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E-Marketing

Dr. Karim Kobeissi

Chapter 8: Segmentation, Targeting,
Differentiation, and Positioning
Strategies

The 1-800-Flowers Story
• Jim McCann started 1800-Flowers

as

a

traditional retailer in
New York City in 1976.

The 1-800-Flowers Story
• In

1995,

extended
brand

Jim
the

to

the

Internet and offer

The 1-800-Flowers Story
• Jim

used

mining*

SAS

data

software

identify

to

customer

segments

for

better

targeting.
– The software analyzed
the

clickstreams

and

purchasing patterns of
the firm’s 21 million
customers.

THE 1-800-FLOWERS STORY, CONT.
• 1-800-Flowers can respond to the segment of
one person and their purchasing patterns.
• The Web site’s Facebook page has nearly
500,000 likes, nearly 14,000 people talking
about the site, and over 20,000 Twitter
followers.
• Over half of its 4.6M online customers are
repeat buyers.

Market Segmentation

Market Segmentation is the subdividing

of

customers

into

homogenous

sub-set

of

customers where any sub-set
may conceivably selected as
market target to be reached
with distinct Marketing Mix.

How Can We Segment the Market?

Demographic Segments
Two market segments have caught the interest of Americans emarketers:
1)

Millennials: 60 million people (Americans) born between
1979 and 1994, over 95% use the internet, 75% have a
social networking profile, 83% sleep with their cell phones,
and 80% sent a text message in the past 24 hours.

2)

Kids: Under 11 years (a segment that will be around 25
million by 2015 in the U.S. alone). They 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%).

Offline Geographic Segmentation
The following are some examples of variables
often used in offline geographic segmentation:
• Region: by continent, country, state, or even
neighbourhood.
• Size of metropolitan area: segmented according
to size of population.
• Population density: often classified as urban,
suburban, or rural.
• Climate: according to weather patterns
common to certain geographic regions.

Online Geographic Segmentation
The following are some examples of variables often used
in online geographic segmentation:
• Countries Internet usage:
– China has 649 Million users (2014).
– U.S. has 280 Million users (2014).

• Rates of global Facebook adoption
• Rates of search engine adoption
• Language spoken.

Psychographic
Segmentation
• User psychographics include:
– Personality
– Values
– Lifestyles
– Activities
– Interests
– Opinions

Interest Communities
• There are many types of online communities such as

art

communities,

Facebook..),

social

consumers

networking

(LinkedIn,

communities

(eBay,

Amazon.com..) ….
• Ways to target online communities:
– Provide online discussion groups, bulletin boards,

and events or through company-owned social
network pages.
– Advertise on another firm’s community site.
– The firm can join the communities and listen and

learn from others.

Behavioral Segmentation
(con)
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,

which

identified

consumer segments in the U.S.

10

Influentials
• Influentials are individuals who are opinion
leaders online. They include:
– Online journalists, such as Arianna Huffington
of The Huffington Post.
– Industry opinion leaders, such as Brian Solis,
author, speaker, analyst, and blogger.
– Influential social network authors, such as
Lady Gaga. (40 million followers on twitter!).

Behavior Segments
• Two common segmentation variables are
benefits sought and product usage.
– Marketers using benefit segmentation to
form groups of consumers based on the
benefits they desire from products.
– 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.

Benefit Segments
• To determine benefits sought, marketers can
look at what people actually do online.
• Online activities include connect, create, learn,
enjoy, trade, and give.
• Marketers also check popular Web sites.
– Microsoft, Google, and Yahoo! are consistently
among the top Web sites in most countries.
– http://www.ebizmba.com/articles/most-popular
-websites

Usage Segments
• Marketers can segment according to technologyuse characteristics such as smartphone, tablet, or
PC and which browser they use.
• Mobile access: 55% of cell phone owners connect
to the internet using smartphones.
• 90% of smartphone users have taken an action,
such as booking a hotel, after searching.
(Intentional Buyers)

Online Engagement Level
• Forrester

categorizes

social

media

users according to usage segments
that are highly engaged online:
– Creators who gather other people’s
content, upload or share it.
– Conversationalists.
– Critics.

