GETTING TO KNOW YOUR TARGET AUDIENCE CEI WORKSHOP WEDNESDAYS DEC 5, 2012 Michele Baumgarten Marketing Communications & PR Consultant
AGENDA 6:00pm Introductions 6:20pm Presentation 6:45pm Activity: How well do you know your customer? 6:55pm BREAK 7:10-:30pm Review of Activity/Q & A
WHAT IS A TARGET MARKETING? Target Marketing is the process of evaluating the attractiveness of various segments and then deciding which to pursue as a market. Before you know how to speak to your audience/customers and how to reach them, you need to know: WHO they are WHAT they think about you, or if they think about you WHERE they are HOW they react to your product/service WHY they should purchase from you how are you different from everyone else? Marketing (Canadian Edition) Grewal, Levy, Persaud, Lichti
WHY TARGET YOUR MARKET? Many types of customers appear in any market and most businesses CANNOT satisfy everyone s needs. Therefore, you need to divide your market into groups of customers with different needs, wants or characteristics who therefore might appreciate products or services geared especially for them this is called Market Segmentation These groups of consumers who respond similarly to a business s marketing efforts are called Market Segments
HOW TO SEGMENT A MARKET? Market Segmentation helps us to understand the consumer what they do and why they do it. Characteristics include: Geographic a grouping of consumers based on where they live (country, region province, city, neighbourhood, urban, rural) Demographic a grouping of consumers according to characteristics such as: age, gender, income, education, marital status, family life cycle, religion, race, occupation, generational cohort (Baby Boomer, Gen X, Gen Y) Psychographic a grouping of consumers based on how they describe themselves: self-values, self-concept, personality (innovators, thinkers, achievers, survivors), lifestyles (conservative, liberal, adventuresome, outgoing, health- and fitness-conscious), social class (upper class, middle class, working class) Behavioural a grouping of consumers based on the benefits they derive from products or services (convenience, economy, prestige, quality, speed, service), their usage rate (heavy, moderate, light, non-user, ex-user, potential user, firsttime user), and their loyalty (not loyal, somewhat loyal, completely loyal)
MULTIPLE SEGMENTATION METHODS Although segmentation methods are useful, each has advantages and disadvantages and one market segmentation cannot fully describe a group. Geodemographic Segmentation the grouping of consumers on the basis of a combination of geographic, demographic and lifestyle characteristics Birds of a feather flock together For example - Consumers in the same neighbourhoods tend to buy the same types of cars, appliances and apparel, shop at the same types of retailers and behave similarly to media and promotions
MARKET RESEARCH - Questions You may need to do some Market Research to find out more about your potential market and to devise effective marketing strategies to reach them. Do you know Who are my customers & potential customers? What kind of people are they? Where do they live? Can and will they buy? Am I offering the kinds of goods or services they want: at the right place at the right time in the right amounts Are my prices consistent with what buyers view as the product's value? Are my promotional programs working? What do customers think of my business? How does my business compare with my competitors?
WHAT IS VALUE? Understanding the benefit of your product/service You need to understand the value or benefit that your customers are seeking or how the product/service fits a particular lifestyle to design your overall marketing strategy It is not enough to say they need it or should want it. You need to be able to define why in the context of who they are and what you know about them
So, I ve identified my market segments - WHAT S NEXT? Once you have identified the various market segments you need to evaluate how attractive each segment is and which to pursue using a process known as target marketing. Why? because you CANNOT market to everyone!
What s an attractive market segment? Can you clearly identify who they are? Do you know enough about them to understand how this segment is distinct? Too much overlap between segments means that distinct marketing strategies aren t necessary to meet segment members needs Can you reach or access this segment? Are you able to reach this market through your communications and/or product distribution? The consumer must know the product/service exists and understand what it can do for him/her and recognize how to purchase it
What s an attractive market segment? Cont d Are they responsive to your product/service? The customers in the segment must react similarly and positively to what you are offering Is this segment substantial in size and will they be profitable? Measurement of size and potential growth of target market If the market is too small or its buying power insignificant it won t generate sufficient profit or be able to support the marketing mix activities What is the profitability current and future? Think lifetime value
LIFETIME VALUE (LTV) Customer Lifetime Value is a marketing metric that projects the value of a customer over the entire history of that customer's relationship with a company. Use of customer lifetime value as a marketing metric tends to place greater emphasis on customer service and longterm customer satisfaction, rather than on maximizing short-term sales.
