logo

(EN) Module 3 – Section 5

Module 1
Module 2
Module 3
Module 4
Module 5
Module 6

Module 3 – Section 5

In this section you will find:

 

  • introduction to the concept of marketing
  • deepening of your knowledge on the market segmentation
Marketing is an administrative and social process through which individuals and groups obtain what they need and desire by the generation, offering and exchange of valuable products with their equals.
Philip Kotler
The worst companies ignore their competitors; mediocre companies imitate them; the best companies become their guide. Philip Kotler
Market segmentation is the sub-dividing of market into homogeneous sub-sections of customers, where any sub-section may conceivably be selected as a market target to be reached with a distinct marketing mix. P. Kotler et Al. - 2017

Marketing

The term marketing is a very popular term and there are many definitions of the term. We offer you those of Philip Kotler, an American scholar considered as one of the leading experts in marketing theories and marketing management, pioneer of evolutionary theories of the discipline and author of texts considered to be benchmarks of the industry. In his work “Marketing Management”, Philip Kotler gives us a simple and clear definition of the term: “Marketing is based on identifying and satisfying human and social needs”.

At the same time, however,he says that different definitions of the term can be formed in relation to the point of view from which we analyze its functions. We can look at marketing by focusing on its social role and then we will have a: “Process through which individuals and groups get what they need through the creation, supply and exchange of valuable products and services “. Or, again, it can be analyzed from a managerial point of view. In this case the term is defined by Kotler as: “The ability to create the right product based on the analysis of market research”.

 

Holistic marketing

The concept of holistic marketing is based on development, design and implementation of programs, processes and marketing activities that recognize their breadth and interdependencies. Holistic marketing states that everything is important in marketing and that a broad integrated perspective is often needed.

 

There are four elements of the holistic marketing:

  • Internal marketing
  • Integrated marketing
  • Relationship marketing – building mutually satisfying long-term relationships with key constituents in order to earn and retain their business.
  • Performance marketing

 

Internal marketing is responsible for ensuring that all members of the organization adopt marketing principles. The marketing activities within the company can be just as important or even more important than those directed outside the company. It is not possible to guarantee an excellent service if the company staff is not aware of it or is not ready to provide it.

Market analysis

When we think about entrepreneurship in e-commerce, we must have a precise identification of the type of clients that will visit our online store. We do not only need to know whether or not they prefer our products, but also how do they see the image we want to give and whether the marketing strategies we have in mind are attractive enough to achieve our goals.

That is why, in this section, we are going to show you the most important points that you need to analyze within the market before starting a new project. The first thing is to know the clients you are going to address, to know what they think, what their needs are and in what way we can satisfy them.

 

The purpose of carrying out a market study is to know how viable, commercially speaking, is a business or product. A basic market study must comply with three phases:

  • Analysis of the competition
  • Customer / consumer analysis
  • Applicable strategy.
First phase

Within the first phase, all efforts will focus on analyzing the environment in which your business will develop. The main objective is to study the set of businesses with which a market is shared or the sale of an equal product. In the specific case of e-commerce, we face a strong obstacle: electronic commerce is immense.

A clear understanding of your competition is the key to success of any business. Therefore it is necessary, right from the beginning, to know your competitors, whether direct (competing by selling the same products, e.g. Burger King and McDonald’s) or indirect ( competing for the same market, businesses that offer slightly different products and services, but target the same group of customers with the goal of satisfying the same need, sometimes also known as substitutes, e.g. water and juice).

It is very important to generate a list (Excel or another document) with a directory of companies that are our competitors – in market or proximity. In this document you can include data for each company such as: location, online showcase, visual identity, product catalog, pricing strategy, quality of service, influx of users who visit it, customer satisfaction …

Once you have researched your competitors, the next step is to approach them. How to do it? Enroll in associations and participate in the activities organized by the industry institutions where you want to start developing as a company. You never know which relationship can be useful, be prepared to cooperate and collaborate with your competitors when necessary, for example, oppose or support certain pending legislation that could affect your sector.