Market Targeting

• Market

Targeting

Evaluating

-

each

segment’s
attractiveness

and

selecting one or more
segments to enter.
• Target Market – A set
of

buyers

common

sharing

needs

or

Evaluating Market Segments
• Segment Size and Growth
– Analyze current sales, growth rates and
expected profitability for various segments.
• Segment Structural Attractiveness
– Consider effects of: competitors, availability
of substitute products and, the power of
buyers & suppliers.
• Company Objectives and Resources
– Company skills & resources needed to
succeed in that segment(s).
– Look for Competitive Advantages.

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 (Concentrating all marketing efforts

on a small but specific and well defined segment of
the population).
– Micromarketing (individualized targeting).
• The internet’s big promise is individualized targeting.

Differentiation
Differentiation is the act of designing a set of
meaningful differences to distinguish the
company's offering from competitor's offerings.
• A brick and mortar company can differentiate
along 5 dimensions:
1) Product
2) Services that accompany marketing, sales and
after sales services.
3) Personnel that interact with the customer
4) Distribution Channel
5) Image (the understanding and view of the
market about the company).

Differentiation Through the Product
Dimension
Features

Quality:  performance and conformance
- Performance - the performance of the product
- Conformance - The performance of every item made by
the company under the same specification

Durability

Reliability

Reparability

Style

Design

Differentiation Through the Services
Dimension
• Ordering ease
• Delivery
• Installation
• Customer training
• Customer consulting
• Miscellaneous services

Differentiation Through the Personnel
Dimension
• Competence
• Courtesy
• Credibility
• Reliability
• Responsiveness
• Communication

Differentiation Through the Distribution Channel
Dimension
• Coverage
• Expertise of the channel managers
• Performance of the channel in ease of ordering,
and service, and personnel

Differentiation Through the Image
Dimension
An effective image does three things for a
product or company.
1) It establishes the product's planned character
and value proposition.
2) It distinguishes the product from competing
products.
3) It delivers emotional power and stirs the hearts
as well as the minds of buyers.

Differentiation Online
• An online company can differentiate its
offering

along

including:
– Product innovation
– Mass customization
– Service differentiation
– Channel differentiation
– Site atmospherics
– User generated content

many

dimensions,

Internet –Specific Differentiation Strategies
There are 6 differentiation strategies unique to online
businesses:
1) Site Environment/Atmospherics
– Easy downloads, accurate and clear information, easy
navigation, virtual tours, 3-D images.

2) Build Trust
– Strong brand recognition
– Safe and encrypted payment process for transactions

3) Efficient and Timely Order Processing
– Deliver timeliness as an important benefit

4) Pricing
– In the early days of the web, firms offered discounts as
purchased incentives.
– Majority of firms today differentiate themselves in other
ways besides pricing.

5) Customer Relationship Management (CRM)
– Managing long-term relationships with customers.

6) Invite User-generated Content
– The key is to trust customers, listen, respond, and learn

P

Positioning

is

o

s

the

i

t

act

i

o

of

arranging for a product to
occupy a clear, distinctive,
and desirable place relative
to competing products in the
minds of target consumers.

n

i

n

g

Positioning

(con)

The end result of positioning is the creation of a market-focused
value proposition - The set of benefits a company
promises to deliver to customers to satisfy their needs to answer the customer’s question:

“Why should I buy your

offer rather than a competitor’s offer?” – it is a simple clear
statement of why the target market should buy the product.
Such value propositions differentiate one brand from
another and the product’s position can be viewed as the
main result of its differentiation.

How Many Differences to Promote?
• Many marketers advocate promoting only one
benefit in the market (Your market offering may
have many differentiators, actually should have
many

differentiators

in

product,

service,

personnel, channel, and image).

• Kotler mentions that double benefit promotion may be
necessary, if some more firms claim to be best on the
same attribute. Kotler gives the example of Volvo,

Online Positioning Bases
• 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

based

on

technology,

benefits, user category, or competitive position.
– The brand story must be told from the
customer’s viewpoint.

BASES AND STRATEGIES
FOR POSITIONING
• Product or service attributes (Ivillage)
• Technology position (My Virtual Model)
• Benefits position (Kimberly Clarke Huggies)
• User category position (U.S. Dept. of Commerce)
• Competitor position (Vimeo)
• Integrator position (The Knot)

Communicating the Company’s
Positioning
Once the company has developed a clear positioning
strategy, the company must choose various signs
and cues that buyers use to confirm that the product
delivers the promise made by the company.