Identifying promotional tactics involves analyzing
- 2. 2 Target vs. Mass Marketing Mass Marketing Target Marketing production-oriented approach using the same marketing mix to vaguely target ALL consumers an approach which segments the mass market in order to tailor the marketing mix to a specific type of consumer applies to a heterogeneous, or diverse group applies to a homogeneous, or similar group
- 3. 3 Mass Marketing • Advantages include: −marketers can spend less time and money on applying a marketing mix to consumers −less expensive compared to segmentation marketing −diversity in customers −less research required to determine the best marketing strategy
- 4. 4 Mass Marketing • Disadvantages include: −success rates differ across geographical areas −adaptations to changes in the marketing environment can be difficult −increased competition between companies −marketers can lose the “niche” effect, which can attract customers • especially for service industries where customers want to feel like “one in a million” −have less of a competitive edge compared to other companies who use market segmentation
- 5. 5 Market Segmentation • Advantages include: −identifies most profitable customers −improves customer service −allows for more efficient advertising −segmentation helps companies focus on particular consumers for the companies products −companies can gain a competitive advantage compared to other companies
- 6. 6 Market Segmentation • Disadvantages include: −segment size could limit business −cost of production increases −could cause companies to overlook other potential customers −potential customers may not fit into any market segments −segmentation can get expensive for companies trying to create too many segments for different types of people
- 7. 7 Target Markets • Are similar groups of consumers a company wishes to attract • Are vital to keeping the marketing mix focused and directed toward the right customers • Allow the marketing mix to be tailored to fit a specific target customer
- 8. 8 Market Segmentation • Is a two-step process: −identifying broad-product markets (generic markets) −segmenting markets into target markets for marketing mix development
- 9. 9 Identifying Generic Markets • Divides possible needs of consumers into generic markets −reduces the marketing focus to product- market areas where companies are more likely to have a competitive advantage −companies cannot satisfy all consumer needs • for example: car manufacturers concentrate on transportation markets and ignore possible opportunities in clothing and food markets
- 10. 10 Segmentation • Is dividing people based on certain characteristics −clustering people with similar needs into market segments • a similar group of consumers responding to the same marketing mix
- 11. 11 Types of Segmentation • Include: −demographic −psychographic −geographic −consumer behavior
- 12. 12 Demographic Segmentation • Is using statistical data which describes a population through personal characteristics including: −age −gender −income −ethnic background −cultural background −education and occupation
- 13. 13 Demographics • Allow businesses to understand consumers and their behaviors • Influence the marketing industry through the following: −population trends • shift of age in the general population −population shifts • movement of people from one geographic location to another
- 14. 14 Segmentation by Age • Consists of dividing people by age and targeting a certain age −separate age groups by generation • this is common due to generation gaps −separate generations further • for example: toy manufacturers place age recommendations on their packaging Generation Gap: difference in values and attitudes between one generation and another; especially between young people and their parents
- 15. 15 Segmentation by Age Baby Boomers Generation X Generation Y Generation Z Born 1946-1964 Born 1965-1977 Born 1978-1994 Born 1995-now Control $2.6 trillion of GNP and 51% of wealth in the United States Are arguably most educated: 29% college educated Are much more diverse than previous generations Are the most technologically savvy and most likely to multitask Are of interest to companies promoting products related to aging populations Are big spenders in electronics, clothing and entertainment and reached through sharp images, music, humor and a hint of impertinence Are more likely to be immune to traditional marketing and sales pitches and tend to be less brand loyal Are attractive to marketers for building lasting consumer loyalty to their brands at an early age
- 16. 16 Segmentation by Gender • Divides consumers according to whether they are male or female −many companies have doubled revenues by targeting women • for example: Gillette® razors and Joe Boxer®
- 17. 17 Segmentation by Income • Includes two types: −disposable income • money left after taxes are taken out of paychecks • attractive to companies who produce “necessities” such as food and personal hygiene products −discretionary income • money left after basic living expenses have been paid (bills, groceries, etc.) • attractive to companies who sell non-necessity type products such as entertainment services and luxury items
