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Market Segmentation.docx

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University of Texas at Austin
ADV 318J
Gary Wilcox

Market Segmentation Tuesday, October 29, 2013 9:34 AM Market Segmentation • Dig into large groups of consumers • Segments become pr/advertiser's core audience. Segmentation for adv/pr • Audience segmentation: is the process of identifying a marketer's "best prospects" on the basis of: 1. Identifiable needs, problems or value • Find the underlying problems or value system  Ex. Fed Ex - did some research and they found customers who: • Need overnight service • Problem w/late deliveries. • Value reliability 1. Accessibility through media • Accessible through media at reasonable cost.  Super Bowl: 30 ad cost 2.5 million • Viewers: 78 million • Cost per thousand: $32.00 • Internet Ad: cpm average $5.29 Profit potential for segment 1. • Most important test of a segment • Least often applied in practice. • Is the segment responsive to communications? • Is it growing?  Product categories that are growing: • Green products • Car Sharing (smart cars) • Long-term health care • Tablets  Market Segments that are growing: • Single women home buyers (women in the workforce making lots of money) • Spanish speaking segment on web Segmentation is Niche Market • Process of identifying a needs-segment and targeting a product for that segment. o How can we segment our class? • Male/Female • Eyeglasses • Left handed  Stores named: Anything Left Handed and Southpaw Shoppe • Made Simple: o We probe to find or create new segments • HP: Found consumers interested in value and quality hardware at a slightly higher price • Dell: same features, cut prices by selling direct to consumers through advertising instead of retailers. •Segmentation Examples: o Automobiles o Laundry Soap • Tide • Cheer • Bold •Segmentation evolved from: o Mass Market: model sees everybody as a potential customer and tries to reach the widest possible audience for a product. •Evolved to: o Target Marketing: Smaller slice of consumers from the "mass market" who share the need for a product • What helped was the ability to segment based on media choices • One of the first examples of target marketing was done with kids on cable channels o One-to-one model: two-way dialogues with customers and prospects. • Brand image advertising created liking and preference • Database went directly to consumer Segmentation process Today: •Step 1: Define the promotion uses for segmentation o Marketing to Existing Customers • Most profitable segment • 65% of the average company's business comes from current satisfied customers • Cost 4-5 times more get new customers than keep existing ones. • How do you get your customers to use more of your product?  Do research  Offer rewards: use more of the product  Ex) L.L. Bean: brought out a line of kids clothes. They had older men and women shopping, why not bring a new market and make current customers (parents) spend more. (in this case, spend on their kids)  Ex 2) Arm and Hammer Baking Soda: found other ways to use product (brush your teeth, eliminate refrigerator odors, dump product down the drain and eliminate drain odors) o Seeking new consumers: • Analyzing Trends  Brain Reserve and Trend Watching: NY based marketing consulting firms that specialize in trends • Past consumer trends: • "Cocooning" the need to protect oneself from the harsh outside world. • "Cashing out" working men and women opting for simpler, stress-free lives. • "Pleasure Revenge" predicted new fondness for meats, desserts, other comfort foods. • Trends for 2013 • Buy Local • The Mobile Device as Everything • Pemiumization: making high end products for different categories • Bling H2O: Limited edition, corked frosted glass bottles. "You can tell a lot about a person by the bottled water they carry." • Tasmanian Rain: captured in Australia -- world's purest • Carlsberg 900 beer: Cost the same as champagne • Revona Black: Fashionable toilet paper: $3.00 a roll • Improving Media Choices  Cable networks • Oxygen - young moms • BET - Higher income black viewers • ESPN - Men  Creating Sharper Messages • Use segmentation to find out what their best prospects will respond to • Knowing prospect's need/attitude gives creates ability to connect to personnel • Step 2: Use geographic, demographic and psychographic variables to create segments; define segments o Identify the best existing customers • What makes them alike? • What makes them different? • What consumer traits are associated with using/liking product? • Which media people who like product attend to? • Sorts of appeals they're likely to respond to? o Segmentation Variables • Geographic information: identifies the scope of a market as global, international national, or local.  Global Segments • Global Youth Market • Global Affluent Market
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