Targeting

1. CHAPTER4 Targeting © 2010 South-Western, a part of Cengage LearningAll rights reserved.

2. Chapter ObjectivesAfter reading this chapter you should be able to: • Appreciate the importance of targeting marketing communications to specific consumer groups and realize that the targeting decision is the initial and most fundamental of all marcom decisions. • Understand the role of behaviorgraphics in targeting consumer groups. • Describe the nature of psychographic targeting. • Appreciate major demographic developments such as changes in the age structure of the population and ethnic population growth. © 2010 South-Western, a part of Cengage Learning. All rights reserved. 4–2

3. Chapter Objectives (cont’d)After reading this chapter you should be able to: • Explain the meaning of geodemographics and understand the role for this form of targeting. • Recognize that any single characteristic of consumers—whether their age, ethnicity, or income level—likely is not solely sufficient for sophisticated marcom targeting. © 2010 South-Western, a part of Cengage Learning. All rights reserved. 4–3

4. Targeting • Targeting Specific Audiences • Is considered the starting point for marcom decisions • Allows for precise delivery of marketing communications to targeted markets • Prevents wasted coverage to people falling outside the targeted market • Choosing a Targeting Method • How difficult to obtain data about the characteristic to be use in targeting consumers • How predictive is the characteristic of consumer choice behavior © 2010 South-Western, a part of Cengage Learning. All rights reserved.

5. Targeting Specific Audiences Measureable ConsumerCharacteristics Behaviorgraphics Demographics Psychographics Geodemographics © 2010 South-Western, a part of Cengage Learning. All rights reserved.

6. Figure 4.1 Classification of Four General Targeting Characteristics © 2010 South-Western, a part of Cengage Learning. All rights reserved.

7. Behaviorgraphic Targeting • Behaviorgraphics • Describe how people behave with respect to a particular product category or class of related products • Assume that the best predictor of future behavior is past behavior • Online Behavioral Targeting • Tracks the online site-selection behavior of users so as to enable advertisers to serve targeted ads • Privacy Concerns • Technological advances increase the ability to serve consumers at the risk of invading their privacy © 2010 South-Western, a part of Cengage Learning. All rights reserved.

8. Psychographic Targeting • Psychographics • Describe aspects of consumers’ psychological make-ups and lifestyles as they relate to buying behavior in a particular product category • Attitudes • Values • Motivations © 2010 South-Western, a part of Cengage Learning. All rights reserved.

9. Types of Psychographic Profiles • Customized Psychographic Profiles • Are typically customized to the client’s specific product category • Contain questionnaire items related to the unique characteristics of the product category • General Purpose Psychographic Profiles • Can be purchased as “off-the-shelf” psychographic data from services that develop psychographic profiles of people independently of any particular product or service © 2010 South-Western, a part of Cengage Learning. All rights reserved.

10. Table 4.1 Illustrative Statements Used In a Customized Banking-Related Psychographic Study © 2010 South-Western, a part of Cengage Learning. All rights reserved.

11. Psychographic Segments of Banking Behaviors Worried Traditionalists Bank Loyalists Secured Investors Thrifty Bankers Psychographic Study of Consumers’ Banking Practices © 2010 South-Western, a part of Cengage Learning. All rights reserved.

12. Table 4.2 Yankelovich MindBase Segments © 2010 South-Western, a part of Cengage Learning. All rights reserved.

13. Table 4.2 Yankelovich MindBase Segments (cont’d) © 2010 South-Western, a part of Cengage Learning. All rights reserved.

14. Figure 4.2 The 8 VALS Segments © 2010 South-Western, a part of Cengage Learning. All rights reserved.

15. VALS Psychographic Segments Innovators Successful, sophisticated, take-charge, with high self-esteem Thinkers Mature, satisfied, comfortable, and reflective; valuing order, knowledge, and responsibility and motivated by ideals Believers Conservative, conventional with concrete beliefs based on traditional, established codes: family, religion, community, and the nation; motivated by ideals Achievers Motivated by the desire for achievement; have goal-oriented lifestyles and a deep commitment to career and family © 2010 South-Western, a part of Cengage Learning. All rights reserved.

16. VALS Psychographic Segments Strivers Trendy and fun loving. Motivated by achievement out of concern about the opinions and approval of others Experiencers Motivated by self-expression; are young, enthusiastic, and impulsive consumers; quickly become enthusiastic about new possibilities but are equally quick to cool. Makers Motivated by self-expression; express themselves and experience the world by working on it and have enough skill and energy to carry out their projects successfully Survivors Live narrowly focused lives; with few resources with which to cope, often believe that the world is changing too quickly; are comfortable with the familiar and are primarily concerned with safety and security © 2010 South-Western, a part of Cengage Learning. All rights reserved.

