Download Chapter 8

Electronic Marketing
Chapter 8
Segmenting and Analyzing the
Target Market
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
5/24/2017
2004
Joel Reedy and Shauna Schullo
Basics of Geo-Demographic
Analysis
• Searching through 130 million households
• Services of database-enabled, geo-demographics
companies are broad and thorough
– Many offer market data, others are mapping firms
– Demographic characteristics are reported in households,
individuals, or as population percentages
– Psychographics reported in percentage of households
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
5/24/2017
2004
Joel Reedy and Shauna Schullo
Basics of Geo-Demographic
Analysis
• The value of marketing databases is the classification of like
items into smaller groups whereby the marketer finds
communication and service easier tasks
– Demographics, socioeconomics, housing characteristics,
lifestyles, and consumer purchasing behavior
– SIC code (Standard Industrial Classification)
• Advantages of CRM and database technologies
– Segmentation can now be done using “real-time” specific
attitudinal and behavioral characteristics
– Segmentation using very specific criteria can be accomplished
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
5/24/2017
2004
Joel Reedy and Shauna Schullo
Basics of Geo-Demographic
Analysis
• Why are the concept and practice of segmentation so
important?
– Demographers have found that people of similar demographic,
economic, and social characteristics tend to live among other
similar persons
– For marketing purposes, these clusters of people with similar
means, aspirations, and motivations can be matched to
products and services related to their life circumstances
– Discovery of whom is the intended prospect is most important
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
5/24/2017
2004
Joel Reedy and Shauna Schullo
Basics of Geo-Demographic
Analysis
• Investigating the typical demographic report
– Demographics
– Demographic updates and projections
– Age by income
– Occupation and education
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
5/24/2017
2004
Joel Reedy and Shauna Schullo
Basics of Geo-Demographic
Analysis
• Psychographics, the clustering of households with similar
lifestyles
– Psychographics is the study of lifestyles
– With psychographic data, marketers can segment, locate,
quantify, and target their best prospects within a selected
geographic area
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
5/24/2017
2004
Joel Reedy and Shauna Schullo
Basics of Geo-Demographic
Analysis
• Each market segment represents consumers with a unique
pattern of purchasing, consumption, media usage, and
financial behavior
• Psychographic measurement identifies the number and
percent of households and population in each market
segment to give the marketer an index of comparison
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
5/24/2017
2004
Joel Reedy and Shauna Schullo
Basics of Geo-Demographic
Analysis
• Researching the habits and lifestyles of chosen markets can
improve effectiveness in promotional tools such as media
vehicle selection, appeals, advertising scheduling and sales
promotion.
• There are many lifestyle niches that an individual can
occupy, hence the study and application of group
psychographics become an important key to marketing
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
5/24/2017
2004
Joel Reedy and Shauna Schullo
Basics of Geo-Demographic
Analysis
• The marketer must define the best profiles, one or more that
will be most receptive to purchasing the product or service
– Selection process should be ranked by number of households
or percentage of households
– Identify an acceptable aggregate market level
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
5/24/2017
2004
Joel Reedy and Shauna Schullo
Basics of Geo-Demographic
Analysis
• Marketers can explore psychographic segmentation online
through the Internet’s Values and Life Styles (VALS) Web
site (http://www.sric-bi.com), a center for psychological and
motivational research
• Its hypothesis is that all Americans can self-identify
themselves into clusters of lifestyles
– Eight segments in the traditional VALS2 categorizations
– Eight segments in the VALS profiles resulting from recent
Internet research
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
5/24/2017
2004
Joel Reedy and Shauna Schullo
Basics of Geo-Demographic
Analysis
• Marketers of consumer products also use behavioral
segmentation as a way to divide consumer market
– The rationale is toward linking consumer behavior to usage:
light, average, or heavy users
– The difficulty in labeling consumers as light or heavy users is
that identification is not constant through the product
categories; consumer usage varies according to products
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
5/24/2017
2004
Joel Reedy and Shauna Schullo
Electronic Marketing Tracking
Tools
• As electronic commerce develops, more and more
technology resources will be directed toward identifying and
tracking the behavior of online purchasers
• Tracking and profiling software, called “cookies,” are easily
installed and easily turned off in the computer owned by the
Web user
• Many persons view these electronic tools as marketing
surveillance akin to a breach of privacy
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
5/24/2017
2004
Joel Reedy and Shauna Schullo
Electronic Marketing Tracking Tools
• Marketers use the information from cookies to track a user’s
visits to a page, length of visit, and visited pages’ frequency
• Clickstream analysis is a study of consumer response data
detailing the content and advertising banners that visitors
click on during the online navigation process
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
5/24/2017
2004
Joel Reedy and Shauna Schullo
Art and Science
• There are two important areas of judgment in marketing
– One area is in the judgment of the creative marketing process
in determining whether new sales programs or creative
campaigns will “work”
– The other area is in market or segment selection in determining
who is the appropriate customer for the product or service
• Employing psychographics is an art that not every marketer
has patience for, but it is a longer-lasting strategy for
ultimate success
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
5/24/2017
2004
Joel Reedy and Shauna Schullo
The Segmentation Technique of
Geographical Mapping
• Utilizing geographical database technique is fast becoming
a popular tool for marketers
– Databases can contain thousands of variables
– Each variable may contain the key information required to
make a decision
• The marketer that is using a mapping application can pull
the same information from a database and apply it to any
map
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
5/24/2017
2004
Joel Reedy and Shauna Schullo
The Segmentation Technique of
Geographical Mapping
• The aspects of mapping include many different levels of
– Geography
– Carrier routes
– Zip codes
– Census tracts
– Designated Market Areas (DMAs)
– States
– Custom-created sales territories
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
5/24/2017
2004
Joel Reedy and Shauna Schullo
The Segmentation Technique of
Geographical Mapping
• Benefits of mapping
– Organization
– Analysis
• Mapping is a front-end display that tells the story of data
that are in the background; the map and database must
always correlate
• It is also critical to have layers on the map up to date
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
5/24/2017
2004
Joel Reedy and Shauna Schullo
The Segmentation Technique of
Geographical Mapping
• There are three types of database mapping and each
function has its benefits to the e-marketer
– Site analysis
– Territory management
– Database plots
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
5/24/2017
2004
Joel Reedy and Shauna Schullo