Marketing midterm

Chapter 4

Target Marketing

Chapter Objectives

Having already discussed the importance of brand awareness in the marketplace, this chapter goes one step further in identifying more specifically who in the marketplace we are trying to reach. After reading this chapter you will understand:

1. Defining prime prospects

2. The importance of target marketing information

3. The marketing concept

4. Planning the advertising

5. Niche marketing and positioning

6. Beyond demographics: psychographics

Chapter Overview

Our market is not “everybody” who has money. Who exactly is going to buy our product? We can take a shotgun approach and hope one shot will hit its mark. But successful marketers have learned to direct their advertising like a well aimed rifle at a specific target market; men, women, teenagers, Hispanics, all with unique product needs.

Marketers often tend to generalize. It is easy to assume that all Russians drink vodka, Germans drink beer, and French drink wine. It is all right to begin a marketing plan by grouping consumers by like characteristics, but we must dig more deeply. There are additional multiple factors that further segment such groups such as age, gender, income, net worth, geography, lifestyle, and family status. Marketing must look at the individual and not the mass market. What additional information do we need to understand and reach prospective consumers?

Lecture Outline

1. Marketing Generalization

A. As we discuss many factors and groups used by marketers, a word of caution is in order. Virtually no generalization encompasses an entire consumer segment, especially age groups. It is important to dig deeper and create an understanding.

B. A cardinal rule in marketing has always been to know your market. It means defining your target in as much detail as circumstances allow and necessity requires.

C. When possible, today’s marketing aims at the individual and not at the mass market.

2. Defining Prime Prospects

Introduction

1) Why waste company money advertising to people who are unlikely to buy? The search for the best prospects among all consumers is called target marketing.

2) The process of finding prime prospects is not limited to products; services, cities, almost any organization may need to target prospects.

*****NOTES: Use Exhibit 4.1 Here*****

Where do we start?

1) Although different advertising agencies and companies may approach consumer research in different ways, they are all utilizing a host of informational sources.

Census data.

1) Census data contains a wealth of information regarding shifts in population demographics and lifestyles. Much of this information is available through on-line databases.

2) The Topographical Integrated Geographic Encoding and Referencing system (TIGER) is one of most sophisticated analytical tools used to pinpoint geographic sales territories for direct marketing using demographic data.

3) More recently researchers are using geodemographic data related to consumer shopping habits based on home addresses and zip codes.

4) Such research takes an even more scientific approach, identifying and labeling American lifestyles with coded nicknames such as Blue Bloods and Penny Pinchers.

5) PRIZM research narrows the market segment even more by geographic areas that encompass 10 to 12 households as opposed to larger block areas having 340 households, and zip codes which include 3,600 households.

6) These services overlay precise demographic information with consumer behavior information giving advertisers a better consumer picture.

7) Such services (to be discussed later) include:

a. Aciom.

b. Claritas.

c. ESRI.

d. Experian.

e. MapInfo.

Population.

1) In October 2006, the Census Bureau reported the U.S. population grew to 300 million people.

2) What do we need to know about the marketplace?

a. Size of target market.

b. Where and how do they live?

c. What do they need?

d. What are their buying patterns?

e. Can we reach them?

3) American Demographics generation categories (2000); how they think, act, and spend influences marketers.

a. GI Generation.

b. Depression.

c. War Babies.

d. Baby Boomers.

e. Generation X.

f. Generation Y.

g. Millennials.

Selected Census State Population Projections

1) Looking at the ten most populous states and their populations in 2000 and the population projections for the ten most populous states by 2030 shows change.

2) Marketers may look at specific markets for numbers of people in a market or making media decisions.

3) Metropolitan Statistical Area (MSA) data takes a narrower look, examining the metropolitan areas where people actually live.

Change, Change, Change.

1) American Demographics prediction—the population will be larger (exceeding 350 million), older, and more diverse over the next quarter century.

2) With population growth, niche markets could grow into mass markets.

3) Termed beehiving, it is likely that we will see the growth of tight-knit alternative communities sharing common values and passions.

