Download GETTING TO KNOW YOUR TARGET AUDIENCE

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:
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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?
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Length of time customers continue to buy - period of the relationship
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Net present value of total profit value over that time (or defined time
period)
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LTV focuses on a series of sales, not just one sale
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Varies across customer database
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Helps to determine the amount you can afford to spend on
marketing (customer acquisition and other activities)
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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?