- 18. 18 Segmentation by Ethnicity • Groups consumers by ethnic background −ethnic populations are increasing in the United States while the Caucasian population is declining
- 19. 19 Hispanic Populations • Include 52 million people −approximately 16.7 percent of total population • Are the largest ethnic group and include many diverse groups: −Mexican −Spanish −Puerto Rican −Cuban −Dominican −Caribbean −other Central and South American nationalities
- 20. 20 Hispanic Populations • Are targeted through: −Spanish language TV such as Telemundo® −Spanish language print media and radio
- 21. 21 African-American Populations • Include more than 40 million people −approximately 13.1 percent of total population • Bring in $400 billion annually • Are targeted by: −advertising in African-American centered media (for example: Essence® or BET® ) −coordinating promotions with important cultural events such as Black History Month −using African-American celebrities to promote products
- 22. 22 Asian-American Populations • Include more than 15 million people −approximately five percent of population • Are the fastest growing and most affluent ethnic population • Include many diverse groups: −Chinese −Filipino −Japanese −Asian-Indian −Korean −Vietnamese
- 23. 23 Asian-American Populations • Are targeted through: −online media −positivity
- 24. 24 Segmentation by Culture • Refers to the differences of individuals within a society • Can determine whether or not a business is successful −for example: if a business does not resemble the community or region to which it is marketing to, the consumer will feel as if they do not belong
- 25. 25 Elements of Culture • Include: −social organization • division of labor, communication systems, sexual composition, etc. −customs and traditions • behaviors, statement, etc. passed from generation to generation −religion • system of faith and worship −language • spoken or written communication
- 26. 26 Elements of Culture • Include: −arts and literature −government −economic systems • countries resource allocation and distribution of goods and services
- 27. 27 Cultural Diversity • Affects the way businesses may advertise goods or services −for example: in the United States, people value individualism and will respond to individualistic messages, but in other countries, people may feel targeted by individualistic messages and NOT respond appropriately to the message
- 28. 28 Multiculturalism • Refers to two or more diverse cultures co- existing with one another • Can complicate marketing strategies due to different meanings and interpretations across cultures
- 29. 29 Multigene Rationalism • Refers to two or more generations co- existing with one another −a generation is a group of people who were born around the same time and will have similar experiences as they age • Can affect how a product or company is perceived −each generation has been through experiences in which shape their outlook
- 30. 30 Psychographic Segmentation • Uses consumer studies of social and psychological characteristics of different types of customers −people’s attitudes, values and lifestyles • magazine publishers understand psychographic segmentation − numerous types of unique magazines targeted to a psychographic population • Golf Digest® • Sport’s Illustrated® • Home and Garden®
- 31. 31 Psychographic Segmentation • Requires knowledge of trends −changes in households, the economy, politics and the workplace −changes in personal attitudes about health, time, fun and general living −trends include: • living a healthy lifestyle − companies are pushing more health-related products to consumers • having enough time − Campbell’s Soup® introduced a soup in a to-go cup for customers on the go
- 32. 32 Geographic Segmentation • Is segmentation based on where people live −local, regional, national and global markets • locally owned restaurants will market differently than national or global restaurant chain • Is often based on ethnic concentrations −to pursue Hispanic consumers, marketers target states with high Hispanic populations
- 33. 33 Geographic Segmentation • Includes consideration of Metropolitan Statistical Areas (MSAs) −created by the government to help distribute federal aid −used by marketers to target consumers and launch promotional campaigns • Includes the following trends: −South, West and Southwest regions have fastest growing states
- 34. 34 Geographic Segmentation • Also causes marketers to consider whether a geographic area can use and buy products or would be receptive to new products
- 35. 35 Consumer Behavior Segmentation • Requires studying people’s needs and attitudes • Includes determining how present and future goods and services will fit into consumer’s consumption patterns −customers may have more than one reason for buying a product −marketers refer to a hierarchy of consumer needs
- 36. 36 Hierarchy of Consumer Needs