BUS 348 Lecture Notes - Lecture 7: Customer Relationship Management, Slacker, Metrosexual
12 Jun 2018
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BUS 348
Lecture 7
Target Marketing Strategies and Customer Relationship Management
• Target Marketing Strategy: Selecting and Entering a Market
o market fragmentation - the creation of many consumer groups due to the diversity of their
needs and wants
• The marketing concept dictates that firms should make every effort to understand and
satisfy customer needs. Unfortunately, understanding needs is an increasingly
complex task because of market fragmentation. Technological and cultural changes
in our societ hae ireased the diersit of people’s iterests ad akgrouds,
leading to the creation of many consumer groups, each with its own set of needs.
• As a result of market fragmentation, mass marketing efforts are not as effective as
they were twenty years ago, or even ten years ago for that matter. For the vast
majority of brands, targeting everyone is not an option.
• Steps in the Target Marketing Process
o Market fragmentation, and the reduced effectiveness of mass marketing efforts in turn
underscores the importance of developing a true target marketing strategy.
o The target marketing strategy process consists of three separate yet interrelated steps:
• Segmentation - Marketers first divide the market into segments based on needs and
other customer characteristics
• Targeting - The marketer then selects one or more segments to serve
• Positioning - For each segment chosen, the marketer develops products specifically to
meet the needs of the selected group, and customizes all other aspects of the
marketing mix in a manner which most effectively and efficiently sells the product to
the segment.
• Step 1: Segmentation
o Segmentation is the process of dividing a larger market into smaller pieces based on
meaningful, shared characteristics
• Useful in both consumer and B2B contexts
• Many different dimensions, or segmentation variables, that marketers can utilize
• Segmentation variables can be broadly classified as demographic, psychographic, or
behavioral in nature.
• Segmenting by Demographics: Age and Generational Marketing
o Age is a popular demographic segmentation base because different age groups have
different needs and wants; specifically, members of a generation tend to share the same
outlook and priority. For this reason, many marketers engage in generational marketing.
o Children: It may surprise you to learn that American children aged 4 to 12 have a say in
family-related purchases of more than $130 billion a year. The purchase of toys, games, and
even food items are heavily influenced by children, while parents purchase a variety of
items (diapers, car seats, clothing, etc.) for use by their children.
o When advertising to children, marketers use cartoons and shows such as Hannah Montana,
American Idol, and others.
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find more resources at oneclass.com
o Teens: Teens are defined as people falling within the 12-17 year old age group. Marketers
are particularly interested in teens because this group is growing nearly twice as fast as the
geeral populatio. Furtherore, this group as ell as the tweens, kids -14 years old),
spend nearly $3000 of their own money on cosmetics, fast foods, and other feel good
products.
o Apple has had exceptional success marketing to teens, particularly via products such as the
iPod which allows teens to create their own content and control every aspect of their music
consumption. Tees hae a strog eed for idiidualit, hih Apple aters to. Tees do’t
partiularl like to e arketed to, hih is a great fit for Apple’s approah of lettig fas
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.
o Generation Y (born between 1979-14 is also alled Milleials or the Ba Boolet
by some. This free-spending group is highly attractive, as they represent approximately 26%
of the population. They are the first generation to grow up in a wired world, and are
ethnically diverse. Unfortunately, Gen Y is somewhat difficult to reach because they resist
readig eaig espapers ad agazies a’t reah the easil ad do’t ath a lot
of TV. When they do, they gravitate towards alternative fare such as the late-night lineup on
Adult Swim. Better methods of reaching this group include social networking, email, online
chat rooms, and other digital and social networking methods.
o Generation X: Some members of Gen X have historically been negatively portrayed in the
media as slackers, based on the fact that a small portion of this group moved back in with
their parents after graduating from college, rather than getting a job and leaving the nest.
