Marketing Chapter 7 Segmenting And Targeting The Audience Segmenting And Targeting The Audience

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Chapter 7: Segmenting and Targeting the Audience

Chapter 7

Segmenting and Targeting the Audience

CHAPTER CONTENT

KEY OBJECTIVES

2. Describe the cultural, social, psychological, and behavioral influences on consumer

responses to marketing communication.

4. List several characteristics that 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 and six

CHAPTER OUTLINE

STARTING THE CONVERSATION

 There are more than 325 million people in the United States, and none of them 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?

 Successful branding begins with connecting with your customers’ priorities and

values. Therefore, good marketing communication begins by knowing everything

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 process with

fairly predictable steps: (1) need recognition – the goal of brand communication at

Chapter 7: Segmenting and Targeting the Audience

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

 Although the set of steps is hierarchical and suffers from the limitations discussed in

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

 A chart in the textbook summarizes six ways consumers make decisions relative to

their need for information. 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

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. Figure 7.2 is a

general model highlighting a variety of influences on consumer behavior.

Cultural Influences

 Marketing communication that grabs people’s attention, sticks in their minds, and

moves them to act often builds on or confronts deeply rooted cultural values. Culture

Chapter 7: Segmenting and Targeting the Audience

 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



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

 A culture’s most important values are few in number and their relative importance

does not change much, even over a long period of time. These underlying core values

 Milton Rokeach developed a taxonomy of cultural values that researchers have used

across a number of countries to help them create brand messages that are congruent

with cultures. In the textbook is a list Rokeach’s 18 terminal values.

 All of Rokeach’s 18 terminal values are desirable, but the ones which receive greater

Cross-Cultural Factors

 International or global marketing programs also have to consider multicultural

differences that might derail communication. Dutch scholar Gaert Hofstede insists

 Working with Hofstede’s research and theories, Marieke de Mooji, a cross-cultural

researcher and consultant, developed a set of principles for cross-national marketing

communication. Her research also discredited the idea of universality of emotions,

finding that both expression and recognition of emotions vary across cultures.

 An example of how difficult it is to manage brand communication across cultures

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. The

Chapter 7: Segmenting and Targeting the Audience

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 opinions

and consumer

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 may segment

consumers by social class, which 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

 Brand communities, such as the Harley Owners Group (HOG) for Harley Davidson,

are groups of people devoted to a particular brand. Apple is another company that has

generated a brand community. The internet has had a high impact on the creation of

reference groups.

 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 reference group

strategy.

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

Chapter 7: Segmenting and Targeting the Audience

 A compelling demographic trend in the 21

century is the rise of the one-person

household. For the first time in U.S. history, single-person households outnumber

married couples with children.

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 are called

 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.

 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. In his book Breakthrough Advertising, the

 Needs and wants can be characterized as a gap between a desired state and our actual

state of being. The greater the gap is perceived to be, the greater the motivation to act

in order to close that gap.

Motivations

 A motive is an internal force that stimulates you to behave in a particular manner.

This driving force is produced by a tension created by an unfulfilled want or need.

Research into motivation uncovers the “why” questions. Many motivations operate

at the subconscious level.

 Repurchase behavior is influenced strongly by the final stage of the consumer

decision-making process: post-purchase evaluation. This stage includes satisfaction

and dissonance.

 Satisfaction. Satisfaction is commonly viewed as the gap between our

expectations of a product and our actual experience with it. Planners must be

Chapter 7: Segmenting and Targeting the Audience

 Dissonance. Cognitive dissonance refers to a conflict between two thoughts

which creates a state of tension. Buyer’s remorse is a related form of tension that

occurs when there is a difference between what we thought we would receive and

what we actually received.

 Some consumer decisions are routine or habitual and lack engaged, conscious

thought. This is also true for decisions that are driven by emotions and feelings.

Influences on B2B Decision Making

 Many of the influences that affect consumer buying also are reflected in B2B

marketing. We know that B2B decision making 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.

HOW DO WE SEGMENT MARKETS AND TARGET AUDIENCES?

 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.

Segmentation Strategies

 Political columnist David Brooks asked in 2012, “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.

Chapter 7: Segmenting and Targeting the Audience

 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. But even Coke is sold in different places,

including international markets, people hear about the product through different types

of media, and there are differences in age of the product’s users. This requires a

segmentation strategy.

