Segmentation & Targeting

Class Objectives

Identify the various methods advertisers use to segment and aggregate consumer and business markets

Discuss how target marketing affects an advertising strategy

First things firstA product must have utility for consumers.

The product must meet a need… or a perceived need (want).

Groceries Botox Home Lamborghini

Photo: stjoesfoodprogram.org

Photo: turbocharger-turbochargers.com

Market Segmentation

1. Identify people with shared needs and characteristics

Market Segmentation

2. Aggregate these groups into market segments according to their mutual interest in the product’s utility

1. Identify people with shared needs and characteristics

Result: Targets

Marketing for a product is aimed at a segment of the population, called the target market.

Advertising is aimed at a group reached by the medium, called the target audience.

Photo: turbocharger-turbochargers.com

Photo: en.wikipedia.org

Types of Markets

Two Types

BusinessConsumer

Behavioristic Segmentation

User-Status Variables

Usage-Rate Variables

Purchase Occasion Variables

Benefits-Sought Variables

Segmenting according to purchase behavior.

Tide photo: coupondad.net All photo: thedealdetector.com

Type of User Brand A Competitor

Sole users Always buy Never buy

Semisole users Generally buy Seldom buy

Discount users Buy if discounted Generally buy

Aware nontriers Prefer not to buy Prefer to buy

Trial/rejectors Never buy Always buy

Repertoire users Will buy Will buy

Researchers: Stefan & Tannenholz

User Status Variables

User Status Variables

This Crate and Barrel ad targets sole users and repertoire users

Usage-Rate Variables

Marketers use volume segmentation, measuring consumers’ usage rates of products similar to theirs.

• Light users• Medium users• Heavy users

Usage-Rate Variables

Hardee’s ad marketing the Thickburger targets heavy fast-food users.

Purchase-Occasion Variables

When does the consumer buy or use this product?

Occasions include: • Context of need• Frequency of need• Fads• Seasonality

Purchase-Occasion Variables

Consumers travel for business and vacations.

Benefits-Sought Variables

What are the benefits of the product to the consumer? What is the symbolism of the brand to the consumer?

Photo: footedpajama.com

Comfort

Fashion,Status

Geographic Segmentation

Photo: http://www.eia.doe.gov/emeu/recs/census_map.html

• Region• County size• Climate• City / SMSA size• Density

Geographic Segmentation

Photo: allmightyray.com

Photo: www2.tbo.com

Demographic SegmentationIncludes:• Gender• Age• Ethnicity• Education• Occupation• Income• Family status• Home ownership

Often combined with geo targeting for geodemographic segmentation.

WOMEN 25-49

Senior CitizensMIDDLE CLASS

Hispanic

African Americ

an

Married

College Educated

Teens

Demographic Segmentation

Demographic segmentation: Heavy usage patterns of various age groups

Exhibit 4-4, page 101

Demographic Segmentation

Ford targets middle-class men in their 30’s and 40’s

Ford targets urban African-Americans

E*TRADE Baby:

Time out: http://www.youtube.com/watch?v=x0GsNhLt9Ds

Singing baby: http://www.youtube.com/watch?v=KCs8gIMKBSo

First class: http://www.youtube.com/watch?v=mDm6iKH38C0 Photo: lifeorganizers.com

Demographic Segmentation

Charles Schwab:

Broker’s kids: http://www.youtube.com/watch?v=qj2oqI8w1gA

Bailout: http://www.youtube.com/watch?v=mFM-m31y5HY

Retirement: http://www.youtube.com/watch?v=11w8sNO8J_8

Photo: badvertisements.blogspot.com

Demographic Segmentation

Psychographic Segmentation

• Primary Motivations• Resources

VALS Framework, from Strategic Business Insights, is a well-known psychographic classification system

Psychographic SegmentationAdidas placed ads along the Boston Marathon route to target young people who define themselvesby their athletic achievements

Insert left panel of Adidas ad(p. 180)

(ritual/shock/denial/isolation ad panel)

Position = 2.9” horizontal, 1.5” vertical

Size = 2.8”wide

Resolution = 300 dpi

Psychographic SegmentationiPad: http://www.youtube.com/watch?v=JP8wKtFA4Io

Budweiser commercial: http://www.youtube.com/watch?v=7IY9xjIHugo

Think about: • How do these ads convey emotion?• What do you notice about the background

music?• What does the target consumer appear to value?• How does each ad motivate its target market?

Finalizing the Target

Number Name62 Hometown Retired

50 Kid Country, USA

53 Mobility Blues

32 New Homesteaders

48 Young & Rustic

http://geography.about.com/gi/o.htm?zi=1/XJ&zTi=1&sdn=geography&cdn=education&tm=7&gps=551_120_1017_563&f=20&su=p284.9.336.ip_&tt=2&bt=1&bts=0&zu=http%3A//www.claritas.com/MyBestSegments/Default.jsp%3FID%3D20

Rock Hill 29730

Top Prizm Clusters

Finalizing the TargetLevi’s

Target Product Concept

2. Use the 4Ps of the marketing mix to shape a product concept for the market

1. Select a target market (markets) from the market segments identified

Product Price Place Promotion

B2B Market Segmentation

Complexity:Manufacturers, Resellers,

Brand Partnerships

Organizationalbuying

behavior

Fewer, more-concentrated

buyers

Differencesfrom Consumer

Markets

B2B Market Segmentation

Complexity:Manufacturers, Resellers,

Brand Partnerships

Manufacturer Reseller/Retailer Brand Partnership

Hardees logo: pitchengine.com Coca-Cola logo: premisemarketing.com

Simeus FoodsInternational

The North American Industry Classification System (NAICS) hierarchy and codes are used throughout North America. Census data about industries helps companies target their markets.

B2B Market Segmentation

Impact of Targeting on AdvertisingMessage Media Mix

Kia Optima:http://www.youtube.com/watch?v=T7-q0eK8HL0

Kia Soul: http://www.youtube.com/watch?v=kfJnqbudMzs