LTV What is it? Length of time customers continue to buy - period of the relationship Net present value of total profit value over that time (or defined time period) LTV focuses on a series of sales, not just one sale Varies across customer database Helps to determine the amount you can afford to spend on marketing (customer acquisition and other activities) Assists in defining the right communication program across the customer lifecycle
Who s the Most Valuable Customer? Who s more valuable? Who s most loyal? Customer 1 visits the store 4 times throughout the year spends $10,000 annually Customer 2 visits each Christmas spends $10,000 annually
LTV the Real Value Every customer your business has a relationship with represents an opportunity to make new sales in the future. The customer value is not merely the sum of what customers have purchased in the past. Understanding Customer Lifetime Value allows marketers to estimate what the future sales could be and to add that value in weighing the worth of the customer.
Does Segmentation Always Work? Establishing a basic segmentation strategy is not always easy and clear Sometimes you need to concentrate on one segment or go after multiple segments either way you still need to understand your audience/customer Segmentation Strategies Mass or Undifferentiated Differentiated Concentrated or Niche Micromarketing or One-on-One
SEGMENTATION STRATEGIES Undifferentiated or Mass Marketing If a product or service is perceived to provide the same benefit to everyone (e.g. sugar, salt) there is no need to develop separate strategies Differentiated Target several market segments with different offerings (e.g. Gap, Gap Kids) Concentrated or Niche Selection of a single, primary target market and focus all energies on providing a product/service to fit that market s needs Micromarketing or One-on-One An extreme form of segmentation that tailors a product or service to suit an individual customer s wants or needs
POSITIONING What is it? The mental picture or perception (thoughts, feelings and impressions) that people have about a company and its products or services relative to competitors. Formed from multiple sources such as friends, family, relatives, reference groups, published articles, reports, stories on radio or TV, Internet and a customers own experiences. Regardless of whether a company wants it or not, consumers form their own ideas and feelings about a product/service and it is those very ideas and emotions that drive them towards or away from a brand or company.
POSITIONING STRATEGIES Value (Price/Quality) The most popular positioning method because the relationship of price to quality is among the most important considerations for consumers when they make a purchase decision Product Attributes Focuses on those attributes of the product that are most important to the target market (e.g. Volvo for the safety-conscious driver) Benefits/Symbolism Emphasizes the benefits of the brand as well as the psychological meaning of the brand to the consumer (What comes to mind when you think about Colonel Sanders? The Nike swoosh? Tony the Tiger?) Competition Head to Head against a specific competitor Differentiation how you stand out against your competition (e.g. as a market leader)
RELATIONSHIP MARKETING Be customer focused in all your activities Open up the lines of communication for a two-way customer dialogue Information & data-driven communications based on a customer file/customer database Success based on the application of customer segmentation, knowledge and customer insight
THE RISKS OF NOT TARGETTING? It will impact all areas of the Marketing Mix Product - Your product isn t important to the audience you are promoting it to Price - You have priced your product below what your target will pay for it Place - You advertise where your target market isn t engaged E.g. Social media is the tool your audience uses to gather information but you are only running a paid ad in a local newspaper or magazine Promotion Your messages speak to no one; You spend more money then you need to Remember the general public is NOT your target market!
ACTIVITY: HOW WELL DO YOU KNOW YOUR AUDIENCE/CUSTOMERS? Define in terms of: Geographic country, region, province, city, neighbourhood, urban, rural Demographic age, gender, income, education, marital status, family life cycle, religion, race, occupation, generational cohort (Baby Boomer, Gen X, Gen Y) Psychographic self-values, self-concept, lifestyles Behavioural based on the benefits they derive from products or services, their usage rate, their user status and their loyalty What else do you know about them?