Lecture 9 E-Marketing

1. Lecture 9E-Marketing Segmentation, Targeting, Differentiation, and Positioning Strategies Instructor: HanniyaAbid Assistant Professor COMSATS Institute of Information Technology

2. Lets see how Coca cola has used e-Marketing techniques

3. Objectives • After this lecture , 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.

4. Objectives, cont. • 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.

5. The 1-800-Flowers Story • 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.

6. THE 1-800-FLOWERS STORY, CONT. • 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?

7. Segmentation & Targeting Overview • 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.

8. Three Markets • 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.

9. Three Basic Markets

10. Market Segmentation Bases and Variables • 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 combine bases, such as geodemographics (geography and demographics)

11. Geographic Segments • Product distribution strategy is a driving force behind geographic segmentation. • Countries may be segmented based on Internet usage. (statistics from 2012) • China has 384 million users. • U.S. has 234 million users . • Japan has 96 million users. • Pakistan has 30 million users

12. Top Internet Languages Geographic markets may also be evaluated by infrastructure variables and language spoken.

13. Demographic Segments • In developed nations, users are much like the mainstream population demographically. • The heaviest Internet penetration in 2010: 18-29,, suburban, earn • Three market segments are of great interest to e-marketers. • Millennials • Younger generation • Online opinion leaders

14. Millennials • Of those born between 1979 and 1994, most 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.

15. Younger generation • The number younger internet users 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%)

16. Ethnic Groups • Minority groups are important online markets. • English-speaking minorities have a increasing Internet adoption rate.

17. Influentials • Influentials are individuals who influence others, driving change. • A survey was conducted to identify these.

18. Psychographic Segments • User psychographics include: • Personality • Values • Lifestyles • Activities • Interests • Opinions

19. Interest Communities • 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.

20. Attitudes and Behaviors • 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).

21. Consumer Techno graphics Segments

22. Behavior Segments • 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.

23. Benefit Segments • 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

24. Usage Segments • Marketers can segment according to how consumers use the Internet. • Home and work access • Mobile access • Biggest use is for text and Web browsing.

25. Social MediaEngagement Segments

26. Targeting Online Customers • 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.

27. Differentiation Online • 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.

28. Differentiation Dimensions • A firm can differentiate along 5 dimensions: • Product • Service • Personnel • Channel • Image

29. Internet-specific Differentiation Strategies • 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

30. 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.

31. Positioning • 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.

32. Bases And Strategies for Positioning • Product or service attributes • Technology position • Benefits position • User category position • Competitor position • Integrator position

33. Summary • E-business occurs primarily in three markets • Marketing segmentation for E-Marketing • Strategies to Niche and Micro marketing • Differentiation and positioning

34. One last thing… • Visit Google and Bing and look for a local grocer in your area. Compare the searches based on effectiveness of results and how easy are they to use • Visit a site of a local retailer and identify what makes the site trustworthy.