CONNECTING

1. PART CONNECTING 3 WITH CUSTOMERS Marketing Management An Asian Perspective

2. Chapter IDENTIFYING 8 Market Segments & Targets Marketing Management An Asian Perspective

3. In this chapter, we address the following questions: • What are the different levels of market segmentation? • How can a company divide a market into segments? • How should a company choose the most attractive target markets? • What are the requirements for effective segmentation? Marketing Management An Asian Perspective

4. China – Attractive target market WHY? Its huge population Marketing Management An Asian Perspective

5. Levels of Market Segmentation • Mass marketing, mass production of one product for all • Now, consumers - stand out from crowd • Turn to micromarketing • segments, niches, local areas or individuals Marketing Management An Asian Perspective

6. Hong Kong ICI Paints– WOMEN – KEY ROLE - purchase of house paints Campaign - target women ICI Dulux supreme as “best make up for your walls” Stunning visuals – brought home message - paint, like make up, is smooth, water resistant & has long-lasting color Marketing Management An Asian Perspective

7. Levels of Market Segmentation- Segment Marketing • Market segment– group, similar needs & wants • Segment ≠ sector • Segment marketing – better satisfy target market & reflect competitor’s marketing • One way - identify preference segments Marketing Management An Asian Perspective

8. Levels of Market Segmentation- Segment Marketing • Flexible market offering: • Naked solution – whole segment value, • Discretionary options – some value • Preference segments • Homogeneous preferences • Diffused preferences • Clustered preferences • Natural market segments Marketing Management An Asian Perspective

9. Figure 8.1 Basic Market-Preference Patterns Marketing Management An Asian Perspective

10. Although Vietnam - more modernized, selling products by using traditional baskets balanced over one’s shoulder is still a common feature Marketing Management An Asian Perspective

11. Levels of Market Segmentation- Niche Marketing • Niche - narrow group - mix of benefits • An attractive niche: • Distinct set of needs • Pay premium for it • Do not attract competitors • Economies through specialization • Size, profit & growth potential Marketing Management An Asian Perspective

12. Levels of Market Segmentation- Niche Marketing • Niche marketers understand customer – willing to pay premium for products • Globalization - facilitate niche marketing • Global niche players - stable markets, typically family-owned & are long-lived Marketing Management An Asian Perspective

13. Levels of Market Segmentation- Niche Marketing Eg : Ostrichesonline.com • Webpreneur - earns 6-figure income • Sell online: ostriches & every product derived from them • Since 1996: > 20,000 clients, >125 countries - ostrich meat, feathers, videos, eggshells & leather jackets Marketing Management An Asian Perspective

14. Levels of Market Segmentation- Local Marketing • Local marketing - tailored to needs & wants of local groups • Countries - strong regional differences • Grassroots marketing - closest to customers possible - experiential marketing – connect to unique experiences Marketing Management An Asian Perspective

15. Experiential Marketing Set of experience providers: • Communications • Visual/verbal identity • Product presence • Co-branding • Environments • Web sites & electronic media • People Marketing Management An Asian Perspective

16. Experiential Marketing Customer Experience Management (CEM) • Strategically manage customer’s entire experience with product/company CEM framework - 5 basic steps: • Analyze customer’s experiential world • Building experiential platform • Designing brand experience • Structuring customer interface • Engaging in continuous innovation Marketing Management An Asian Perspective

17. Levels of Market Segmentation- Customerization • Customization = one-to-one marketing • Customerization – operationally driven mass customization & marketing • Empowers consumers design product of choice • Eg: Online firms provide Choiceboard: customer design own products Marketing Management An Asian Perspective

18. Segment: More efficient Less customer data More standardization Individual: Segments are fiction Individuals in segments differ greatly More precise & effective – address individual needs Levels of Market Segmentation- Customerization Marketing Management An Asian Perspective

