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E-M ARKETING /6E
C HAPTER 8
C HAPTER 8 O BJECTIVES
8-2

After reading Chapter 8, you will be able
to:

Outline the characteristics of the three
major markets for e-business.

Explain why and how e-marketers use
market segmentation to reach online
customers.

List the most commonly used market
segmentation bases and variables.
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
C HAPTER 8 O BJECTIVES ,
CONT.
8-3

Outline the five types of Internet
usage segments and their
characteristics.

Describe two important coverage
strategies e-marketers can use to
target online customers.

Define differentiation and positioning
and give examples of companies using
them.
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
T HE 1-800-F LOWERS S TORY
8-4

Jim McCann started 1-800-Flowers as a
traditional retailer in New York City in 1976.

In 1995, he extended the brand to the
Internet.

He used SAS data mining software to
identify customer segments for better
targeting.

The software analyzed the clickstreams
and purchasing patterns of the firm’s 21
million customers.
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
THE 1-800-FLOWERS STORY,
CONT.
8-5

In Q4 2009, the firm’s Web site had
767,360 daily visitors, $238.5 million
in sales and drew 656,000 new
customers.

Why do you think better
segmentation and targeting lead to
reduced phone time and lower costs?
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
S EGMENTATION & TARGETING
O VERVIEW
8-6

Marketing segmentation is the
process of grouping individuals or
businesses, according to use,
consumption, or benefits of a
product or service.

Market targeting is the process of
selecting market segments that are
most attractive to the firm.
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
8-7
T HREE M ARKETS
Three important markets sell to and buy
from each other:
 Business Market: Marketing of
products for use in the business
operation, as components, or for resale.
 Government Market: Federal, state,
county, city, and foreign governments.
 Consumer Market: The consumer
market involves marketing goods and
services to end consumers.
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
8-8
T HREE B ASIC M ARKETS
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
M ARKET S EGMENTATION
B ASES AND VARIABLES
8-9
Marketers create segments to identify and
reach the right people at the right time.
 Geographic location
 Demographics
 Psychographics
 Behavior with regard to the product
 Companies can also combines bases, such
as geodemographics (geography and
demographics)

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
G EOGRAPHIC S EGMENTS
8-10
Product distribution strategy is a driving force
behind geographic segmentation.
 Countries may be segmented based on Internet
usage.
 China has 384 million users.
 U.S. has 234 million users .
 Japan has 96 million users.
 Geographic markets may also be evaluated by
infrastructure variables and language spoken.

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
8-11
TOP I NTERNET L ANGUAGES
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
8-12
D EMOGRAPHIC S EGMENTS
In developed nations, users are much like
the mainstream population demographically.
The heaviest Internet penetration in 2010:
18-29, white, suburban, earn $75,000+, and
highly educated.
Three market segments are of great interest
to e-marketers.
Millennials
Kids
Online opinion leaders
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
M ILLENNIALS
8-13
Of those born between 1979 and 1994,
over 90% use the Internet.
 “Confident, connected, and open to
change.”
 75% have a social networking profile,
83% sleep with their cell phones, and
80% sent a text message in the past 24
hours.
 This group is a marketing proving ground
for the future.

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
K IDS
8-14
The number of kids under 16 online is
increasing.
 Kids 8-12 do a number of activities online:
 Play online games (78.1%)
 Homework (34.2%)
 Music (28.6%)
 Videos (26.2%)
 Surf Web (22.7%)
 E-mail (20.4%)

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
E THNIC G ROUPS
8-15


Hispanics, African Americans, and Asians are
important online markets.
English-speaking Hispanics have a 64% Internet
adoption rate.


They access the Internet with a handheld device more
than non-Hispanic Caucasians.
African Americans are one of the largest and most
quickly growing ethnic groups online.

They have a 70% rate of adoption and tend to be
younger, more highly educated, and more affluent than
African Americans not using the Internet.
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
I NFLUENTIALS
8-16

Influentials are individuals who influence
others, driving change in America.

Represent 10% of the population, 15%
of Internet users.

