Chapter 5
Segmenting and Targeting the Audience
CHAPTER CONTENT
CHAPTER KEY POINTS
1. How does the consumer decision making process work?
2. What cultural, social, psychological, and behavioral influences affect consumer
responses to advertising?
3. How does targeting work and how is it different from market segmentation?
4. What characteristics are used to segment markets and target consumers?
.
CHAPTER OVERVIEW
This chapter opens by attempting to explain how consumers make brand decisions and
what factors influence them during the decision making process. Several decision
making models are provided as explanations, along with cultural, social, and
psychological factors that influence the process. Next, segmentation is defined andsix
broad categories used to segment markets are listed. Then target marketing strategy is
explained, as well as the practice of profiling target markets using demographics,
psychographics, and behavioral patterns. The chapter closes with a discussion of Seekers,
the name given to consumers who search, share and initiate marketing communication
and brand relationships. Ideas concerning how segmentation strategies can be expanded
to include them are introduced.
CHAPTER OUTLINE
Starting the Conversation
There are more than 315 million people in the United States, not all of whom are
in the market for every product and every service. How do you find the
consumers who are most likely to be interested in your brand, and then how do
you start a conversation with them?
Communication begins by knowing everything possible about a brand’s
consumers, then speaking to them with a tone and message that resonates
emotionally with what moves them.
How Do Consumers Make Brand Decisions?
The traditional view of consumer decision making is based on a linear,
information-processing approach. It suggests that most people follow a decision
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process with fairly predictable steps: (1) need recognition – the goal of brand
communication at this stage is to activate or stimulate this need; (2) information
search– marcom messages help the search process by providing information and
making that information easy to find as well as to remember; (3) evaluation of
alternatives– brand communication helps sort out products on the basis of tangible
and intangible features; (4) purchase decisions – in-store promotions such as
packaging, point-of-purchase displays, price reductions, banners and signs, and
coupon displays affect consumer choices; (5) post-purchase evaluation– guarantees,
warranties, and easy returns are also important for reducing the fear of a purchase that
goes wrong.
The set of steps is hierarchical and suffers from the limitations discussed in Chapter 4.
There are other paths to brand decisions.
The Paths to a Brand Decision
The Think/Feel/Do model of consumer response to a message can also be used to
analyze the various ways in which consumers make decisions. The amount of
information needed, for example, varies between low-involvement and
high-involvement situations and products. (See Figure 5.1).
A chart in the textbook summarizes six ways consumers make decisions relative
to their need for information. The point is that the path to a decision depends on
the type of product and the buying situations.
In B2B marketing, businesses buy goods and services for two reasons: (1) they
need ingredients for the products they manufacture, and (2) they need goods for
their business operations. Many of the influences that affect consumer buying also
are reflected in business-to-business marketing. Buying decisions are often made
by committees on behalf of the people who use the products, and the actual
purchase is negotiated by a specialist in that category called a buyer.
What Influences Consumer Decisions?
Consumer behavior describes how individuals or groups select, purchase, use, or
dispose of products as well as the needs that motivate these behaviors.
Cultural Influences
Culture is made up of tangible items (art, literature, buildings, furniture, clothing,
and music) and intangible concepts (history, knowledge, laws, morals, customs,
and even standards of beauty) that together define a group of people or a way of
life. Culture is learned and passed on from one generation to the next.
Generally culture is seen as providing a deep-seated context for marketing
communication, but popular culture – what we see on television, sports, fashion,
and music, among other areas – is dynamic.
Norms and Values
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The boundaries each culture establishes for “proper” behavior are norms, which
are simply rules that we learn through social interaction that specify or prohibit
certain behaviors. The source of norms is our cultural values,which represent our
underlying belief systems. Values are few in number and hard to change.
Advertisers strive to understand underlying core values that govern people’s
attitudes and guide their behavior. A message’s primary appeal aims to match the
core values of the brand to the core values of audience. Here are ten basic core
values:
A sense of belonging
Excitement
Fun and enjoyment
Warm relationships
Self-fulfillment
Respect from others
A sense of accomplishment
Security
Self-respect
Thrift
Thrift was recently the hallmark of the recession of the late 2000s when polls
found that Americans tightened their belts, saved more, spent less and borrowed
less.
Cross Cultural Factors
International or global marketing programs also have to consider multicultural
differences that might derail communication. Dutch scholar Gaert Hofstede
insists that the impact of national culture on consumption patterns is huge and
should be accommodated in marketing and advertising programs.
An example of how difficult it is to manage brand communication across cultures
comes from Professor Sunny Tsai, who describes in the A Matter of Principle
feature how the Dove “Real Beauty” campaign was reworked for Taiwanese
consumers.
Corporate Culture
The concept of culture applies to B2B as well as B2C marketing. Corporate
culture is a term that describes how various companies operate. Some are very
formal with lots of procedures, rigid work hours, and dress codes. Others are more
informal.