19. Figure 8.2 Examples of Marketing Customization Marketing Management An Asian Perspective

20. Figure 8.2 Examples of Marketing Customization Marketing Management An Asian Perspective

21. Segmenting Consumer Markets-Geographic Segmentation • Divide market - geographical units • nations, cities or neighborhoods • Mapping software - densest areas –customer cloning Geoclustering = geographic + demographic data data • Captures increasing diversity of population Marketing Management An Asian Perspective

22. Table 8.1Geographic Major Segmentation Variables for Consumer Markets Marketing Management An Asian Perspective

23. Table 8.1Geographic Major Segmentation Variables for Consumer Markets Marketing Management An Asian Perspective

24. Segmenting Consumer Markets-Demographic Segmentation Demographic variables popular – WHY? • Consumer needs, preferences often associated with them • Easy to measure Marketing Management An Asian Perspective

25. Segmenting Consumer Markets- Demographic Segmentation AGE AND LIFE-CYCLE STAGE • Consumer wants, abilities change with age • But, target may be psychologically young • Eg: Honda targeted 21-year-olds with Element - “dorm room on wheels” • Average age of buyers turned out to be 42! Marketing Management An Asian Perspective

26. Segmenting Consumer Markets- Demographic Segmentation LIFE STAGE • Same in life-cycle may differ in life stage • Life stage • Person’s major concern - divorce, new home • Opportunities for marketers who can help people cope with major concerns Marketing Management An Asian Perspective

27. Segmenting Consumer Markets- Demographic Segmentation GENDER • Men & women - different attitude & behavior - genetic makeup & socialization • Male-oriented markets - recognize gender segmentation • Eg Banks now find women a lucrative segment in Japan Marketing Management An Asian Perspective

28. Segmenting Consumer Markets- Demographic Segmentation INCOME • Long used in clothing, cosmetics, travel etc • May not predict best customers for product • Reinvent - huge potential – those trading up • If not – risk “trapped in middle” • Eg General Motors caught in middle of • German imports in luxury market & • high-value Japanese models in economy class Marketing Management An Asian Perspective

29. Segmenting Consumer Markets- Demographic Segmentation GENERATION • Growing up times - profound influence on generation • Cohorts - same major cultural, economic experiences - outlooks & values • Marketers - use icons & images prominent in their experiences Marketing Management An Asian Perspective

30. Marketing to Generation Y • Generation Y ≈ 78 million Americans • Spending power ≈ $187 billion annually • 53 years life expectancy: $10 trillion range in consumer spending • Turned off by “hard sell” approaches • Gen Y - force that will shape consumer & business markets for years to come Marketing Management An Asian Perspective

31. Marketing to Generation Y Different approaches to reach Generation Y • Online buzz • Student ambassadors • Unconventional sports • Cool events • Computer games • Videos • Street teams Marketing Management An Asian Perspective

32. Segmenting Consumer Markets- Demographic Segmentation GENERATION • Asian version of Generation X GENIE GENeration who Independently Engage • Little respect for social structures • Not rebellious or materialistic • Enjoy good life– value family & hard work Marketing Management An Asian Perspective

33. Segmenting Consumer Markets- Demographic Segmentation • Lifestage Analytic Matrix • Uses data on cohorts, life stages, physiographics, emotional effects & socio-economics • To analyze segment/individual • Same cohort may differ in life stages • More efficient targeting & messages Marketing Management An Asian Perspective

34. Segmenting Consumer Markets- Demographic Segmentation SOCIAL CLASS • Strong influence on preference in cars, clothing, leisure activities & retailers • Design for specific social classes • Tastes of social class change with years Marketing Management An Asian Perspective

35. Segmenting Consumer Markets- Psychographic Segmentation • Psychographics • Use psychology & demographics to better understand consumers • Psychographic segmentation – groups based on - lifestyle, personality, values • Same demographic group can have different psychographic profiles Marketing Management An Asian Perspective