17. Geodemographic Targeting • Geodemographics • Consumers who reside within geographic clusters such as zip codes or neighborhoods also share demographic and lifestyle similarities • Typical Clusters (PRIZM NE) • Bohemian Mix • White Picket Fences • Suburban Pioneers © 2010 South-Western, a part of Cengage Learning. All rights reserved.

18. Major Demographic Aspects Age structure of the population Change in household composition Ethnic population developments Demographic Targeting © 2010 South-Western, a part of Cengage Learning. All rights reserved.

19. Demographic Trends • World Population Growth • 6.67 billion (2009) to 8 billion (2025) to 9 billion (2050) • Changing Age Structure in United States • Median age will increase to 38 by 2025 • More middle-aged Baby Boomers • Fewer children, teenagers, and young adults due to decreased birthrates © 2010 South-Western, a part of Cengage Learning. All rights reserved.

20. Table 4.3 World’s 25 Largest Countries as of 2007 © 2010 South-Western, a part of Cengage Learning. All rights reserved.

21. Table 4.4 Largest Ancestral Groups of U.S. Residents © 2010 South-Western, a part of Cengage Learning. All rights reserved.

22. Table 4.5 Population of the United States by Age Group, as of 2006 © 2010 South-Western, a part of Cengage Learning. All rights reserved.

23. Demographic Segments by Age Group • Preschoolers (5 years or younger) • Elementary-school-age children (6-11 years) • Tweens (8-12 years) • Teenagers (13-19 years) • Millennial Generation or Generation Y • Highly conformist, narcissistic, and fickle consumers • Young adults (20-34 years) • Generation X (Baby Busters) • Yup & Comers, Bystanders, Playboys, and Drifters © 2010 South-Western, a part of Cengage Learning. All rights reserved.

24. Figure 4.3 An Appeal to Preschoolers’Parents © 2010 South-Western, a part of Cengage Learning. All rights reserved.

25. Figure 4.4 An Appeal to Teenagers © 2010 South-Western, a part of Cengage Learning. All rights reserved.

26. Demographic Segments: Age • Middle-Aged (35-54 years) • Younger baby boomers and older Gen Xers • Target category for luxury goods and youth • Mature Consumers (55 years or older) • Are 23% of the total U.S. population • Have highest discretionary income and most assets • Census Bureau classification: Olders (55 to 64); Elders (65 to 74); and the Very Old (75 and over) • Descriptive groups: Healthy Hermits, Ailing Outgoers, Frail Recluses, and Healthy Indulgers © 2010 South-Western, a part of Cengage Learning. All rights reserved.

27. Figure 4.5 An Appeal to Female BabyBoomers © 2010 South-Western, a part of Cengage Learning. All rights reserved.

28. The Ever-Changing American Household • Household Defined • An independent housing entity, either rental property or owned property. • U.S. Households • Growing in number, shrinking in size, and changing in character • Married couples with children families now represent less than one-third of all households • Single person and unrelated persons households are a growing market © 2010 South-Western, a part of Cengage Learning. All rights reserved.

29. Ethnic Population Developments • Changes in the U.S. Melting Pot • More diversity in the overall population • Growth in all ethnic groups • Implication for Marketers • Need to devise marcom strategies to meet ethnic groups’ unique wants/needs © 2010 South-Western, a part of Cengage Learning. All rights reserved.

30. Table 4.6 Ethnic Groups’ Population Representation in the United States, 2000–2050 (in millions) © 2010 South-Western, a part of Cengage Learning. All rights reserved.

31. Ethnic Population Developments • African Americans • Are of an average age that is considerably younger than that for whites • Are geographically concentrated, with three-fourths of all blacks living in 16 states • Tend to purchase prestige and name-brand products in greater proportion than do whites • Have spending power that totals nearly 800 billion annually © 2010 South-Western, a part of Cengage Learning. All rights reserved.

32. Figure 4.6 African-American Models Appeal to African AmericanConsumers © 2010 South-Western, a part of Cengage Learning. All rights reserved.

33. Ethnic Population Developments (cont’d) • Hispanic Americans (Latinos) • Are the largest U.S. minority population segment • Are not a single unified market • Are underserved by current marketing efforts • Are responsive to advertising in their dominant language © 2010 South-Western, a part of Cengage Learning. All rights reserved.

34. Table 4.7 Top 10 U.S. Hispanic Markets (estimates as of 2006) © 2010 South-Western, a part of Cengage Learning. All rights reserved.

35. Ethnic Population Developments (cont’d) • Asian-Americans • Represent many nationalities • Are the newest “hot” ethnic market • Are better educated • Have higher incomes • Occupy more prestigious jobs • Speak a variety of languages • Are heavy users of the Internet • Respond to marketing programs that reflect their values and lifestyles © 2010 South-Western, a part of Cengage Learning. All rights reserved.