In addition, we must complete this analysis with basic data such as what focus each of them has, what types of products are sold, their price levels and what are their competitive advantages. Once you have analyzed these profiles, it is time to segment them by different characteristics, which may include:

Product prices. Maybe not from everyone, but certainly from those that really are similar or equal to what you want to sell.

These are some questions you can ask yourself when you are analyzing this factor: At what price do your competitors sell products you want to sell? What is the average price of products similar to the ones you want to sell? How many companies or organizations currently provide a product or service similar to yours? What factors could affect your pricing decisions?

What is a structure of their online stores: design, corporate images (sizes, effects, shots, creativity, etc), colors, catalogues, reviews, etc.

Purchase, sale and payment processes. Here you must analyze the processes of your competitors. What steps a client must follow to make the purchase? Are there any restrictions of sale, processes and methods of payment and options of sending and returns?

In this phase you can use a strategy known as benchmarking. Benchmarking is a process by which we seek and identify those techniques or strategies of the competition that can be applied to our own business, see how they carry out their production processes; what is their characteristics; why they succeed; what is their advantage. It is important to emphasize that it is not about coping strategies, but about adapting.

Second phase

In the second phase, the objective is to know in detail the clients on which you focus; what is their profile; and what is their behavior in your online store and in the market in general. The factors that you must identify are:

  • Consumption habits. What they consume, what they want to consume, what are the needs they want to satisfy, when they consume more of the product.
  • Shopping habits. How they make the purchase, whether or not they leave shopping carts, what are their preferred methods of payment and shipping, from where they access your store (website, app). When studying this factor, it is important to ask yourself questions such as: To who will you direct your sales? Individuals, companies or both? How many companies or organizations currently provide a product or service like yours?

 

Example of questionnaire for a market analysis. In order to carry out an analysis correctly you must cover these questions that will help you to know the state of the market.

Are there any direct competitors in the market? Who are they?

Are there any indirect competitors in the market? Who are they?

What kind of companies are they? (How are their organization different from yours?

How do they meet the needs of their customers?)

What do they offer?

What are their sales strategies?

What is their pricing policy?

Who are their customers?

Who are their suppliers?

How do they promote themselves? (How do they attract new customers? Do they have a dynamic promotional activity? Are they advertising or using direct mail? What stories do they use to get press coverage? Do they usually go to fairs and, where appropriate, to which ones? What proportion of sales do you think they spend promoting themselves?)

What are their strengths and weaknesses?

What are the inefficiencies in their services?

What can you adopt and improve?

What are the risks they face? (risk of not satisfying the needs of the clients, risk of not selecting the right equipment, risk of not being able to overcome the challenges, risk of financial insufficiency …)

In order to make your strategy work, you must analyze your competitor’s strategies, look for patterns and write down data such as: frequency with which they release new publications; the topics they work on; the formats they use for advertising; the contents that work best for them (which of them have better comments, more stars, recommendations …). Also, to make the analysis more complete, you should ask yourself questions such as: is the competition promoted through blogs? Do they send a newsletter with their offers? Do they publish on social networks? On which ones? How often do they publish on each platform?

It is very important to never forget that having a market study is a basis, you need to know the possible scope of your online store, both in the environment and in customers.

Third phase

In the third and final phase, you must create a document that reflects the strategies and real actions that you want to carry out to attract customers. It is always advisable to have a main strategy and a backup strategy.

Maybe you wonder, whether there are different types of strategies? Yes, here we present two main ones that are the most used. Depending on your goals you may be able to use them.

Maybe you wonder, whether there are different types of strategies? Yes, here we present two main ones that are the most used. Depending on your goals you may be able to use them.

Competitive difference strategy. The customer is looking for something that your competitors do not have, so your main goal is to create added value in each sale so that each customer perceives your efforts to be unique in the market. This strategy includes elements such as design, corporate image, customer service (website, live chat, social networks), payment methods, shipping and returns.

Advantage of small businesses could always be focusing its marketing efforts on specific segments of the market instead of trying to appeal to everyone. Market segmentation involves using market research to identify the business’s ideal target market and customer.