4) Large opportunity for marketers in the next few decades will be in 65 and older set, as Baby Boomers double the size of that same group today.

5) Clue in the future will be how to establish brands that attract older consumers without alienating younger ones.

6) All the demographic changes may or may not be important to a specific marketing situation. It is imperative to get a handle on what data are important.

G. Multicultural Overview

1) Although we address the traditional multicultural market in terms of ethnic background and nationality, it will be necessary to “think outside the box” and recognize other like groupings by age (generational) and sexual orientation (gay and lesbian consumers).

2) America is becoming increasingly diverse. Today, marketers refer to the term multicultural marketing (formerly called ethnic marketing) as their effort to reach not only a range of ethnicities but also lifestyle-related target markets.

H. Selected Demographic Snapshots

1) The American Community Survey, a Census Bureau program, released its first findings in the summer of 2006. Among the new data were the following:

a. Ancestry. Seventeen percent of Americans say their roots are German, the largest ancestral group.

b. Immigrants. One in eight residents (12.4 percent) are immigrants, up from 11 percent in 2000.

c. Age and household. Utah has the nation’s youngest median age (28.5), the highest percentage of households with children (44 percent), and the largest families (3.1 people).

d. Education. Twenty-seven percent of U.S. adults (age 25+) have a bachelor’s degree; 10 percent have an advanced degree.

2) The African American Population.

a. The mid-decade Census Bureau report indicates that African American people make up 13.4 percent of the U.S population, or 36.6 million.

b. There are 11.8 million African American children under the age of 18.

c. 54 percent live in the South.

d. Median age is 29.5 years, which is both younger and faster growing than the white population.

e. There are 823,500 African American-owned businesses generating $71 billion in revenues. Women own 38 percent of these, a higher percentage than that of any other minority ethnic group.

f. 5.7 million (46 percent) own there own homes.

g. Top five African American population cities are New York, Chicago, Detroit, Philadelphia, and Houston.

h. Median income of black families is $30,134.

i. 30 percent of African-American households have achieved middle-and-upper income status.

3) The Hispanic Population.

a. The U.S. Hispanic population, including immigrants and those born in the United States, totaled 41.9 million (14.5 percent of U.S. population) in the mid-decade Census study.

b. Median age is 27.2, which is nine years younger than the U.S. median (36.4). One third are under age 18.

c. People of Mexican origin make up 64 percent of the U.S. Hispanic population.

d. Hispanic purchasing power reached $736 billion in 2005 and is projected to reach $1 trillion by 2010, or almost 10 percent of the nation’s buying power.

e. Traditional demographic markers such as Spanish-language usage, country of origin, and length of time in the United States are becoming much less relevant as the number of bilingual, bicultural households grows quickly. The Latino identity is based on interpersonal orientation, time and space perceptions, spirituality, and gender perception. Marketers need to understand these.

4) The Asian and Pacific Islander Population.

a. 2005 Census Bureau report of 12.5 million Asians and Pacific Islanders, 4.8 percent of population.

b. Where do they live? 51 percent in the West; 19 percent in the South; 12 percent in the Midwest; and 19 percent in the Northeast.

c. 95 percent live in metropolitan areas.

d. Asians are younger than non-Hispanic whites.

e. Education. Asians place high value on learning: 51 percent of men &44 percent of women hold at least a bachelor‘s degree.

f. Income. 40 percent have incomes of $75,000 or more and 17 percent earn less than $25,000.

g. Cultural makeup: members belong to at least one of fifteen distinct ethnic groups and national origins, differing in culture, language, and history.

h. The percentage increase in Asian children ages 5 to 9 is expected to rise 22 percent by 2010, ages 10 to 14 by 31 percent.

i. Asian market becoming extremely important over the next decade, especially for high-end products.

I. Other target influences.

1) Marketers must examine a lot of information.

2) Household income.

a. Marketers gather and analyze income data annually released by the Bureau of Labor Statistics’ Consumer Expenditure Survey.

b. Household income is defined as: disposable, income after taxes; and discretionary, amount of family budget left to spend after paying taxes and buying necessities.

