGS Demographic Database
Family Lifecycle & Retailing
Demographic Profile
Business segmentation can
help companies align their
sales territories based on
the opportunities
on the ground. The
BEFOREmap shows
territories determine by
geometry—four quadrants
dividing the central area—
while the AFTERmap shows
territories that vary in size
based on the number and
potential value of target
businesses (the red dots
indicating the locations of
target businesses). By
mapping its business
prospects by size and
industry type in Lexington,
Kentucky, a company can
better realign its sales
territories based on the
concentrations of its highquality prospects.
PRIZM– Potential Rating
Index for Zip Marketers
• Demographic analysis
• Demographic data packs
• PRIZM market segments
• Prizm ZIP profile
• Mosaic segments
A Affluent Suburbia
01 Very high-income, families with
older children in suburban areas
02 Very high-income, large families in
suburban areas
03 Very high-income, young, suburban
families with children
04 Empty-nest, high-income, suburban
couples
05 High-income, families with older
children in suburban areas
06 Large, high-income families in major
market suburbs
07 High-income families with children
in suburbs
08 Suburban, high-income families with
older children
In your discussion team:
Describe yourself as a
target market using the
descriptors from the various
methods of profiling we
have covered.
Given your description, how
would a marketer most
optimally contact and
engage you?
Sample Profile
Cluster analysis
Cluster analysis builds hierarchical trees based
on similarity among individuals compared across
several dimensions of questions
Cluster Analysis of Recreational Groups
Actualizers
9%
Principles
• Types
• Applications
• VALS-2 survey
Status
Action
Fulfilled
11%
13%
12%
16%
13%
13%
Strugglers
12%
Social Technographics
Ladder (2008)
Forrester categorizes
social computing
behaviors into a ladder
with six levels of
participation; we use the
term "Social
Technographics" to
describe analyzing a
population according to
its participation in these
levels.
http://www.forrester.com/Groundswell/profile_tool.html
Segmentation of blog users by political party
There is a persistent
tendency for
Democrats to
participate more fully in
social technologies.
Looking at the index
(all adults = 100), you
can see that
Democrats are at least
10% more likely to do
just about anything
involving social
technologies. The
Republicans are the
opposite -- they're a lot
LESS likely to
participate
http://blogs.forrester.com/groundswell/2007/12/the-social-prof.html
Segmentation of democratic blog users by who they voted for
One in three Obama
voters is a Joiner, which
may be helping the
my.barackobama.com
strategy. Edwards voters
(62% Spectators) are the
most likely to be
consuming social
applications; Clinton
voters are the least, with
only 49% Spectators and
42% Inactives. 34% of
Gore voters are Critics -he ought to connect with
them in some sort of
community or forum to
make them a force for his
issues in the general
election. Obama, Clinton,
and Edwards voters are all
rich with Creators (at least
22% of their supporters) -energize those voters and
they'll start getting the
Spectators excited.
Segmentation of republican blog users by who they voted for
Note the relatively
anemic levels of
Creator participation -no Republican gets
above 16%. The
Creators are the voters
who energize
everybody else with
their contribution.
Target Market & the 4 Ps
How STP adds
value to a firm
Marketing resources are focused to better meet
customers needs and deliver more value to them
Customer develop preference for brands that
better meet their needs and deliver more value
Customers become brand/supply loyal, repeat
purchase, share favorable experiences
Brand supplier loyalty leads to increased market
share and creates a barrier to competition
Fewer marketing resources needed over time to
maintain share due to brand or supplier loyalty
Profitability (value to the firm) increases
The
Intergenerational
Cohort Approach
(see Meredith, G. E., Schewe, C. D., & Karlovich, J. (2001) Defining Markets, Defining Moments:
America's 7 Generational Cohorts, Their Shared Experiences, and Why Businesses Should Care
Depression Cohort (Born from 1912 – 1921;
Came of age during the Great Depression; Aged
79 – 88 in 2000): This group’s coming of age
experience consisted of economic strife,
elevated unemployment rates and having to
take menial jobs to survive. Financial security—
what they most lacked when coming of age—
rules their thinking.
