e-marketing, 3rd edition judy strauss, raymond frost, and adel i

E-Marketing, 3rd edition Judy Strauss, Adel I. El-Ansary, and Raymond Frost,Chapter 8: Targeting Market Segments and Communities, Prentice Hall 2003,Segmentation and Targeting Overview,Companies need to clearly understand the needs and behavior of its target market. It must have in-depth: Market knowledge, A savvy segmentation, Targeting strategy. E-marketing strategic planning occurs in two highly interrelated tiers:The first tier = segmentation, targeting, differentiation, and positioning,Second tier = the 4Ps and CRM.,Segmentation and Targeting Overview,Marketing segmentation = the process of aggregating individuals or businesses along similar characteristics that pertain to the use, consumption, or benefits of a product or service. Targeting = the process of selecting the market segments that are most attractive to the firm and selecting an appropriate segment coverage strategy.,Sources, Databases, and Strategy: Tier 1 Strategies,Market Segmentation Bases and Variables,Marketers can base their segmentation of consumer markets on:Demographics, Geographic location, Psychographics, Behavior with regard to the product. Within each base, there are many sub categories.,Market Segmentation Bases and Variables,Companies create segments:Combining bases + focus on categories = geodemographics. Using any combination of variables that makes sense for their industry. That can be used to identify and reach the right people at the right time. Using any of these four bases alone or in combination + many other variables. To know which variables broadly identify the target segment + which simply further describe it because marketers use identification variables to enumerate and access the target.,Segmentation Bases and Examples of Related Variables,Geographic Segments,Geographic location of computers is not important to users accessing Web sites, but it is very important to organizations with an Internet presence. Most firms target specific cities, regions, states, or countries with their product offerings = develop multisegment strategies based on geographics. Product distribution strategy is a driving force behind geographic segmentation:Companies want to reach only customers in countries where it distributes products. Firms offering services online will only sell to geographic areas where they can provide customer service.Companies must examine the proportion of Net users in its selected geographic targets before deciding to serve the Web community.,Fiesta Americana Site in Spanish and English Source: ,Posadas: The leading hotel chain in Mexico, Targets tourists in Mexican and United States markets. Focuses heavily on the U. S. market and built its first site for the United States because it recognized that Internet penetration was much higher.,Important Geographic Segments for E-Marketing,The United States = the largest Internet usage in the world.10 other country markets have more than 40% Internet penetration. = 11 countries represent good markets for new technology.E-marketers use geographic variables for segmentation also evaluate online markets by region, city, urban area, and so forth.The quality of a countrys market is evaluated using additional criteria: infrastructure variables designed to predict their ability to access and absorb information technology: computer adoption, information, Internet, social. In 2001, Sweden and Norway held the top two positions as the worlds dominant information economies because of a high mobile Internet access.,Country Markets With Over 40% Internet User Penetration,Important Geographic Segments for E-Marketing,English is no longer the language of most Web pages and online bulletin boards, a major change from just two years ago. Top Internet languages: English (42%), Japanese (9%), Chinese (9%), Spanish (7%), German (7%). Huge implications for e-marketers desiring to reach global markets via the InternetUntil more online text appears in local languages, users in those countries will not able to participate in e-commerce or other online activities.,Less Than Half of Web Users Access in EnglishSource: Adapted from Cutitta (2002),Demographic Segments,In the Internets early years, the typical user was:A young male, college educated, with a high income = an innovator.Now, this is true in countries with low levels of Internet adoption. In developed nations, 76% of U.S. users are 18-49 years old,The annual average household income: about $50,000,The population is almost equally divided by gender.Knowing that U. S. Internet users mirror the population, marketers need to identify attractive demographic niches.,Occupation,Few years ago, the Internet = a place for the technologically- and financially-savvy. Today = a place where U.S. residents from all professions find something of use. Huge implications for e-commerce and advertising, and big changes are still taking place.,Occupation,Blue-collar workers: Are currently the fastest growing online occupational group in the U.S. This group is busy surfing and exploring, Represent a major marketing opportunity because segment members have not yet developed site loyalty and have some different product and entertainment needs from users in other professions. Other fast growing occupational groups include homemakers (49%), service workers (37%), and salespeople (34%).E-marketers can use such facts about occupational segments online as information and then knowledge to drive e-marketing strategy.,Teens and Children,In the US, 75% of 14-17 year olds + 65% of 10-13 year olds use the Internet: = “The Net Generation” or Generation Y, = One of the fastest-growing online niches. 12-17 year old: send e-mail (81%), instant messages (70%), play games, and purchase music, tickets, and videos.58% use the Internet for homework, Teens repeated requests for online access is what leads families into computer and ISP purchases.,Teens and Children,Driving future growth in this market is the fact that 95% of all U.S. schools now have Internet access. This market:Is not impressed with brand names online; wants utility + particular activities. Teens spread the news through online word of mouth (viral marketing). 