3) Spending.

a. American Demographics reports that the average U.S. metropolitan household spends 16 percent for shelter, 17 percent for transportation, 14 percent for food, 6 percent for utilities, 6 percent for apparel, 5 percent for entertainment, 3 percent for household operations, and 11 percent for personal insurance.

b. Spending traits depend on level of income and demographic differences.

4) Marrieds.

a. The U.S. Census reports 56 percent of Americans (over age 18) are married, or 110.6 million.

b. Median age for men at first marriage is 26.7 years and 25 years for women.

c. 19.4 million adults are divorced.

d. More than 1.3 million marriages are interracial.

e. Of children under 18, 6 percent live with grandparents.

5) Birthrate.

a. In decline for decades, dropping from 23.7 per 1,000 population (1960) to 13.9 per 1,000 in 2002.

b. With more than 4 million births recorded in 2002, the baby goods market is definitely viable.

c. Marketer must continually monitor changing lifestyles occurring in progressive stages of life.

d. About one-third of children in 1997 were ethnic minorities, and roughly 62 percent of married mothers with preschoolers were in the workforce. Still a good market for more than baby products.

6) Aging population.

a. By 2020, one in every six Americans will be age 65 plus.

b. The senior segment of the population will more than double by 2050, producing significant marketing ramifications.

7) Women.

a. 110 million women in the U.S., account for 47 percent of all workers and 51 percent of management positions.

b. Women with children under age 18 account for almost one-third of U.S. households.

c. Education. U.S. Department of Education reports that women earn close to 60 percent of all bachelor degrees and master degree’s.

d. 85 percent of all product purchases are made by women.

e. Market power of women will increase with rising wealth, education, and longevity.

f. Women dominate in the purchases of food, beauty, and household products.

g. Bridget Brennan says marketing to women as your leader is the way of the future in almost every product category.

h. Mary Lou Quinlan, in her book Just Ask a Woman, tries to answer marketers’ questions.

1. What does it mean?

2. Do they want different products than men?

3. Do they want to feminize advertising?

i. Marketers must also consider ethnic and cultural influences on women’s’ purchases.

*****NOTES: Use Exhibit 4.5 Here*****

8) Men.

a. Media habits of 18-34 year-old men have changed.

b. Single males have relatively high disposable incomes, are still forming brand loyalties, and are important to a number of product categories.

c. The Future of Man, coauthored by an advertising man, looks at the stereotypes and changes taking place in male culture.

9) Single-Person Households.

a. For the first time, there are more people living alone in single-adult households than in two-parent families with children. Group projected to reach 34 million by 2010. People are most likely to lie alone in youth or as senior citizens.

b. Nuclear-family household (mom, pop, and two kids) now the second largest group. Married households without children third.

c. Not all adults living alone are living completely alone.

d. Group is not a homogenous target audience. Looking Glass, Inc. identifies eight of its 30+ key consumer segments that are likely to live as one-person households:. Among them are:

1. Upscale, mature women.

2. Working-class women.

3. Fit and stylish students.

4. Well-to-do gentlemen.

5. Working-class men.

3. Generational Marketing

A. Modern marketing’s definition of generation has two parts.

1) The number of people in any age group and the influence on the size and shape of tomorrow’s market.

2) Shared attitudes, history, and experiences of age groups.

3) Most agree that a generation covers 30 years and extends past a single decade.

4) Cohorts represent groups of individual who were born in continuous years and share common experiences.

a. A generation’s personality is made up of its member’s memories of major world events, which occurred during their formative years.

b. Marketers trace the number of babies born in different stages/cohorts and are able to project opportunities to better reach and serve each generation.

B. Target Generations. Researchers concentrate their attention the following generations, studying carefully how each thinks and buys.

1) Matures. Characterized by exemplifying classic American values of Puritan work ethic, self-sacrifice, teamwork, and conformity for the common good.

2) Boomers. A self-assured, self- absorbed generation much better educated than any prior generation. They possess a sophisticated view, believe they know better than their predecessors, and are eager to change the world and fix things. Fighting the concept of old.