36. Segmenting Consumer Markets- Psychographic Segmentation SRIC-BI VALSTM - psychographic measurements • 8 primary groups - personality & demographics • 4 demographic & 35 attitudinal questions • Continually updated • New data from > 80,000 surveys per year Find out which VALS type you are at SRIC-BI’s Website:www.sric-bi.com Marketing Management An Asian Perspective

37. Segmenting Consumer Markets- Psychographic Segmentation Innovators Successful, “take charge” Upscale, niche-oriented Thinkers Mature, reflective Durability, functionality Achievers Successful career Established & prestige Experiencers Enthusiastic, variety Fashion, entertainment Believers Conservative Familiar & established Strivers Trendy Stylish products Makers Practical, traditional Basic, practical Strugglers Resigned, passive Loyal to favorite brands SRIC-BI VALSTM Find out your VALS type at:www.sric-bi.com Marketing Management An Asian Perspective

38. Figure 8.3 The VALS Segmentation System: An 8-Part Typology Marketing Management An Asian Perspective

39. Psychographic segmentation often customized by culture Japanese VALS 2 key dimensions: Life orientation Attitudes to social change Segmenting Consumer Markets- Psychographic Segmentation Marketing Management An Asian Perspective

40. Tradition Innovators Tradition Adapters High Pragmatics Low Pragmatics Sustainers Segmenting Consumer Markets- Psychographic Segmentation Japanese society - 10 segments: • Integrators • Self Innovators • Self Adopters • Ryoshiki Innovators • Ryoshiki Adapters Marketing Management An Asian Perspective

41. Segmenting Consumer Markets- Behavioral Segmentation • Buyers into groups – knowledge, attitude, use, response to product DECISION ROLES • Easy to identify buyer for many products • But buying roles change • 5 roles: Initiator, Influencer, Decider, Buyer & User Marketing Management An Asian Perspective

42. Segmenting Consumer Markets- Behavioral Segmentation BEHAVIORAL VARIABLES • Occasions: time of day, week, month, year or any defined aspects of life • Buyers - occasions – need/buy product • Extend activities linked to holidays to other times of year Marketing Management An Asian Perspective

43. Segmenting Consumer Markets- Behavioral Segmentation • Benefits: • Buyers grouped – benefits they seek • User Status: • non-, ex-, potential, first time, regular & will-be (life stage/event) users • Market leaders - attract potential users • Small firms - attract users from leader Marketing Management An Asian Perspective

44. Segmenting Consumer Markets- Behavioral Segmentation • Usage Rate: • light, medium & heavy users • Heavy users • Small % of market but high % total consumption • Loyal to only one brand or lowest price Marketing Management An Asian Perspective

45. Segmenting Consumer Markets- Behavioral Segmentation • Buyer-Readiness Stage: • Different stages of readiness to buy product • Some unaware, interested, desire or intend to buy product Marketing Management An Asian Perspective

46. Brand loyalty status: Hard-core loyals 1 brand all the time Split loyals loyal to 2/3 brands Shifting loyals 1 brand to another Switchers No loyalty to any brand Segmenting Consumer Markets- Behavioral Segmentation What firms learn: Product strengths Competitive brand Marketing weakness Marketing Management An Asian Perspective

47. Brand-loyal purchase patterns may reflect: Habit Indifference High switching cost Non-availability of other brands Segmenting Consumer Markets- Behavioral Segmentation Marketing Management An Asian Perspective

48. Segmenting Consumer Markets- Behavioral Segmentation 5 attitude groups: • Enthusiastic • Positive • Indifferent • Negative • Hostile Marketing Management An Asian Perspective

49. Figure 8.4 Behavioral Segmentation Breakdown Marketing Management An Asian Perspective

50. Segmenting Consumer Markets- Behavioral Segmentation THE CONVERSION MODEL • Psychological commitment strength between brands & consumers & openness to change • Use satisfaction with current brand & likelihood to select brand Marketing Management An Asian Perspective