Market segmentation

Geographic Profiles

Customers can be segmented based on their geographic location. For a small business such as a pizza shop, for example, its target market may be all residents within a five km radius of the shop’s location. Also a microenterprise, offering unique jewelry, could define clients from the global market.

Demographic Profiles

Demographics are personal characteristics used to categorize consumers. Demographics include characteristics such as age, gender, income level and marital status. Through market research, the company may identify its ideal customer as a married, college-educated female aged 30 to 35 with an annual income level of 35,000 to 45,000 EUR. This information helps the business owner develop a marketing strategy that appeals to individuals with this demographic profile. For example, an owner of a women’s clothing store might attempt to reach this market by developing an advertising campaign using help of the influencer’s active in the social media to promote a new line of business attire.

Psychographic Profiles

Psychographic profiling attempts to segment the market based on traits such as personality and lifestyle. Marketers may use these traits when developing a targeted advertising or promotional campaign. A purveyor of expensive jewelry items can use psychographic profiling to market to individuals who have purchased similar items in the past or other luxury products like expensive cars or clothing. For instance, they can create an ad for placement in an online magazine that appeals to an upscale market.

Behavioral Profiles

Behavioral profiling analyzes characteristics such as desired product benefits, price sensitivity and brand loyalty. Behavioral profiling is useful for determining buying patterns and what changes may affect these patterns. For instance, if a restaurateur determines that customer loyalty is high, it may mean customers are more willing to tolerate menu price increases. Behavioral profiling can also tell a company how many of their customers are first-time buyers as opposed to repeated customers. If repeat purchases are low, the company may need to focus on improving quality or building brand loyalty. An e-shop can improve quality be expanding the range of products and encourage repeated visits by sending e-mails with special offers or discounts.

Customer segmentation

These are possible customer segments of e-commerce companies

  • Different visitor such as consumers who log into their own accounts, guest users, VIP shoppers, repeat customers and first-time visitors
  • Customers who have made a purchase within the last month (or other period of time, depending on the company’s business cycle)
  • Top purchasers such as those who make frequent transactions or those who spend a considerable amount on each purchase
  • Customer location
  • Traffic source, such as shoppers who landed on your site through a search engine
  • Device type like desktop users, smartphone or tablet users
  • https://www.practicalecommerce.com/Identify-your-target-customers-and-market-to-them

 

Defining these segments it is important to implement special IT solutions (such as website optimization, targeting mobile shoppers ) which will be discussed in other programme modules. So before starting an e-business you could analyse the opinion of potential customers in reference to the products you want to offer to the market.

There are possible clients survey questions for this:

  • Do you usually make purchases online?
  • How often do you shop online?
  • What kind of products do you usually buy online?
  • What type of device do you usually use?
  • How many times have you bought online in the last 12 months?
  • What type of products or services have you purchased in the last 12 months?
  • What has been the amount spent on online purchases in the last 12 months?
  • In what times of the year do you make more purchases online?
  • What is your level of satisfaction with the purchases of “X product” in other companies? (from 1 to 10)
  • What price would make “product X” to look cheap? (Offer with several answer options with different prices).
  • What price would make “product X” to look expensive? (Offer with several answer options with different prices).
  • What price would “make “product X” to look so expensive that you would never buy it? (Offer with several answer options with different prices).
  • What price would “make “product X” to look so cheap that you would doubt its quality? (Offer with several answer options with different prices).
  • Where would you like to buy this product / service? (Internet, physical store …)
    What media channels are the best for you to receive information about “this product / service”?
  • Which payment method do you find most reliable?
  • What shipping methods do you prefer ?
  • Do you usually return for the products purchased online?
  • Do you like to receive personalized treatment throughout your purchase?

 

To analyze the type of strategy that you will apply in your business you must know the strategies used in your sector.
For example, the most common strategy in your sector is using the social networks.