3) Generation X. Born in the post Baby-Boom era (1965–1978), they have been decried as overeducated slackers, with a distrust for social institutions, politics, and religion. Xers are self-reliant, entrepreneurial, techno-focused, media-savvy, and socially tolerant. They are slowing becoming parents. as a result of being more cautious about family formation. Xers are reinventing traditionalism in family life.

4) Generation Y (Echo Boomers, Millennials, iGeneration). Born between 1979 and 1995, are techno-savvy, coddled, optimistic, prone to abrupt shifts in tastes, tough to pigeonhole, and very racially diverse. This group is the largest consumer cohort to come along since the Baby-Boomer generation and can potentially hurt brands made popular by the Boomers. These kids are known by economists, sociologists, and marketing experts as optimistic team players and rule followers, born into “child-centered” families and raised as part of the most celebrated, protected, and overscheduled generation in memory.

5) Generation Z. This generation is said to have begun with people born in the late 1990s or early 2000s and is expected to run through about 2017. This group will come from a wider mix of backgrounds and, by 2010, marketers will have to start over figuring out how to impress this new generation.

6. Why is this important to advertising people?

a. Without an accurate view of a generation’s values, needs, and wants, you are likely to misinterpret what you see in the marketplace.

b. Levi Straus made the mistake of not offering a jean that distinguished the Gen-X and Echo-Boom generations.

c. The consumer marketplace no longer has the homogeneous identities of previous decades.

**

C. Marketing Concept and Targeting

1. Companies generally find that it is necessary to divide the market into major market segments, evaluate them, and then target those segments they can best serve.

2. This focus on specific groups of buyers is called market segmentation.

3. Market segmentation is an extension of the marketing concept.

a. Phil Kotler defines the marketing concept as achieving organizational goals by determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors.

b. Make what you sell instead of sell what you make.

4) The concept of consumer value today is at the heart of the new marketing concept. Businesses are concentrating more effort in building long-term relationships with customers. In the new concept, the initial sale is just the beginning.

5) The focus is sharpened by adding the idea of the value proposition.

a. Market-driven companies need to understand how to converge consumer needs with company capabilities to better define value.

b. This is more than monitoring data. It includes listening to the consumer, using all the research techniques, and being attuned to the “blogosphere” and other informational technology and tracking systems.

c. It is a way of doing business that includes customer orientation, market intelligence, distinctive competencies, value delivery, market targeting and the value proposition, customer-defined total quality management, profitability rather than sales volume, relationship management, continuous improvement, and a customer-focused organizational structure.

6. Marketing databases. Comprehensive data about individual customers’ and prospects’ sales histories, along with demographic and psychographic infor​mation, are now available to better enable companies to deliver one-to-one relationships not previously available.

a. A new type of bar code, radio frequency identification (RFID) has tremendous data implications for tracking products and understanding how they are used by consumers.

D. What Is a Product?

1. Defined as a bundle of ingredients put together for sale as something useful to a consumer.

2. Consumers are buying more than the physical product. They are buying satisfactions.

a. Functional satisfactions—a watch to tell time, or a car for transportation.

b. Psychological satisfactions—consumers want status with a car and the look of jewelry with a watch.

c. Products are often designed to match interests of particular consumer groups.

d. Products often say something about who we are and about those with whom we associate.

e. As we match people and benefits, we create product loyalty that insulates us against competitive attacks.

3. New products.

a. With more than 20,000 new products yearly, companies find it difficult to fine a place in the market.

b. Due to the high cost of new product introduction, product design, and strategy must be well thought out and innovative.

4. Segmenting goods by brand loyalty, helps marketer introduce new brands.

a. National-brand loyal. Members of this segment buy primarily a single national brand at its regular price.

b. National-brand deal. Similar to national-brand loyal, except consumers are attracted to the best deal or price and are prone to store switching.

c. Private-label loyal. Consumers buy the private label offered by the store in which they shop.

d. Private-label deal. This segment shops at many stores and buys the private brand with the best deal.

e. National-brand switcher. Members of this segment tend not to buy private brands and switch regularly among national brands on the market.

f. Private-label switcher. This segment is similar to private-label deal consumers, but is not very deal prone and purchase private labels at their regular price.