38% of teens share their online findings with friends = a great marketing opportunity.,Teens and Children,One big problem = payment:They do not have credit cards for online purchases (only 12% have purchased online). Some are allowed to use their parents credit cards.Those over 16 years of age can obtain a debit card. Innovative approaches such as “Splash Plastic” prepaid cards or “cyber allowance” accounts deposited at designated online retailers have emerged. Important characteristics of this market = the need to be honest about marketing tactics: revealing the motives behind asking for personal information. Teens are eager to play online games, download music and movies, and sign up for sales promotion premiums and free samples.,Ethnic Groups,African Americans:One of the largest and most quickly growing ethnic groups online in the United States. Tend to be younger, more highly educated, and affluent. Are heavy purchasers of music online and buy less clothing and travel. Go online from academic and public locations and are less likely to register at Web sites. Hispanics:A huge segment with 14.5 million users + 19-26% growth rate. 55% use the Spanish language when online = a market with unique needs in the US. Miami-Fort Lauderdale, Florida is the 15th largest market overall, but 3rd largest for Hispanic Web users. Hispanics who use the Internet outspend those non-users by a margin of 7%, a statistic that has caught the eye of marketers.,Ethnic Groups,Chinese-Americans:More than 50% have Internet access, 65% of those are online everyday, Purchase books, computer products and electronics online and enjoy a large purchasing powerthe average income is $69,000.,Differently Abled,= “The Internets next niche” :Spend 20 more hours a week online than other Internet users. Fifty-four million U.S. consumers have disabilities, health problems, or handicaps that prevent full participation in work, school, or housework. Web accessibility guidelines exist to accommodate disabled people. BUT this segment is a demographically diverse group, and tend to have low incomes, making them difficult and undesirable targets for some firms.,Differently Abled,Why do marketers target this segment, despite its low income and accessibility challenges? Social values of full accessibility and potential legal action. To draw a larger consumer audience. The huge baby boomer group is headed for some of these problems as they reach age 65 and older.This market can be a productive target: The 2000 Paralympic Games from Australia last fall experienced good traffic. Most importantly, a market consisting of 54 million Americans has a great deal of purchasing power.,Psychographic Segments,User psychographics include:Personality: Traits (other-oriented / self-oriented) and habits, Values: Deeply held convictions (religious beliefs),Lifestyle: Non-product-related behaviorActivities:(playing sports or eating out),Interests: Attitudes and beliefs people hold.Opinions:,Attitudes And Behaviors,How do attitudes and behavior differ?Attitudes:Internal evaluations about people, products, and other objects, Either positive or negative, The evaluation process occurs inside a persons head.,Attitudes And Behaviors,Behavior:Refers to what a person physically does (calling a 1-800 number to order, shopping, or purchasing a product),Product behaviors are such a vital segment descriptor that they form an entirely separate category.Psychographics:The general ways that consumers spend time, Help e-marketers define and describe market segments so they can better meet consumer needs, Important for Web page design.,Attitudes Toward Technology,Marketers believe that demographics are not helpful in predicting who will purchase online. BUT it is important to know which demographic target is online. The segments attitudes toward technology determine whether or not these users will buy when they surf the Web.,Attitudes Toward Technology,Forrester Research measures consumer and business attitudes toward technology.The system, Technographics, works by combining three specific variables:Determine if a person is optimistic or pessimistic toward technology, Measure a users income level ( important determinant of online shopping behavior), Query users about their primary motivation for going online.,Attitudes Toward Technology,Examples of the 10 consumer technographics segments in the United States:,Consumer Technographic Segments and Proportion in the United StatesSource: Adapted from Modahl (2000),Attitudes Toward Technology,Forresters research revealed some interesting findings: Technology optimism declines with age:Older users tend to have a more negative attitude toward technology, Their attitudes may be less negative if they use a PC at work or live in one of the largest 50 U.S. cities, Men tend to be more optimistic, Peer pressure can increase optimism in all demographic groups, Income: 40% of high-income citizens are optimistic, Certain low-income groups such as college students and young families are also optimistic about technology.,Attitudes Toward Technology,How do these findings translate to online purchasing? Twice as many high-income optimists shop online (19%) compared with other groups. Only 2% of low-income pessimists shop online and, therefore, are not a good target for e-commerce firms. Combining Technographics with adopter categories, Early adopters = high-income technology optimists = the first consumers to shop online. Laggards = low-income pessimists = last to shop online. Technographic segments can be used to profile customers who shop online and to determine where to allocate resources to attract more of the same.,Behavior Segments,Two behavioral segmentation variables are:Benefit segmentation: form groups of consumers based on the benefits they desire from the product. “70% of online shoppers can be segmented into two groups:Bargain