The slacker subgroup within Gen X was actually relatively small, so this gross generalization
is unfair. However, it is true that many Gen Xers are skeptical of marketing claims and
maintain a cynical outlook towards marketing.
o Over time, Gen X has changed in many ways. On a positive note, Gen Xers are highly
entrepreneurial and are responsible for a great number of start-up businesses.
o Gen X seems determined in many ways to do things differently – while many Gen Xers were
lath ke hildre groig up, eaig that the let theseles i the house after shool,
got their own snacks, etc., because either both parents worked or they lived in single parent
homes, Gen Xers seem determined to have stable families. More than half are involved in
home improvement, and homes express their individuality, rather than serve as symbols of
material success.
o Baby Boomers are an important market for many businesses because this group is in its
prime earning years. For example, many leisure destinations rely heavily on business
provided by baby boomers – not only does this group have a high disposable income, but
working members of this generation typically have a lot of vacation time available, and few
worries about what to do with the kids (since most have graduated college and have moved
out on their own).
o Baby boomers are also a fantastic market for any product or service that disguises or
compensates for the fact that are aging. Cosmetics, wrinkle creams, clothing, cars, plastic
surgery . . . You name it!
find more resources at oneclass.com
find more resources at oneclass.com
o Older Consumers: Currently there are more than 40 million Americans ages 65 or older, and
this group ill ol get larger as the a ooers otiue to age. Ofte alled ature
osuers
• Segmenting by Demographics: Gender
o Many products appeal to one sex or the other
o Metrosexual - a straight, urban male who is keenly interested in fashion, home design,
gourmet cooking, and personal care
• Segmenting by Demographics: Other Variables
o Family life cycle
• Family needs change over time
• Different product categories ascend or descend in importance over the life cycle
o Income
• Strongly correlated with buying power
o Social Class
• Consumers buy according to image they wish to portray rather than where they fall in
the framework
• Segmenting by Demographics: Race and Ethnicity
o A osuer’s ethiit ofte plas a strog role i preferees for produts, series, ad
media. Understanding the unique needs of each group, as well as the media preferences
that indicate how they can best be reached, is essential for marketers who target on the
basis of race or ethnicity.
o African-Americans comprise about 12% of the U.S. population. A variety of specialized
media, such as Urban sound, rap, or hip-hop radio stations and Ebony, Vibe, or The Source
magazines are valued by this group, and provide marketers with an excellent opportunity to
reach this segment.
o Asian Americans are the fastest growing minority in the U.S. Though the overall size of the
sample is small, they earn more than other minority groups, and serve as an excellent target
for technology products.
o Hispanic Americans overtook African Americans as the largest minority group following the
2010 census. Commanding over $200 billion in purchase power, Hispanics are also an
attractive market due to their brand loyalty, geographic concentration by national origin
(e.g., Mexican-American, Cuban-American, Puerto Rican), youth, larger household size, and
receptivity to relationship based selling and marketing approaches.
o Cultural differences need to be taken into account when trying to reach Hispanics; family is
very important to this group. By 2020, the growth in Latino youth (62%) is projected
outstrip the growth of traditional teens (10%) by 52%. Latino teens seek spirituality,
stronger family ties, and more in color in their lives.
o One implication of the growth in minorities is that cultural diversity is increasing in the
workplace and elsewhere. Cultural diversity is the management practice that actively seeks
to include people of different genders, races, ethnic groups, and religions as employees,
customers, suppliers, or other members of the value chain.
• Segmenting by Demographics: Place of Residence
o Geodemography:
• Combines geography with demographics
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Unfortunately, understanding needs is an increasingly complex task because of market fragmentation. For the vast majority of brands, targeting everyone is not an option. Step 1: segmentation: segmentation is the process of dividing a larger market into smaller pieces based on meaningful, shared characteristics, useful in both consumer and b2b contexts, many different dimensions, or segmentation variables, that marketers can utilize. Segmentation variables can be broadly classified as demographic, psychographic, or behavioral in nature. Segmenting by demographics: age and generational marketing: age is a popular demographic segmentation base because different age groups have different needs and wants; specifically, members of a generation tend to share the same outlook and priority. For this reason, many marketers engage in generational marketing: children: it may surprise you to learn that american children aged 4 to 12 have a say in family-related purchases of more than billion a year.