Social Influences
In addition to the culture in which you were raised, you also are a product of your
social environment, which determines your social class or group. Reference
groups, your family, and your friends also are important influences on your
opinions, as well as your consumer behavior, and affect many of your habits and
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biases. For example the Inside Story feature in this chapter explains how a brand
character was developed based on insights into consumer attitudes and opinions
about others in the neighborhood.
Social Class
Social class is the position you and your family occupy within your society.
Social class is determined by such factors as income, wealth, education,
occupation, family prestige, value of home, and neighborhood. Brand
communication assumes that people in one class buy different goods for different
reasons than people in another social class.
Reference Groups
A reference group is a group of people you use as a model for behavior in
specific situations. Examples are teachers and religious leaders, as well as
members of political parties, religious groups, racial or ethnic organizations, clubs
based on hobbies, and informal affiliations such as fellow workers or students—
your peers.
Brand communities, such as the Harley Owners Group (HOG) for Harley
Davidson are groups of people devoted to a particular brand. For consumers,
reference groups have three functions: (1) they provide information, (2) they serve
as a means of personal comparison, and (3) they offer guidance. Ads that feature
typical users in fun or pleasant surroundings are using a referencegroup strategy.
Sociologist David Reisman describes individuals in terms of their relationships
with other people as inner–directed (individualistic) or outer-directed (peer
group and society). Advertisers are particularly interested in the role of peers in
influencing their outer-directed friends’ wants and desires. On the other hand,
inner-directed people are more likely to try new things first.
Family
The family is the most important reference group because of its formative role
and the intensity of its relationships. According to the U.S. Census, a family
consists of two or more people who are related by blood, marriage, or adoption,
and live in the same household. A household differs from a family in that it
consists of all those who occupy a dwelling whether they are related or not.
For the first time in U.S. history, single-person households outnumber married
couples with children. This reflects a growing trend in America over the past 30
years to marry later in life, divorce, or never get married at all.
Psychological Influences
Needs and Wants
Underlying driving forces that motivate us to do something reflecting basic
survival, such as choosing a motel (shelter) or restaurant (food) when traveling
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are called needs.Primary needs (biological) include the need for water, food, air,
and shelter. Satisfying these needs is necessary to maintaining life. Maslow’s
Hierarchy of Needs is illustrated in Figure 5.3.
Needs we learn in response to our culture and our environment are called
acquired needs. These may include needs for esteem, prestige, affection, power,
learning, and beauty. Because acquired needs are not necessary to your physical
survival, they are considered secondary needs.
Principle: An item we need is something we think is essential or necessary for
lives; an item we want is something we desire.
A want occurs when we desire or wish for something. We don’t die if we don’t
get it, but it can still provide a strong motivation to try or buy something new.
Research has uncovered the power of new and novel. This is particularly true in
fashion areas, such as clothing and music. Desire is the driving force behind
demand. Successful brands focus more on what we want than on what we need.
Brian Martin, the founder of Brand Connections, has built a list of ten desires that
successful brands satisfy.
Satisfaction.A feeling of satisfaction is only one possible response to
attending to a message. More troublesome is dissatisfaction or doubt. People
can pay attention to a commercial, buy a product, and be disappointed.
Dissonance. Cognitive dissonance refers to a conflict between two thoughts
which creates a state of tension.Buyer’s remorse is a related form of such
tension. When there is a difference between reality and facts, people engage in
a variety of activities to reduce cognitive dissonance.
Motivations. A motive is an internal force, such as the desire to look good,
that stimulates you to behave in a particular manner. This driving force is
produced by the tension caused by an unfulfilled need. People strive to reduce
the tension. At any given point, you are probably affected by a number of
different motives.
Research into motivation uncovers the “why” questions—why did you buy that
brand and not another? What prompted you to go to that store? Understanding
buying motives is crucial to advertisers because the advertising message and the
timing of the ad should reflect the consumer’s motivations.
Professor Ann Marie Barry describes the emerging field of neuroscience in
Chapter 4. Neuromarketing, a new brain-science approach to understanding how
people think, provides a deeper understanding of the way low-attention
processing actually works and motivates people into unconscious, intuitive
decision making.
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Influences on B2B Decision Making
Many of the influences that affect consumer buying also are reflected in B2B
marketing. We know that B2B decisionmaking tends to follow the information
path. Emotion may still be important in certain situations, but ultimately these
decisions are more rational than emotional for the following reasons:
In organizational buying, many individuals are involved in reviewing the
options, often with a buying committee making the final decision.
Although the business buyer may be motivated by both rational and emotional
factors, the use of rational and quantitative criteria dominates most decisions.
The decision is sometimes made based on a set of specifications to potential
suppliers who then bid on the contract, and typically the lowest bid wins.