5. Markets change with the product and products change with the market.

E. What Is a Market?

1. Market is defined as a group of people who can be identified by some common characteristic, interest, or problem; that could use a product to their advantage; could afford to buy it; and can be reached through some medium.

2. Markets can be broadly or narrowly defined.

3. Majority fallacy is the term applied to the assumption, once frequently made, that every product should be aimed at, and acceptable to, a majority of all consumers.

a. This view, however, overlooks the opportunity to serve consumer minorities.

F. What Is Competition?

1. In a broad sense, competition includes all the forces that inhibit sales of a product.

a. Competing with products in the same product class or subclass. Know your category and the reasons why people buy.

b. Competing with forces outside your product category; alternative choices that serve the same purpose such as buying mouthwash rather than toothpaste with a fresh breathe attribute.

c. Competing with a confusing array of brands.

d. Advertisers need to find answers to which products in what categories compete for the consumer’s attention and dollar.

e. Marketers of products and services must answer several questions.

1) Who are our competitors?

2) What are their brands?

3) What are other product categories?

4) Are there many brands or only a few?

5) Which are strong?

6) Which are vulnerable?

7) What impact do store brands or generics have?

8) Are there any strong, long-established brands or is the market volatile?

4. Planning the Advertising

A. Market Segmentation. Maximizing your potential in the marketplace by targeting your product to certain segments of the population with similar behaviors, ages, genders, and lifestyles.

1) Marketing plan: situation analysis section.

a. Description of current situation.

b. SWOT analysis.

c. Major issues.

d. Assumptions about the future.

*****NOTES: Use Exhibit 4.7 Here*****

2) Market-segmentation process: steps.

a. Segment your market.

b. Target a segment.

c. Position your product for that segment.

d. Communicate your positioning.

3) When planning advertising to take advantage of market segmentation, consider the variable to use for dividing a market. In addition to demographics, this could be geographic, product-user, and lifestyle segmentation. Segment must be large enough to justify the marketing effort.

4. Geographic segmentation.

a. Oldest form of segmentation that designates consumers by geographical area.

b. Also termed geomarketing, it is important to media planners of national, regional, and local ad campaigns.

c. There has been a data explosion on local markets. Many retail companies practice micromarketing -- targeting individual store trading areas.

d. Numerous categories of geographic segmentation are used such as census trace data, areas of dominant influence (ADI), zip codes, states, counties, census regions, metropolitan statistical areas, and the total United States.

e. Companies that lack national distribution may consider geographic segmentation, using geographic segmentation as a distribution strategy rather than a promotional one.

f. It is not unusual for national companies to divide their marketing efforts into regional units (cities, regions, and even globally) to respond better to the competition).

5. Product user segmentation.

a. Rather than user/consumer characteristics, this segmentation is based on product usage.

b. It is a complex combination of demographics and lifestyle in identifying consumers.

c. Typically, the market is divided into sub-segments of use: heavy, medium, light, and non-users.

d. Usage varies with each product category.

6. Lifestyle Segmentation.

a. The most accurate characterization of people is identifying clusters of consumers who share similar ways of life, known as lifestyles.

b. Constant research is needed to keep up with a sea of changes in public attitudes toward dimensions of life such as work, leisure, and fitness.

c. Research techniques based on the premise that people in the same ZIP codes tend to buy similar products: PRIZM, CACI’S Acorn, and SRI’s VALS (Values and Lifestyle System).

d. Research technique, which segments by values, attitudes, and mindsets, rather than geography, demographics, and consumption: Yankelovich Partners, Inc.’s Monitor Mindbase.

e. Some researchers suggest custom designing segmentation studies with a specific product or service in mind.

*****NOTES: Use Exhibit 4.8 Here*****

f. AIO studies. One approach to lifestyle segmentation is measuring consumers’ activities, interests, and opinion.