82% of influentials have Internet access,
compared with 76% of the general U.S.
population.
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
P SYCHOGRAPHIC S EGMENTS
8-17

User psychographics include:

Personality

Values

Lifestyles

Activities

Interests

Opinions
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
8-18
I NTEREST C OMMUNITIES
 Exhibit 8.8 lists 10 important types of online
communities, including social networking.
 Ways to target online communities.
 Provide online chats, bulletin boards, and
events.
 Advertise on another firm’s community
site.
 The firm can join the community and post
as a member.
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
ATTITUDES
8-19
AND
B EHAVIORS
Psychographic information helps e-marketers
define and describe market segments.
 Some marketers believe that a segment’s
attitudes toward technology can help
determine buying behavior.
 Forrester Research measures attitudes
toward technology with a system called
Technographics.
 Forrester identified 10 consumer
Technographics segments in the U.S.
(Exhibit 8.10).

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
8-20
CONSUMER TECHNOGRAPHICS
SEGMENTS IN THE U.S.
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
B EHAVIOR S EGMENTS
8-21

Two common segmentation variables are
benefits sought and product usage.
 Marketers using benefit segmentation
form groups of consumers based on the
benefits they desire from product.
 Marketers often segment by light,
medium, and heavy product usage.
 Marketers can segment users as brand
loyal, loyal to a competitive product,
switchers, and nonusers.
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
B ENEFIT S EGMENTS
8-22
To determine benefits sought, marketers
can look at what people actually do online.
 Online activities
 Popular Web sites
 Most popular, according to comScore.com:
 Google
 Yahoo!
 Microsoft
 AOL
 Facebook

©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
U SAGE S EGMENTS
8-23

Marketers can segment according to how
consumers use the Internet.
 Home and work access
 60% of all U.S. users have broadband
connectivity at home.
 Nielsen/NetRatings estimated 69.7 million
accessed the Internet from work; 217.3
million from home.
 Mobile access

Biggest use in 2010 was for text and Web
browsing.
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
8-24
S OCIAL M EDIA
E NGAGEMENT S EGMENTS
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
8-25
TARGETING O NLINE C USTOMERS
 E-marketers select a targeting strategy.
 Which targets to serve online
 Which locations
 Other factors
 Two targeting strategies are well-suited for
the Internet.
 Niche marketing
 Micromarketing
 The Internet’s big promise is individualized
targeting.
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
D IFFERENTIATION O NLINE
8-26

Kotler defines differentiation as the process
of adding meaningful and valued
differences to distinguish the company’s
offering from the competition.

There are a number of differentiation
dimensions and strategies for their
accomplishment.
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
DIFFERENTIATION
DIMENSIONS
8-27

A firm can differentiate along 5
dimensions:

Product

Service

Personnel

Channel

Image
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
INTERNET-SPECIFIC
DIFFERENTIATION STRATEGIES
8-28

There are 6 differentiation strategies unique
to online businesses.

Site Environment/Atmospherics


Easy downloads, accurate and clear
information, easy navigation.
Build Trust

Strong brand recognition.

Privacy policy.

Safe and encrypted payment process
for transactions
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
8-29




INTERNET-SPECIFIC
DIFFERENTIATION STRATEGIES,
CONT.
Efficient and Timely Order Processing
Pricing
 Majority of firms today differentiate
themselves in other ways besides
pricing.
Customer Relationship Management
(CRM)
 Managing long-term relationships
with customers.
Invite User-generated Content
 The key is to trust customers, listen,
respond, and learn.
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
P OSITIONING
8-30

Positioning is the process of creating a
desired image for a company and its
products in the minds of a chosen user
segment.

The e-marketer’s goal is to build a position
on one or more bases that are relevant and
important to the consumer.

Firms can position brands, the company,
the CEO, or individual products.
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
BASES AND STRATEGIES
FOR POSITIONING
8-31

Product or service attributes (Ivillage)

Technology position (My Virtual Model)

Benefits position (Kimberly Clarke-Huggies)

User category position (U.S. Dept. of
Commerce)

Competitor position (Vimeo)

Integrator position (The Knot)
©2012 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL
8-32
All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system, or transmitted, in any form or by any means, electronic, mechanical,
photocopying, recording, or otherwise, without the prior written permission of the
publisher. Printed in the United States of America.
Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall

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