Quality is of huge importance and repeat purchases are based on how well the
product performs.
HOW DO WE SEGMENT CONSUMER GROUPS?
Cost efficiency and effectiveness demand that marketers: 1) segment the market
and 2) target the group that is most likely to respond. Segmentation means
dividing the market into groups of people who have similar characteristics in
certain key product-related areas. Segmenting does two things: it identifies those
people who are in the market, but it also eliminates those who are not. There are
various ways to segment a market.
Segmentation Strategies
Political columnist David Brooks recently asked, “Are people more alike than
different?” Why is this question important to brand communication? According
to Brooks, our era is ‘the segmentation century.’ It’s not about convergence of
values but rather about diverging opinions, interests, and tastes.
At one point in its history, Coca-Cola viewed the U.S. market for its brand as
homogeneous and used general appeals designed for all consumers. That was
considered an undifferentiated strategy.
Principle: Segmenting is efficient and cost effective when it identifies those
people who are in the market but also eliminates those who are not.
Few examples of homogeneous markets exist in contemporary marketing, so most
strategies are based on market segmentation strategies. By using a segmentation
strategy, a company can more precisely match the needs and wants of the
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customer with its products. That is why Coke and Pepsi introduced product
variations to appeal to different consumer segments, such as diet, caffeine-free,
and flavored versions of their basic products.
Principle: Buyers may not be the users and users may not be the buyers. Buyers
and users often have entirely different needs and wants.
Instead of marketing to a big undifferentiated market, marketers target narrow
segments, such as single women in the international traveler category. Although
marketing has gone global to reach large markets, at the same time many
marketers have moved toward tighter and tighter niche markets. Niche marketers
are companies that pursue market segments of sufficient size to be profitable
although not large enough to be of interest to large marketers.
Types of Segmentation
In general marketers segment their markets using sixkey consumer characteristics (see
Figure 5.4).
• Demographic segmentation divides the market using such characteristics as age,
gender, ethnicity and income.
• Life-stage segmentation is based on the particular stage in a consumers’ life
cycle, which includes such categories as children, young people living at home,
college students, singles living on their own, couples, families with children,
empty nesters, and senior singles living alone.
• Geographic segmentation uses location as a defining variable because
consumers’ needs sometimes vary depending upon where they live—urban, rural,
suburban, East, West, and so on. Defining variables are world or global, region,
nation, state, city, or zip code.
• Psychographic segmentation is primarily based on studies of how people spend
their money, their patterns of work and leisure, their interest and opinions, and
their views of themselves. This strategy is considered richer than demographic
segmentation because it combines the psychological information with lifestyle
insights.
• Behavioral segmentation divides people into groups based on product category
and brand usage.
• Values and benefits-based segmentation groups people based on tangible and
intangible factors that reflect their underlying value system.Values segmentation
reflects consumers’ underlying value system – spiritual, hedonistic, thrifty, and so
forth. Benefit segmentation strategyis based upon the consumer’s needs or
problems. The idea is that people buy products for different benefits they hope to
derive.
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International marketers need to answer three basic segmentation questions:
1. What countries? This is generally the easiest to answer because it is driven by
where the brand is distributed.
2. Market Development Level. Countries, especially developing countries, vary
greatly in market infrastructure, literacy levels, economic level and level of media
development.
3. Cultural Cohorts. A cultural cohort is a segment of customers from multiple
countries sharing common characteristics that translate into common wants and
needs.
Targeting the Best Audience
Regardless of whether the marketing communication uses one-way or two-way
communication strategies, planners still need some sense of who they are talking
to and with. Through targeting, theorganization can design specific
communication strategies to match the audience’s needs and wants and position
the product in the most relevant way to match their interests.
The target is first described using the segmentation characteristics that separate a
group of prospective consumers from others who are not as likely to buy the
brand. Then the descriptive variables are added until an ideal consumer group is
identified. As Figure 5.5 illustrates, each time you add a variable, you narrow the
market as you come closer to the ideal target audience. The objective is to get the
largest group that can be defined in such a way that you can direct a message that
will speak to people in that group and you can reach with specific media.
Principle: Each time you add a variable to a target audience, you narrow the size
of the target audience as you try to find the largest group to whom you can direct
a relevant message and reach with specific media.
A targeting practice that has emerged from political campaigning is called
microtargeting, which refers to using vast computer databanks of personal
information to direct highly targeted messages to narrow slices of a segment. This
datamining practice, which enables advertisers to direct highly tailored
marketing messages to narrow slices of a segment, has been used by candidates of
both political parties.
This practice of using data banks that contain collections of personal information
is controversial. Another example of microtargeting based on location comes from
retailers who use ‘geofencing’ – drawing a perimeter around a location – to reach
customers via cell phone who are in the neighborhood of the store.
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