Marketing Tip: Having lived through the Depression, this cohort prefers to
pay more for a smaller serving, rather than throw something away. As a result,
single-serving products are now becoming popular. Maxwell House Filter
Pack Singles, Pillsbury single-serve cakes, and Orville Redenbacher singleserve microwave popcorn are all examples.
World War II Cohort (Born from 1922-1927; Came of
age during World War II; Aged 73-78 in 2000): Sacrifice for
the common good was widely accepted among members of
this Cohort, as evidenced by women working in factories for
the war effort and men going off to fight. Overall, this cohort
was focused on defeating a common enemy, and their
members are more team-oriented and patriotic than those of
other generational cohorts.
Marketing Tip: The1940s were an intensely romantic period. Therefore
romance (candlelight dinners, hand-holding, soft music) can provide a
wonderful context for advertising messages. In ads for Lazy-Boy recliners,
the company uses a scene of a couple sitting on the porch of a Victoriantype home; the man is dressed in clothes of the ‘40s, while the woman,
clearly his sweetheart, is looking down demurely as he speaks to her. Older
adults immediately relate to the ad, which goes on to emphasize how long
the company has been in business—another strong selling feature for this
cohort.
Post-War Cohort (Born from 1928-1945; Came of
age after WWII; Aged 55-72 in 2000): These individuals
experienced a time of remarkable economic growth and
social tranquility, a time of family togetherness, the Korean
conflict, McCarthyism, school dress codes, and moving to
the suburbs. Overall, this cohort participated in the rise of
the middle class, sought a sense of security and stability,
and expected prosperous times to continue indefinitely.
Marketing Tip: Post-War grandparents are healthy, active, educated and
endowed with sizeable nest eggs. Spending by grandparents on their
grandchildren is on the rise. Yet, toy stores are so focused on capturing the
young parent market that they ignore this fact. A good example of a
company taking advantage of this market is Genesis Direct of Secaucus,
NJ, which markets a catalog called Gifts For Grandkids. The company
provides a quarterly newsletter that offers tips that subtly help grandparents
carry out their roles.
Leading-Edge Baby Boomer Cohort (Born
from 1946-54; Came of age during the turmoil of
the ‘60s; Aged 46-54 in 2000): This group remembers the assassinations of John and Robert
Kennedy and Martin Luther King, Jr. It was the
loss of JFK that largely shaped this cohort’s
values. They became adults during the Vietnam
War and watched as the first man walked on the moon.
Leading-Edge Boomers were dichotomous: they
championed causes (Greenpeace, civil rights, women’s
rights), yet were simultaneously hedonistic and selfindulgent (pot, “free love, ”sensuality).
Marketing Tip: You can reap major rewards by tying your product to health
and wellness values. Retailers can joint-venture with hospitals to offer on-site
health seminars that have a direct nutritional link to providing health and
wellness. Offering tips in newsletters on health and fitness is another way to
enhance satisfaction. Financial institutions should consider designing financial
instruments (like “Christmas Club”) that promote saving strictly for health,
wellness and fitness purposes.
Trailing-Edge Baby Boomer Cohort, or
“Generation Jones” (Born from 1955-1965;
Came of age during the first sustained economic
downturn since the Depression; Aged 35-45 in
2000): This group witnessed the fall of Vietnam,
Watergate and Nixon’s resignation. The oil embargo,
and the raging inflation rate and the more than 30
percent decline in the S&P Index led these individuals
to be less optimistic about their financial future than the
Leading-Edge Boomers.
Marketing tip: Technology is making it easier to telecommute, and more and
more Trailing-Edge Boomers are finding ways to work from home. Marketers
looking to serve this labor force should offer telecommuters ways to get out of
the house. Fitness clubs could offer special packages to attract home-based
workers, many of whom have the flexibility to work out during the day and make
up the time later in the evening. Restaurants could host telecommuter
roundtables—monthly or bimonthly luncheons that would give home-based
workers the opportunity to meet and network with new people.