 

What do you need to know to define and measure in order to achieve an effective market strategy in social networks?:

  • What are the advantages of being in social networks?
  • What do you want to do on social networks?
  • Who do you want to address?
  • What will you communicate?
  • Where will you be present? (Facebook, Twitter, Pinterest…)
  • How will you measure the results obtained? (Google analytics, Facebook statistics…)

Example of segmentation by age

Socio-demographic segmentation based on generation is useful because it identifies groups of individuals who have experienced the same social, economic, political and cultural events during their youth, share similar values and tend to have similar consumption decisions. Segmenting the market means dividing the demand “into distinct subsets of consumer-customers, homogeneous within them but uneven between them”. P. Kotler et Al. – 2017

In the following pages we propose a segmentation: the one developed by Barclays in collaboration with the University of Liverpool.

  • Maturists pre 1945
  • Baby boomers 1946-1960
  • Generation X 1961-1980
  • Generation Y 1981-1995
  • Generation Z After 1995
  • Focus on: Nielsen: Millennials beyond prejudices, 2017
MATURIST 1925-1945

MATURIST OR THE SILENT GENERATION 1925-1945

 

The Silent Generation represents people born between 1925 and 1942, who today are between 75 and 92 years old. The people of this generation were children during the Depression and the Second World War: “they grew up too late to be war heroes and too early to be free youth spirits” (Howe and Strauss, 2007).

How they communicate and where to find them: they are the only ones who still look at old media with dreamy eyes, to enjoy the evolution of the fixed telephone that becomes cordless, of satellite TV that is replaced by digital terrestrial.

Social behavior: wary of change; members of this generation remain very attached to the traditional values ​​of discipline, commitment, responsibility, respect for the institutions. As for products / services, this generation is not price sensitive and prefers traditional media: radio, television, magazines, billboards (Williams & Page, 2011). Communicate orally – in the waiting rooms of the general practitioner, in the corridors of the supermarket or in the square – but a part of them strives to keep up with the times, has a computer and a Facebook account – through which they often communicate with their relatives by writing directly on their wall. Despite what can be thought, over 65s become more and more social and this can not go unnoticed by companies. Not a considerable market share, many marketing experts do not consider them in their strategies, but in the last four years the percentage of maturists on social networks – particularly on Facebook – has tripled in the United States. From the twelfth Censis-Ucsi report on the communication of March 2015, 14.3% of the over-65-years-old Italians are registered on Facebook, and 6.6% of them also use Youtube.There are pages dedicated to the users of the third age and a social network was created for them, SpecialAge. According to research conducted by the University of Pennsylvania, published in the journal Computers in Human Behavior, the main reasons for which the seniors are closer and closer to the social networks are: fighting loneliness, build new relationships, follow the growth path of their children and grandchildren, who they support through likes and shares.

BABY BOOMERS 1946-1959

Birth years of the Baby boomer’s are starting from the early- to mid-1940s and ending anywhere from 1960 to 1964.

Baby boomer’s characteristics, lifestyles, and attitudes were determined by their careers and retirement life. This generation has more knowledge about technology and innovation than previous generations. As far as the marketing information about the Baby Boomer buyers is concerned, they want immediate service, accept only a little change, and expect prompt improvement. Sometimes, they like alternatives and flexibility. They are more concerned about the quality of the product than the price. The interesting issues for this generation are health, energy, and wellness. These issues are the major goals for them, especially health is the major concern for this generation. On the other hand, they do not like bureaucratic system because this system requires their time and it does not provide any added value.

Pornpimon S., 2017

GENERATION X

Current age in 2018: 39-53

 

ATTRIBUTES:

Individuals in this demographic group were born between 1965-1979. The Gen X´ers are typically independent and naturally self-reliant. They do not like to be told what to do and they are prone to try and figure things out on their own.

These middle-aged Americans account for nearly 19 percent of the U.S. population and make up 34 percent of the workforce. The Gen Xers are arguably the best-educated generation with 35 percent having obtained a college degree.

According to the Bureau of Labor Statistics, Generation X spends more on housing, clothing, and food than any other generation. This is not surprising given that they are typically family-oriented and have millennial and Gen Z-aged children. Moreover they are now starting taking care of their baby boomer parents, who are becoming more dependent on them. Though they are currently the smallest generation, Pew Research projects that Gen Xers will outnumber baby boomers by 2028.