hunters: includes Hooked, Online & Single (16%), Hunter-Gatherers (20%)Convenience shoppers: includes Time-Sensitive Materialists (17%), brand loyalists (19%), E-Bivalent Newbies (5%), and Clicks & Mortars (23%).” Product usage: Light, medium and heavy product usage. Brand loyal, loyal to the competitive product, switchers (who dont care which brand they use), and nonusers of the product.,Benefit Segments,On the Internet, there is something for everyone: information, entertainment, news, social meeting places, and more. Marketers form segments based on the benefits sought by users to design products to meet those needs. What better way to determine benefits sought than to look at what people actually do online? Check which Web sites are the most popular. Sites report monthly on the top online properties displays the top Web site parent companies. AOL, MSN, and Yahoo! are consistently among the top sites in most countries.,Benefit Segments,Commonly used segmentation variables:E-mail: 8 billion e-mails flying over the Internet worldwide. Shop. Information search. Online stock trading and online banking. Online banking has a high usage but online stock trading is quite active. Streamies: People who listen to online audio.,Top Web Properties in June 30, 2002 Source: Data from ,Usage Segments,E-marketers:Identify segments according to how users behave and use the Internet. Profile the segments by user characteristics, geographical location, and so on. Difference between usage-based segmentation and user-based segmentation = when users shop online: sometimes they browse aimlessly, but sometimes they have a specific goal.,Home and Work Access,Segmentation by access point is important because the needs are different:Home:80% of home users have slow connection speeds, making large graphics and other files undesirable on sites frequented from home.A small but growing number of households have more than one PC and are networking them within the home. Work:42 million U.S. users access the Internet from work. People spend nearly twice as much overall time online than those who access only from home. The audiences in all countries are much more heavily male.,Home and Work Access,The most popular sites for U.S. at-work access follow:Telecom or Internet services (29.7 million visitors)Finance, insurance, or investment (21.2 million visitors)Travel (18.4 million visitors)Corporate information (14.6 million visitors)Special occasions such as greeting cards, gifts or flowers (14.1 million visitors)E-marketing strategists can use such information to target their Web site offerings. Strategies might include special products, the language in sites, and the amount of interactivity and multimedia possible for work users.,Access Speed,The type of Internet connection + the information receiving appliance both affect usage behavior. Faster connections at work allow users to receive larger data files filled with multimedia content.20% of the U.S. population has broadband Internet access from home (21.9 million).25.5 million office broadband users (60%). Home users:Are connected through ISPs offering cable modems and DSL (satellite). Cost is still a barrier for many home users.Broadband penetration is nearly high enough to reach the critical mass needed for true video and audio program delivery on demand. This will certainly change the face of the Web.,Access Speed,Broadband users operate differently from narrowband users online. They:Play audio CDs (75%), Play online games (60%), Download music (48%), Watch streaming video or DVDs (67%). Mobile wireless users have very small screens and slow access speed. About 200 million wireless devices were in use during 2001 = hard for marketers to resist!13.1 million PDAs (personal digital assistants) The majority of the other 187 million devices are cell phones.,Access Speed,Wireless users do a lot more than talk on their cell phones. They send and receive dataanyplace, anytime:E-mail and voice mail, Online banking, Access Internet, Track information on package shipment, stock quotes, airline schedules and changes, and news. Wireless devices cannot access typical Web pages on their tiny screensSite developers have a mobile viewing mode and a regular viewing mode. The mobile mode = 100% text and serves precise information on demand. The mobile wireless segment = huge opportunities for firms wanting to produce wireless portals: a customized point of entry to the Net where subscribers can access Web sites and information in text format. Big technical problems BUT the market is unstoppable and will grow considerably.,2002 Predicted Revenue Proportion for Data Type on Mobile Devices Worldwide Source: Fichter (2001),Time Online,Although the Internet has been growing, not all the people with access are as active logging on as others. Six user segments based on the active users time online, pages, domains accessed, and the amount of time spent per Web page:Simplifiers want end-to-end convenience. Surfers want whats new. Connectors are novelty seekers. Bargainers look for deals.Routiners want something special.Sportsters desire highly interactive content. These segments are likely to overlap because people use the Internet for different purposes at different timessuch as research, e-mail, chat, work, and so forth.,User Segments Based on Online Viewing Behavior Source: Adapted from McKinsey and MediaMetrix study,Industry Specific Usage Segments,Segmenting by usage vary from one business type to the other. Visitors to car sites behave differently than visitors to other e-commerce. Even serious car buyers tend to visit car sites only a few times64% of all buyers complete their online research in five sessions or fewer. Three visitor segments for car Web sites: Explorers are the smallest group, but almost half buy their new vehicle within two months of visiting a car site. They want a convenient, explicit buying process.Off-roaders tend to do a lot of research online and subsequently are very likely to purchase in an offline showroom. Cruisers visit car