The Flowers Story DIGITAL MARKETING. Family of Brands 11/3/2013. In 1995, he extended the brand to the internet.

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1 The Flowers Story 2 DIGITAL MARKETING Jim McCann started Flowers as a traditional retailer in New York City in Segmentation and Targeting Strategies Assist. Prof. Dr. Ozge Ozgen, Department of International Business and Trade In 1995, he extended the brand to the internet. Family of Brands different brands, including the Popcorn Factory, Cheryl s (cookies), Fannie May (chocolates) etc. Cross-channel and cross-brand marketing opportunities the data mining tool allow to really hone in on these opportunities 1

2 The Flowers Story 5 Data mining software to identify customer segments for better targeting As a result of segmentation and targeting strategies, customer retention increased by 15% and sales by 13.8% in Pearson Education, Inc. Publishing as Prentice Hall Collecting customer information from The company began analyzing its customer data: 7 8 face to face contacts loyalty programs Fresh rewards Higher tired programs for customers who spend $400 or $800 per year surveys direct mail advertisings sales promotions affiliate programs Customer name Occasion bought for Recipient s name Recipient s address Channel for the order Demographic information Transactional behavior (recency, frequency, monetary) Psychographic profile This data was then used to send the right type of messaging, promotion and marketing for each customer. 2

3 We look for all possible ways to get into dialogue with our customer The Flowers Story, cont The firm s Web site attracted 13.1 million new customers and the repeat order rate increased to 43%. In 2006, the site had 2.1 million monthly visitors and $430 million in sales. Better segmentation and targeting lead to reduced phone time and lower costs Segmentation & Targeting Overview Market Segmentation Bases and Variables Marketing segmentation is the process of grouping individuals or businesses, according to use, consumption, or benefits of a product or service. Market targeting is the process of selecting market segments that are most attractive to the firm. Geographic location Demographics Psychographics Behavior with regard to the product Companies can combines bases, such as geodemographics (geography and demographics) 3

4 Geographic Segments Top Internet Languages 8-13 Product distribution strategy is a driving force behind geographic segmentation. Countries may be segmented based on internet usage. U.S. has 186 million users (64% of the population). China has 95.6 million users. Japan has 77.9 million users. Geographic markets may also be evaluated by infrastructure variables. Language spoken may also be a variable Language options... Demographic Segments In developed nations, users are much like the mainstream population demographically. The heaviest internet penetration in 2008 includes 18 to 29-year-olds, who are white, live in urban or suburban areas, earn $50,000+, and have high education. Three market segments are of great interest to digital marketers. Millenials Kids Online opinion leaders 4

5 Millenials Kids and Mobile Devices 8-17 Of those born between 1979 and 1994, over 90% use the internet. They grew up with the internet. 80% have cell phones and 36% use text messaging. Most have broadband for downloading music and watching videos online. This group is a proving ground for the future The number of kids under 16 online is increasing. They have spending power of $40 billion. What do kids do on mobile devices? Online games (63%) Using apps (50%) Watching videos (47%) Kids Use of Mobile Gadgets Grows 89% Ethnic Groups 19 Even among kids under the age of two, some 38% have used a mobile device for media, compared to 10% two years ago. The Wall Street Journal, Oct 28, Hispanics, African Americans, and Asians are important online markets. 79% of Hispanics use the internet. They view 15% more Web pages and spend 9% more online than the average internet user. Hispanics will contribute more than 60 percent of all population growth over the next five years--but, more important, Hispanics make up a $1.2 trillion economy that rivals consumer expenditures of Russia and Mexico, and their disposable income is projected to more than double by 2020 African Americans are one of the largest and fast growing ethnic groups online. They have a 56% rate of adoption and tend to be younger, more highly educated, and more affluent than African Americans not using the internet. More than half of Chinese Americans have internet access and high purchasing power. 5

6 Psychographic Segments Fashion Kid Beauty Technology Home and Life User psychographics include: Personality Values Lifestyles Activities Interests Opinions Different Lifestyles CVS Pharmacy Dependent (e.g., children or young adults still living at home with parents); Pre-family (adults with their own households but no children); Family (parents with at least one dependent child); and Late (parents with children who have left home, or older childless couples). CVS/pharmacy, the retail division of CVS Caremark, is America's leading retail pharmacy with more than 7,500 CVS/pharmacy and Drug stores. Offline stores and online at CVS.com super customer persona of a woman in her early 50s who s responsible for managing medications across three generations: her children, herself and her husband, and her parents 6

7 Interest Communities Attitudes and Behaviors Interest communities attract like-minded individuals who post comments on Web sites or send s to other members. Social networking is perhaps the most important type. Exhibit 8.8 lists 10 important types of online communities. Most marketers believe that demographics cannot predict who will purchase online or offline. 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. Forrester identified 10 consumer Technographics segments in the U.S. (Exhibit 8.10). Consumer Technographics Segments Influentials Exhibit 8.10 Influentials are individuals who influence others, driving change. Represent 10% of the population and 15% of internet users. 82% of influentials have internet access, compared with 64% of the general population. They serve as opinion leaders for the rest of the population. 7

8 Behavioral Segments Recency, Frequency, Monetary (RFM) Analysis Two common segmentation variables are benefits sought and product usage. Marketers using benefit segmentation form groups of consumers based on the benefits they desire from product. 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. One of the classic behavioral segmentation strategies is recency, frequency, monetary (RFM) analysis. how recently they transacted with you, how frequently they have done that in the past, and the monetary value of those transactions Share of Wallet The high recency, high frequency, high monetary value group represents your most valuable customers Benefit Segments Usage Segments 8-31 To determine benefits sought, marketers can look at what people actually do online. Online activities Popular Web sites For example, travel benefits sought can include: Ability to check flights, hotels, and car rentals. Travel destination information. Travel bulletins and alerts. Chat/forum areas Marketers can segment according to how consumers use the internet. Home and work access 57% of all U.S. users have broadband connectivity at home. Estimated 69.7 million users at work; million from home. Access speed Nearly 80% of broadband users will watch a video online. Online engagement level Exhibit 8.13 Industry-specific usage segments 2009 Pearson Education, Inc. Publishing as Prentice Hall 8

9 Social Media Engagement Segments Social Media Engagement Segments Exhibit 8.13 Targeting Online Customers TIME FOR IN-CLASS STUDY E-marketers select a targeting strategy. Which targets to serve online Which locations Other factors The internet s big promise is individualized targeting. Who are your target customers (demographics)? What are their purpose/usage aims? How frequently are they buying your product or using the services provided by your company? What experience do they have with your company and competitors? What will be your geographic focus? What type of information are they looking for? What kind of benefit are they looking for? What are the pschographic factors related to them? 9