7. Benefits and attitude segmentation.

a. A segmentation approach, which clusters people into groups, based upon what benefits they want in a product.

8. Segmentation risks.

a. Researchers must be careful not to narrowly define their markets, thereby limiting company growth beyond the outer limits of a market niche.

b. Such limitation results in inefficient media usage and narrows the selection of advertising approaches and distribution channels.

c. If segments become excessive, it turns out to be very cost inefficient.

B. Target market sacrifice.

1. Targeting one market niche allows you to become the preferred product in that segment, e.g., Pepsi for the younger generation.

2. Broadening the sales effort beyond the target segment runs the risk of chasing away your original customers.

C. Niche marketing.

1. Niche marketing serves two purposes: 1) to gain market entry into small part of a larger market not currently served; and 2) to cater to latent needs not satisfied by existing products.

2. A market niche is a small group of consumers who are narrowly defined by uniquely identified needs.

3. Guiding principle. Pit your strength against your competitor’s weakness.

4. Heart attack niche. Marketers create specific variations of their product to meet niche needs; e.g., a variety of offerings of the same pain reliever.

5. Social-networking niches. When Facebook and MySpace websites became broad based, niche sites appealed to advertisers.

6. When seeking new niche opportunities, pay attention to marketing basics: changing shopping trends, demo​graphics, marketing strategy, and delivery on commitments.

7. Each niche offers challenges for advertisers.

8. Niche marketing is a growth builder.

9. Bobos. Another niche segmentation example, short for Bourgeois Bohemian, a market segment 40 million strong who possess a combination of the counter-culture ’60s and the achieving ’80s.

a. Bobos’ jobs are to create new ideas, new technology, and new content; don’t work 9-to-5 jobs; age isn’t a defining factor; highly educated; tend to buy the functionality extreme; incomes exceed $75,000. Top ten Bobo markets: San Francisco, Seattle, Boston, Austin, San Diego, Washington DC, Chapel Hill-Raleigh-Durham, New York, Minneapolis, and Denver.

5. Positioning

A. Positioning is creating a brand or product image in the mind of the consumer, which relates to the lifestyle of the buyer.

B. Positioning is segmenting the market by either or both of two ways.

1) Creating a product to meet the needs of a specialized group.

2) Identifying and advertising a feature of an existing product that meets the needs of a specialized group.

C. Purpose of positioning.

1) It is the intent of the marketer to position an image of a product in the mind of the prospective consumer, which distinguishes it from the competition and induces purchases.

2) Some products, like Arm & Hammer baking soda, can be positioned in several different ways, as a deodorant, bath skin cleanser, or refrigerator deodorizer.

6. How to approach a positioning problem.

A. Advertisers thinking about positioning a product should ask several questions.

1) What position, if any, do we already own in the prospect’s mind?

2) What position do we want to own?

3) What companies must be outgunned if we are to establish that position?

4) Do we have enough marketing money to occupy and hold that position?

5) Do we have the guts to stick with one consistent positioning concept?

6) Does our creative approach match our positioning strategy?

B. The most used positioning strategy.

1) Associating a product attribute or characteristic with an object/product.

2) Association can translate into reasons to buy a brand.

3) The attribute must be important to a major market segment and not already claimed by a competitor.

*****NOTES: Use Exhibit 4.10 Here*****

C. Further questions to consider.

1) What is the core identity?

2) Which benefits stand out and should be featured?

3) What is the emotion the target feels from the brand?

7. Positioning examples.

A. Examples of positioning statements

1) Dove soap is the moisturizing beauty bar.

2) Allstate insurance is the good hands people.

3) Cheer is the detergent for all temperatures.

4) Intel is the computer inside.

5) Ace hardware is the helpful place.

6) It’s not TV. It’s HBO.

7) Milk-Bone dog biscuits clean teeth and freshen breath.

a. Some marketers like to change brand positions frequently, which is not good for firmly entrenched brands.

b. Some positions dropped years ago are brought back again.