 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

Types of Segmentation

In general marketers segment their markets using six key consumer characteristics

(see Figure 7.4).

 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 consumer’s 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.

Chapter 7: Segmenting and Targeting the Audience

 Values and benefits-based segmentation groups people based on tangible and

intangible factors that reflect their underlying value system. Values segmentation

1. What countries? This is generally the easiest to answer because it is driven by where

2. Market Development Level. Countries, especially developing countries, vary greatly

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 Audiences

 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, the organization 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.

 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

Chapter 7: Segmenting and Targeting the Audience

139

 Another example of microtargeting based on location comes from retailers who use

‘geofencing’ – defining a perimeter around a location – to reach customers via cell

phone who are in the neighborhood of the store.

PROFILING MARKETS AND TARGET AUDIENCES

 Profiles are built of typical customers or prospects in order to make the brand

communication more personal and relevant. Profiles are descriptions of the target

audience that read like a description of someone you know.

 Forrester Research uses a research approach called personas. The Research Director

for Customer Experience at that firm describes a persona as ‘a fictional character that

embodies your target customers’ key behaviors, attributes, motivations, and goals.’

It is a vivid profile of a type of person.

Targeting and Profiling Using Demographics

 The statistical, social, and economic characteristics of a population, including such

factors as age, gender, education, income, occupation, race, family size, and sexual

Age

 The most important demographic characteristic used by marcom planners is age.

People of different ages have different wants and needs. The following list describes

some of the more common age-related categories that are used by marketers:

 Referred to as The Greatest Generation by Tom Brokaw in his book by that

name, this generation, born in the 1910s through the late 1920s, fought World

War II. A small group, these seniors are in their last years. They opened up

college education to the middle class after the war and lived frugal yet financially

satisfying lives.

Chapter 7: Segmenting and Targeting the Audience

 A boomer subgroup called Generation Jones is made up of the younger Baby

Boomers who were born from the mid- to late-1950s through the mid-1960s. The

Jones reference comes from their continuing need to chase the dream of affluence

by trying to “keep up with the Joneses.”

 Gen X, also known as baby busters, is the group whose 49 million members were

born between 1962 and 1981. Now adults, they have been described as

independent-minded and somewhat cynical. They are concerned with their

physical health (they grew up during the AIDS outbreak) and financial future (the

job market became more difficult just about the time they entered).

 Born between 1980 and 1996, Generation Y is also known as Echo Boomers

because they are the children of Baby Boomers. They are important to marketers

because they are next in size to the boomer generation with more than 74 million

 Age is a key factor in media plans because age usually determines what media you

watch, listen to, or read. The older the age group, the more likely it is to use

traditional media daily or several times a week, and the more likely they are to read

newspapers.

 Age is driving a fundamental shift in U.S. marketing strategy. Since the 1960s,

marketers focused on reaching young people, but now with Baby Boomers moving

into retirement, marketers realize that wealth and numbers belong to this active senior

market.

Gender and Sexual Orientation

 An obvious basis for differences in marketing and advertising is gender. Many brands

are either masculine or feminine, in terms of both use and brand personality. Because

women account for 85 percent of all consumer purchases in the United States, they

are an important target for many marketers.

Chapter 7: Segmenting and Targeting the Audience

 Gender stereotypes have been a problem in advertising for decades and some believe

that may be because the majority of the work has been created by men writing for

women.

Education, Occupation, and Income

 Generally, white U.S. consumers attain higher levels of education than blacks and

Hispanics, and US males are falling behind females in higher levels of education.

Education tends to correlate with the type of medium consumers prefer. Consumers

with lower levels of education are higher users of television, especially cable.

 Another key demographic indicator for many advertisers is income, which relates to

both education and occupation. The updated census income data reported in 2011

showed a shift toward fewer people in the top third (6%) and more people in the

bottom third of income distribution (72%). The remaining 21% is made up of the

shrinking middle class.

 European consumers are even more frugal, as many of their countries are in economic

trouble and suffering from government austerity programs that have drastically

increased unemployment and reduced income levels. In contrast, the middle class in

China has been growing dramatically during the 2000s, although it is slowing down

as the worldwide recession hits Asian markets.

 Advertisers track trends in discretionary income, which is the amount of money

available to spend after paying taxes and buying basic necessities such as food and