 

BUYING BEHAVIORS:

Generation X is often focused on getting the best products for the best prices. But unlike their baby boomer parents, they are less trusting of brands. Naturally cynical, they would not take your word alone when it comes to choosing between you or your competitors. You have to show, not just tell them, that your agency can deliver what they are looking for. Despite their initial tentativeness, the Gen X’ers are the most loyal consumers than any other generation once you show them your worth.

Though they have fully embraced online purchasing, the Gen X´ers grew up without it and are still in-store shoppers as well. Make sure you provide them with a seamless experience across both touchpoints. This generation loves coupons and loyalty/reward programs more than every other generation. Your agency can use programs like these to draw them in. Research shows that 88.6 percent of the Gen Xers join loyalty programs to save money.

 

COMMUNICATION TIPS:

During their customer journey, the Gen X leans more toward third-party research and informational content when making purchasing decisions. Brands should put greater emphasis on paid search and SEO. Because the Gen X´ers prefer information-based content, visual content is not as necessary for targeting them as for the younger generations. This age group is more likely to pay attention to data-rich product comparisons, buying guides, and credible third-party reviews that emphasize quality and value of your brand versus alternatives.

While their smartphone ownership rate is slightly lower than that of the millennials or the Gen Z´ers, Generation X ranks number one in PC ownership. Their most-used social media platform is Facebook although email is still the best way to communicate with them as the 35 to 44-year-olds are the most likely to prefer email (78 percent).

http://www.streampage.com/bbb/Regina/5293/the-abcs-of-marketing-to-generations-x-y-z

GENERATION Y

Current age in 2018: 22-38

 

ATTRIBUTES:

This group, born between 1980-1996, has been talked about more than any generation preceding them. At 92.7 million strong in the U.S, they are the largest living generation as of 2015,their number exceed the number of baby boomers. They make up almost 29 percent of the U.S. population and in 2018, they should have the major spending power at $3.39 trillion.

In comparison to their Gen X predecessors, millennials are more tech-savvy, as they grew up with personal computers and the internet. They are enthusiasts and seek instant gratification while valuing speed and on-demand services. They also love to travel; they are driven by social causes; and they want to make the world different.

Studies show that millennials are delaying life milestones like getting married or buying a home (only 41 percent own a home). Instead, many of them prefer to rent or are still living at home with their parents. Pursuing education and accumulating student debt are major factors driving this trend. Because of this, millennials are big proponents of the “shared economy” and its impact on their lifestyle. They are more willing to spend their income on services like Uber, Airbnb, Etsy, and Kickstarter than other generations. It is also important to note that an average millennial will change jobs four times during their first decade out of college.

 

BUYING BEHAVIORS:

Millennials seek personalized products that are specific to their needs and lifestyle. They value experience over material things. When it comes to interacting with businesses and making purchasing decisions, millennials first turn to their friends and online reviews. Eighty-four percent of millennials do not trust traditional advertising and 97 percent of consumers aged 18–34 read local business reviews online.

According to one study, “millennials, more than any other generation, prefer to use several different channels when it comes to the total shopping experience, both online or offline.” A Deloitte study discovered that “19 percent of millennial buyers make purchases online before picking them up in-store, compared to 12 percent non-millennials.” This proves that millennials prefer a mixed shopping experience including both online and offline touchpoints.

 

COMMUNICATION TIPS:

The millennial customer-to-business relationship is highly influenced by technology. Among the surveyed millenials, 73 percent said they preferred digital contact with their bank to personal contact. According to Forbes, “compared to older generations, millennials are most likely to use online and mobile banking channels due to easy-to-use websites and great apps.”

