Chapter 7 Sharpen the Focus Target Marketing Strategies and Customer Relationship Management Target Marketing Strategy Select and Enter a Market Market fragmentation society The creation of many consumer groups due to a diversity of distinct needs and wants in modern Target marketing strategy selecting one or more segments and developing products to meet the needs of those specific segments Dividing the total market into different segments on the basis of customer characteristics Step 1 Segmentation shared characteristics The process of dividing a larger market into smaller pieces based on one or more meaningfully segmentation variables Dimensions that divide the total market into fairly homogeneous groups each with different needs and preferences Segment consumer markets Generation Y The group of consumers born between 1979 and 1994 D emographics income education occupation and family structure Statistics that measure observable aspects of a population including size age gender ethnic group Generational marketing Marketing to members of a generation who tend to share the same outlook and priorities Generation x The group of consumers born between 1965 and 1978 Baby boomers The segment of people born between 1946 and 1964 Metrosexual care A straight urban male who is keenly interested in fashion home design gourmet cooking and personal Segment by demographics Family life cycle Income and social class Ethnicity Place of residence Geodemography A segmentation technique that combines geography with demographics Geocoding Customizing Web advertising so that people who log on in different places will see ad banners for local businesses Segment by pyscographics psychographics The use of psychological sociological and anthropological factors to construct market segments VALS TM Values and Lifestyles A psychographic system that divides the entire U S population into eight segments 1 Chapter 7 Sharpen the Focus Target Marketing Strategies and Customer Relationship Management Segment by behavior 80 20 rule A marketing rule of thumb that 20 percent of purchasers account for 80 percent of a product s sales An indicator used in behavioral market segmentation based on when consumers use a product most Usage occasions Segment business to business markets Organizational demographics Step 2 Targeting A strategy in which marketers evaluate the attractiveness of each potential segment and decide in which of these groups they will invest resources to try to turn them into customers Target market The market segments on which an organization focuses its marketing plan and toward which it directs its marketing efforts Are members of the segment similar to each other in their product needs and wants and at the same time different from consumers in other segments Is the segment large enough to be profitable now and in the future Can marketers measure the segment Can marketing communications reach the segment Can the marketer adequately serve the needs of the segment Segment profile A description of the typical customer in a segment Undifferentiated targeting strategy Appealing to a broad spectrum of people Differentiated targeting strategy making sure these offerings are kept separate in the marketplace Developing one or more products for each of several distinct customer groups and Custom marketing strategy An approach that tailors specific products and the messages about them to individual customers Mass customization An approach that modifies a basic good or service to meet the needs of an individual Step 3 Positioning Repositioning Redoing a product s position to respond to marketplace changes Retro brand A once popular brand that has been revived to experience a popularity comeback often by riding a wave of nostalgia Brand personality A distinctive image that captures a good s or service s character and benefits Perceptual map A technique to visually describe where brands are located in consumers minds relative to competing brands 2 Chapter 7 Sharpen the Focus Target Marketing Strategies and Customer Relationship Management Customer Relationship Management CRM Toward a Segment of One Step Identify Differentiate Interact Customize Suggested Activities Collect and enter names and additional information about your customers Verify and update deleting outdated information Identify top customers Determine which customers cost the company money Find higher value customers who have complained about your product more than once Find customers who buy only one or two products from your company but a lot from other companies Rank customers into A B and C categories based on their value to your company Call the top three people in the top 5 percent of dealers distributors and retailers that carry your product and make sure they re happy Call your own company and ask questions see how hard it is to get through and get answers Call your competitors and compare their customer service with yours Use incoming calls as selling opportunities Initiate more dialogue with valuable customers Improve complaint handling Find out what your customers want Personalize your direct mail Ask customers how and how often they want to hear from you Ask your top 10 customers what you can do differently to improve your product Involve top management in customer relations CRM communicating with customers and about customers being able to communicate with a company up close and personal Touchpoint which is any point of direct interface between customers and a company online by phone or in person S hare of customer The percentage of an individual customer s purchase of a product that is a single brand Lifetime value of a customer customer s lifetime The potential profit a single customer s purchase of a firm s products generates over the customer equity The financial value of a customer relationship throughout the lifetime of the relationship 3 Chapter 7 Sharpen the Focus Target Marketing Strategies and Customer Relationship Management Chapter 7 Objectives Identify the steps in the target marketing process Marketers must balance the efficiency of mass marketing serving the same items to everyone with the effectiveness of offering each individual exactly what she wants To accomplish this instead of trying to sell something to everyone marketers follow these steps 1 select a target marketing strategy in which they divide the total market into different segments based on customer characteristics 2 select one or more segments and 3 develop