Topic 6 – Target Marketing
There is a marketing revolution in progress today as the environment continues to change
with new technologies and the availability of data to assist marketers in focusing on a
target audience.
Today’s marketing concept considers the needs of consumers as the primary aspect for
success of the firm. Long term relationships are sought by providing information and
developing the proposition of value whereas the old marketing concept was simply to
make a sale. Both old and new concepts utilize market segmentation, market targeting
and positioning.
Brand loyalty is divided into segments as follows: national brand loyalty means the
consumer is loyal to the product across national competition; there is also loyalty that is
based on the “deal” or cost of the product/service; private label loyalty is the loyalty a
consumer may have for a private label, such as CVS products at the pharmacy or again,
these consumer may switch again if a national product is on sale and lower in cost than a
private label; there are also national brand switchers who will alternate among the
national branded products as well as private label brand switchers.
A market is a group of people identified by some common characteristic, or problem or
interest and these people can use a particular product and can afford to purchase it and
may be reached through a particular or group of media.
STP Marketing
Segmenting – breaking down a diverse market into some sort of manageable parts or
segments
Targeting – choosing particular segments as the focus of the marketing effort
Positioning – utilizing the marketing mix to appeal to a specific target segment
Market segmentation has to do with breaking down various different markets into more
manageable segments of submarkets. To do so, it is necessary to identify common
characteristics that will lead members of the segment to respond to the marketing effort.
Forms of segmentation
Geographic – this dates to the earliest days of distribution which used geographic
boundaries for the marketing effort but today with the sophistication of geomarketing and
the utilization of information such as census data and zip codes,, other forms of
segmentation are equally available.
Often large companies will divide their national and local/regional advertising between
agencies (i.e., McDonald’s) recognizing that the local/regional agency will have a better
understanding of their market.
Product user segmentation is based on the amount and consumption patterns of a brand
by the consumer. The 80/20 rule recognizes that the minority of consumers, 20%,
purchase the largest portion of services. These consumers are identified as heavy users
and when and where they buy is of great interest to the firm.
Lifestyle segmentation combines several demographics and lifestyles, clusters, to
determine activities, interests and political preferences. This is very important in today’s
market since the ultimate goal of the message is to “speak” to the consumer in a language
they will relate to. Knowing their interests can help the marketer do so.
Benefit segmentation considers the benefit package that different consumers may want
from the same product category (i.e., with autos, some simply want reliable transportation
while for others luxury and status must be considered as well).
Niche marketing targets a small group of consumer who have a very particular need. The
size of the market may not be large enough for more than one organization or product to
serve it allowing for a narrow window of opportunity within the product market (i.e.,
anti-aging, ethnic products).
Target marketing
With target marketing, a subgroup of the larger market is selected as the focal point for
the marketing and advertising campaign. Often target marketing uses demographic
information so that the advertiser can select effective media to reach the segment
targeted.
Every census, completed every 10 years, provides new data about the population. For
example, the 1990 census identified that the fastest growing population group were the
“woopies” or well off older people who are 50 years or older. By 2025 these woopies
will represent 1/3 of the US population. Income becomes another variable as does
education. For minority marketing opportunities, the census provides much information
about these groups who maintain strong cultural bonds with their home country. Also
identified by the census are the living patterns of the population (i.e., single, childless
couples, empty nesters who are married, age 45-64 and have no children living at home).
Marketers may decide to make variations on a product to appeal to a selected market.
This is referred to as repositioning and is an effective way of increasing brand share (i.e.,
aspirin for pain as well as adults with heart conditions).
A market profile considers both demographic and psychographic information about
people and household’s that fall within the product’s targeted market. Overall usage is
determined, defined in sales of the percentage of household use which helps to describe
the characteristics of the market. Database marketing provides information upon which
to base integrated promotional decisions.
A demography is the study of economic and sociological statistics about the population.
These include age, gender, rate, income, and occupation. There are two primary uses of a
demography for the marketer: to describe or profile the consumer segments that have
been identified with some other variable (i.e., if a firm first segmented the market by
product usage rates, then to describe or profile these users by demographic characteristics
would be the next step; and a demography is often used as a starting point in market
segmentation.
Psychographics is a term that was created in the mid-1960s to refer to a particular form of
research that emphasizes the consumer’s activities, interests and opinions (AIOs) and
often results in a lifestyle segmentation. Information for a psychographic profile is
available through syndicated research services that specialize in amassing different types
of information about consumers. Sources such as credit card use, recreational activities,
high tech purchases, and vacations all provide information for databases.
Positioning a product has to do with designing and representing a product/service so that
it will occupy a distinct and valued place in the consumer’s mind. The strategy involves
a selection of themes and concepts to be used by the manufacturer to communicate a
distinctiveness to the target segment (i.e., Pontiac’s “We Build Excitement” positions the
car as a fun vehicle). Position strategies are based upon the benefits offered by this brand
to the consumer.
Positioning strategies include ideas and themes to be communicated for a successful
marketing program. For example, a strategy may stress the substantive value for the
consumer. A strategy remains consistent over time and reinforces a distinct perception in
the consumer’s mind as to what the brand represents (i.e., for an airline, does it offer ontime reliability, state of the art baggage handling?)
Positioning themes focus on the benefit for the user. Some examples include: Ryka shoes
utilize a theme that stresses the fact that these are shoes designed by woman and state
“shoes by woman for woman”; United airlines has positioned itself as the airlines for the
busy business traveler. Having a strong positioning theme is useful in a well established
product category with much competitive activity. Sometimes a theme will define
precisely what the brand can do: Excedrin is best for headaches, Tylenol for flu/colds.
Repositioning, as noted above, represents a brand to the consumer. There are various
reasons to reposition such as helping an ailing brand or to adjust to competition activity.
Product differentiation attempts to build a feature or performance characteristic into a
brand to set it apart from the competition (i.e., Toshiba offered a Pentium chip in its
computers). Additionally, an emotional differentiation creates a distinctive
image/personality for a brand. Think of Ralph Lauren, BMW or even Calvin Klein
products. Most likely these companies conjure up a distinct image for you.