B. Profile of the Market. We examine the market profile which is a demographic and psychographic description of people or households of a product’s market. It may also include economic and retailing information about a territory.

1) What is the overall usage of the product type?

2) Is the product category growing, stagnant, or declining?

3) What has been the trend in market share over the past several years?

4) What is the chief product advantage featured by each brand?

5) A different advertising approach is used, depending on whether a brand is a leader or a distant follower in market share.

6) Important for the advertiser to know not only the characteristics of the product’s market but also similar information about media alternatives.

7) Most major interactive, print, and broadcast media can provide demographic and product-user information, which is helpful in making integrated promotional decisions.

C. Profile of the Buyer

1) Advertisers must look at demographics and lifestyle to understand any market because not all consumers in various ethnic or generational groups respond the same to promotional messages.

a. Women ages 50 to 70 are the golden bull’s –eye of target marketing.

2) Demography.

a. Is the study of vital economic and sociological statistics about people, revealing facts about product usage. Considering differences in purchasing preferences by gender, age, and regions inhabited can help marketers to better understand how demo​graphic differences can influence advertising strategy and expenditures.

*****NOTES: Use Exhibit 4.11 Here*****

D. Heavy Users.

1. 80/20 Rule. In any product category, a small percentage (20 percent) of users is responsible for a disproportionately large share (80 percent) of sales.

2. 80/20 rule varies with each product and product category.

3. Heavy users are identified by their similarities, when they buy and where they are located.

4. Heavy users are an important part of the market; however, they are also the group most advertisers are trying to target and, therefore, the competition can be fierce and expensive.

5. Marketers need to study their target audiences in great depth before defining marketing goals.

8. Beyond demographics: psychographics.

A. When analyzing consumer profiles to identify market segments, the marketer must look deeper, behind the obvious similarities.

1) The attempt to explain and illuminate consumer differences is known as Psychographics , or the study of lifestyles.

2) Psychographics sharpens the search for prospects beyond demographic data.

3) Lifestyle information can aid good creative people to devise copy that appeals to a specific segment’s lifestyle interest.

a. The appropriate media is then selected and advertising is direct to this target group or groups.

4) Psychographics reveals the soul of the person; demographics reveal only the skeleton of that person.

B. Target audience: beyond demographics (example).

1. Travel advertiser’s basic demographic requirement: consumers with a combined household income of $40,000.

2. Further lifestyle and geographic qualifiers: primary, one-week summer vacationers; weekend travelers; mature (50+) market; business travelers; and international travelers.

C. Psychographic research.

1. Much more refined information available today. Ad agency research information includes syndicated research from outside sources, client’s research, and the agency’s own resources.

2. Household lifestyle categories are numerous and include: credit card usage; good life activities; high-tech activities and usage; sports and leisure activities; outdoor activities; and domestic activities.

*****NOTES: Use Exhibit 4.12 Here*****

D. Test marketing.

1. Manufacturers seldom launch a new product without first testing it in the marketplace.

2. Test marketing helps determine if consumers will really purchase a product or react to specific advertising and promotional activities.

3. Each test market is a microcosm of America.

4. The Midwest, being the heartland of America, is a popular region for test marketing.

5. Criteria: city’s demographics must fall within 20 percent of the national average.

6. Criteria: the city should be somewhat isolated.

7. Criteria: local media should be relatively inexpensive.

8. Criteria: citizens should not be extremely loyal to any particular brand.

9. Criteria: supermarkets should be impartial and give display space to new products.

10. Acxiom Corporation, a database services company, ranks America’s top 150 MSAs based on their overall characteristics as a consumer test market.

11. Perils of introducing a product nationally without test marketing include failure. This can be extremely expensive; most marketers are not willing to take the risk without some type of testing.

*****NOTES: Use Exhibit 4.2 Here*****

*****NOTES: Use Exhibit 4.3 Here*****

*****NOTES: Use Exhibit 4.4 Here*****

*****NOTES: Use Exhibit 4.6 Here*****

*****NOTES: Use Exhibit 4.9 Here*****