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Sharpen the Focus:
Target Marketing Strategies and
Customer Relationship Management
Chapter Seven
Chapter Objectives
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Identify the steps in the target marketing
process
Understand the need for market
segmentation and the approaches available
to do it
Explain how marketers evaluate segments
and choose a targeting strategy
Understand how marketers develop and
implement a positioning strategy
Explain how marketers increase long-term
success and profits by practicing customer
relationship management
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Real People, Real Choices:
Decision Time at PBS KIDS Sprout
 Which strategy should Jim select for
Sprout’s first ever consumer-oriented
brand campaign?
• Option 1: Target only Sprout viewers
with the marketing campaign
• Option 2: Produce a campaign that is
specifically designed for nonviewers
• Option 3: Target both those who view or
are aware of Sprout, as well as
nonviewers, with the same campaign
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Target Marketing Strategy:
Selecting and Entering a Market
 Market
fragmentation:
• The creation of
many consumer
groups due to
the diversity of
their needs and
wants
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Figure 7.1
Steps in the Target Marketing Process
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Figure 7.2
Segmenting Consumers Markets
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Segmenting by Demographics:
Age and Generational Marketing
 Children
 Teens
 Tweens
 Generation Y:
born between
1979 and 1994
Ford Fiesta Movement
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Segmenting by Demographics:
Age and Generational Marketing
 Generation X:
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born between 1965
and 1976
Baby boomers:
born between 1946
and 1964
Older consumers
Visit Nintendo
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It’s Debatable
Class Discussion Question
As the baby boomers age, many
marketers are going to have to decide
whether or not they should adapt their
products so they continue to appeal to the
baby boomer segment as it grows older.
Choose a particular product or service
that currently appeals to baby boomers.
What types of adaptations might be
necessary to make this product or service
appeal to those 65 years and older?
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Segmenting by Demographics:
Gender
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Many products
appeal to one sex or
the other
Metrosexual:
A straight, urban
male who is keenly
interested in fashion,
home design,
gourmet cooking,
and personal care
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Segmenting by Demographics:
Other Variables
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Family life cycle:
• Family needs change over time
• Different product categories ascend or
descend in importance over the life cycle
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Income
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Social Class
• Strongly correlated with buying power
• Consumers buy according to image they
wish to portray rather than where they fall in
the framework
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Segmenting by Demographics:
Race and Ethnicity
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Race and ethnicity
• African Americans
• Asian Americans
• Hispanic
Americans
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Cultural diversity is
increasing
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Segmenting by Demographics:
Place of Residence
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Geodemography:
• Combines geography with demographics
PRIZM website
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Geocoding:
• Customizes Web advertising so people who
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log on in different places see ad banners for
local businesses
Search engine marketing example:
Google
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Segmenting by Psychographics
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Psychographics use psychological, sociological,
and anthropological factors to segment a market
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Figure 7.3
VALS Framework
TM
Learn more
about each
segment by
visiting
Strategic
Business
Insights
(VALS types)
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Take the
VALSTM
survey by
visiting
Strategic
Business
Insights
(survey link)
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Segmenting by Psychographics
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Niche markets may
be defined by a
single characteristic
Psychographic
segmentation can be
industry specific
Situations, such as a
bad economy, can
create opportunities
for psychographic
segmentation
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Segmenting by Behavior
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Behavioral segmentation:
• Segments consumers based on how they act
toward, feel about, or use a product
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User status
80/20 rule and
segmentation by
usage status
Long tail concept
Usage occasions
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Segmenting B2B Markets
 Segmentation helps B2B firms
understand the needs and
characteristics of potential customers
 Firms can be segmented by:
• Organizational demographics
• Production technology used
• Whether targeted business firm is a
user/nonuser of product
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Figure 7.4
Phases of Targeting
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Evaluation of Market Segments
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A viable target segment should:
• Have members with similar product
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needs/wants who are different from members
of other segments
Be measurable in size and purchasing power
Be large enough to be profitable
Be reachable by marketing communications
Have needs the marketer can adequately
serve
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Developing Segment Profiles
 After segments are identified, profiles
or descriptions of the “typical”
customer in a segment are developed
• Segment profiles might include
demographics, location, lifestyle, and
product-usage characteristics
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Figure 7.5
Choose a Target Marketing Strategy
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Choosing a Targeting Strategy
 Customized marketing strategy
• Tailoring specific products to individual
customers
• Common in personal and professional
services, and in industrial marketing
• Mass customization
Modifying a basic good or service to
meet the needs of an individual
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Steps in the Target Marketing Process
Step 3: Positioning
 Positioning:
Developing a marketing strategy to
influence how a particular market
segment perceives a good/service in
comparison to the competition
Sprout Video
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Figure 7.6
Stages in a Positioning Decision
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Modifying Positioning Strategies
 Repositioning is commonly used to
change the brand image
• Requires redoing a product’s position
in response to marketplace changes
 Repositioning may breathe life into
Retro brands
• A once-popular brand that has been
revived to experience a popularity
comeback, often by riding a wave of
nostalgia
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Targeting and Positioning Strategies
Must Complement Each Other
Sobe’s XTC targets 18-35
year olds who want a
“New Age” beverage that
offers an energy boost
without unhealthy
additives.
SoBe was inspired by
“herbal ecstasy”
cocktails made popular
in the 1990s, but
positioned as less risky.
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The Brand Personality
 Brand personality:
A distinctive image that captures the
brand’s character and benefits
 Personality dimensions:
• Sincerity
• Excitement
• Competence
• Sophistication
• Ruggedness
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Example?
Example?
Example?
Example?
Example?
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Figure 7.7
Perceptual Map
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Customer Relationship Management
(CRM): Toward a Segment of One
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Customer relationship
management:
• A systematic tracking of
consumers’ preferences
and behaviors over time
in order to tailor the
value proposition as
closely as possible to
each individual’s unique
wants and needs
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Table 7.1
The Four Steps of 1-to-1 Marketing
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CRM: A New Perspective on an Old
Problem
 CRM systems capture information
 Touchpoints interface customers and
businesses
 CRM systems include:
• Order and delivery tracking websites
• Call centers
• Automatic reminder systems
• Sales contact management software
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Figure 7.8
Characteristics of CRM
LVC Tool
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Real People, Real Choices:
Decision Made at NutriSystems, Inc.
 Jim chose option 3
• Why do you think Sprout chose to
target both current viewers and
nonviewers with the same brand
awareness campaign?
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Keeping It Real: Fast-Forward to
Next Class Decision Time at Bossa Nova
Beverage Company
 Meet Palo Hawken, co-founder and VP
of research and innovation at Bossa
Nova Beverage Company
 Firm markets premium guarana
flavored carbonated energy drinks
 The decision to be made:
How to fit the new açai juice into the
current product line
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written permission of the publisher. Printed in the United
States of America
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