Generation X Cohort (Born from 1965-1976;
Came of age during a time of instability and
uncertainty; Aged 24-34 in 2000): These are the
latchkey children of divorce and have received
the most negative publicity. This cohort has
delayed marriage and children, and they don’t
take these commitments lightly. More than other
groups, this cohort accepts cultural diversity and puts
quality of personal life ahead of work life. They’re “free
agents,” not “team players. ”Despite a rocky start into
adulthood, this group shows a spirit of entrepreneurship
unmatched by any other cohort.
Marketing Tip: Because this cohort is very street smart when it comes to
advertising, oversold sales pitches full of hype will fall flat. They need to be
spoken to in a way that says, “You’re different. We respect that.” Chrysler’s
Neon’s “Hi” campaign, which showed the car with the simple message “Hi”
written above it, was very effective with Xers mainly because it dropped all
pretensions and talked directly to the customer in a non-threatening way.
Generation Y Cohort (Born from 1977-?; Came
of age during the “Information Revolution;” Aged
23 and under in 2000): We call the youngest cohort
“Generation Y,” or “Y-Gen, ”because the advent of
the Internet is a defining event for them, and because they will be the “engine” of growth over the
next two decades. While still a work in progress, their
core value structure seems to be quite different from that
of Gen-X. They are more idealistic and social-cause
oriented, without the cynical, “What’s in it for me?” freeagent mindset of many Xers.
Marketing Tip: This is the most diverse cohort of all. One third are from a
minority group compared to one fourth of the total population. In marketing to
this group, reflect greater diversity in your ads. The Gap and Benetton have
been particularly effective in mirroring diversity in their advertising. Even Ralph
Lauren’s “wasp-ish” lines of clothing have embraced racial and ethnic diversity.
Social Network Analysis
In online communities, who are the influencers?
The Hypernetworked World
Profile of Motor Boat Owner Segmentation
Reds, Blues, and ‘Tweens
1. Who are political independents in Minnesota; How
would you characterize them?
2. Given this description, how could each major political
party appeal to them for the next election?
If you were going to gather information for
segmenting beer drinkers, how would you
go about it?
Team activity:
Segmentation Task
Using one or more of the
profiling methods discussed,
identify several of your target
market segments for a
business. Describe one in
detail in a paragraph and be
prepared to present in class.
Additional Slides (not used)
Clinic Cynic: Generally distrustful of medical profession with poor adherence to treatment.
Suspicious of ads and their promises. Fairly involved in wellness. Responds to issues as they occur
Avoider: Refrains from using healthcare services. Does not participate in competitive sports or good
nutrition. Shows the most healthy apathy. Moderately receptive to ads; dominated by males.
Generic: Shops around to save healthcare dollars. Most likely to experiment with alternative
healthcare delivery. Active, information seeker, open to advertising. Adherence adversely affected by
costs.
Family centered: Puts family health above all other health issues. Enjoys role as family health
decision maker. Moderate information seeker but attends to ads.
Traditionalist: Willing to pay more for quality healthcare. Can be very brand-driven. Easiest to
satisfy. High rates of chronic disease but underuse of Rx. Low receptivity to ads.
Loyalist: Moderation in all healthcare opinions and behaviors, and average interest in health
information, fitness and nutrition. Interested in saving money but will often pay more for care of better
quality.
Ready User: Least likely to avoid healthcare services; undeterred by expense. Frequent use of Rx.
Good nutrition but rarely does heavy exercise. Attends to ads, although somewhat skeptical.
Independently Healthy: Active in exercise, sports, and good nutrition. Likely to try different
providers and healthcare alternatives. Looks for long-term benefits. Fairly involved in seeking
healthcare information.
Naturalist: Propensity for nontraditional healthcare. Concerns with nutrition and staying active, but
not sports. Skeptical of ads & providers. Contrary opinions, high expectations, hard to satisfy.
Segments for Broadband & Wireless
Positioning strategies can be based on:
Team activity:
You as customer–
Reflect on CSS graduate
students as a market
segment. How would you
describe yourself as a
target group?