Make sure you have a strong online reputation that is well-maintained. Your social media channels should be engaging and up to date. Since many millennials were in their teen years upon its release, Facebook is still number one among their preferred social platforms. However, Instagram now ranks higher among many younger millennials. Give these clients opportunities to be co-creators for your brand since much of the daily content they consume online is generated by their peers. You can attract them by aligning your company with social causes and by turning your products and services into an experience that they will want to tell their friends about.

http://www.streampage.com/bbb/Regina/5293/the-abcs-of-marketing-to-generations-x-y-z

GENERATION Z

Current age in 2018: 3-21

 

ATTRIBUTES:

Also known as iGeneration, these up-and-coming post-millennial consumers already account for just over 20 percent of the total U.S. population, outnumbering the Y Generation, as there are 65.2 million of them. And though we are still learning about this newest generation, the oldest of them are just beginning to enter the workforce and consumer markets. Born between 1997-2015, this group is ethnically diverse and globally connected.

Not surprisingly, Gen Zers are similar to their millennial siblings and have been referred to by various publications as the “millennials on steroids.” Unlike any generation before them, Generation Z is comprised of true digital natives who have never lived in world without the Internet. Despite their young age, 97 percent of this demographic group are smartphone owners, sharing the same ownership rate as their older millennial forerunners. Generation Z spends more time on their smartphones than any other age group, averaging 3 hours and 38 minutes a day.

These young tech-gurus are on track to become the largest generation of consumers by 2020. They have entrepreneurial mindsets and they are captivated by social activism. They are social media savants and enthusiastic watchers of digital video, with Youtube being their number one social media platform followed closely by Snapchat. To put their social media consumption into perspective, 95 percent of Gen Zers say they use Youtube, and 70 percent of them watch more than two hours of it each day. One report found that 79 percent of Gen Z respondents say they use Snapchat at least once per day, with 51 percent of respondents reporting they use the platform about 11 times per day.

 

BUYING BEHAVIORS:

Major brand cynicism is already occurring among Generation Z due to growing up in time of recession, online reviews, and fake news. Like millennials, they demand speed and expect things to be a click or a tap away.

Social media have greater impact on Gen Z shopper purchasing behaviors than it does on millennials. Many Gen Z´ers follow social media influencers who partner with brands to put their products in front of these younger consumers. Since they are still young, Gen Z’ers also rely heavily on friends and family to help them make their purchasing decisions.

You might be surprised to learn that despite engaging in online shopping and purchasing through social media channels, Gen Z´ers still like to shop in brick-and mortar-establishments. A study by IBM and the National Retail Federation found that 98 percent of Generation Z still shop in brick-and-mortar businesses.

 

COMMUNICATION TIPS:

Though attention spans are dwindling among all consumers, the average attention span of Generation Z is only eight seconds. They have developed this filter due to growing up in time of limitless options and information overload. Say what you have to say and do it fast. Make it snappy and memorable. Consider partnering with social media influencers to help promote your brand and extend your reach.

Adding more video elements to your marketing strategy is one major way you can captivate this generation of YouTube lovers on their smartphones. This will allow you to increase visualization of your products and services. Attract this generation of consumers giving them a more seamless and interconnected experience to interact with your agency’s physical offices and online.

http://www.streampage.com/bbb/Regina/5293/the-abcs-of-marketing-to-generations-x-y-z

Packaging

 

Few years ago, packaging was nothing more than packaging, a way to receive the purchased product. Nowadays, packaging is an integral part of the order: it is part of the shopping experience.

Due to expectation of the buyers, the companies compete trying to surprise the buyers and exceed their expectations. They do not offer just the product but product experience. In this context packaging and presentation of the products become a tool that makes a difference.

A good example of packaging is offered by Trunk Club, a company that takes seriously the experience of unpacking of products by the customer. Trunk Club is a personalized clothing shopping service for men and women that sends a careful selection of trendy clothes and accessories to subscribers every month.

Trunk Club instead of using standard boxes closed with simple adhesive tape, opted for boxes with personalized print and wooden-like handle, with a clear match to their brand (trunk as a suitcase). Inside the box, the goods are placed with special care and accompanied with a handwritten note from a personal stylist, which illustrates the selected items.

Trunk Club customers put unpacking videos on YouTube.

To learn more, please visit the Shopify page.

Finally, we point out one of the industry reference fair: ipackima (Italy)

This project has been funded with support from the European Commission. Information reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein.
For more information contact: projektai@paneveziodrmc.lt