ELC 310 Day 10 (1/3 done) Agenda Questions? Marketing Plans due October 22 (3 weeks from now) Should be working on them 20% of final grade Finish Discussion Consumer Behaviors Being Discussions on Targeting Market Segments and Communities Individual Characteristics Affecting Internet Exchanges Characteristics specific to Internet users: A positive attitude toward technology. Online skill and experience play an important role in the exchange process. Gender affects attitudes toward use of technology: Men are more positive about Internet shopping. Language: the Internet would be more useful it had more content in the local languages of various countries. Individual Characteristics Affecting Internet Exchanges Online shoppers tend to be more: Goal oriented (= going to a specific Web site with a purpose in mind, or searching for the lowest price for a particular product + not having to deal with salespeople or crowds in the online environment, and appreciate the online product selection, convenience, and information availability) Than experience oriented: having fun, bargain hunting, or just surfing to find something new. Goal oriented individuals like the idea that they. 2 common traits of online shoppers: convenience or price orientation. Differences in the outcomes sought online based on family life cycle. Young kids in the house vs. empty nesters Consumer Resources For consumers: VALUE = BENEFITS - COSTS Costs = a consumer’s resources for exchange: Money Time Energy Psychic costs Monetary Cost Consumers need enough discretionary income to exchange for the goods and services they want. What makes the Internet exchange different? Consumers have to pay by credit card, debit card, electronic check, or smart card. BUT not everyone is able to acquire or wants a credit card. = A big problem for e-marketers targeting: The teen market online Consumers in countries with low credit card availability. Monetary Cost Consumers with bank accounts can use: Debit cards. Electronic checks: the consumer sets up an account and authorizes a third party Web site to pay a specified amount and withdraw funds from the user’s checking account. Smart cards = Splash Plastic: have an electronic chip that can be coded to hold a certain amount of funds, payable by the bank or a depository company. Advantages = anyone with the cash can get one and the limit of potential fraud is the amount of money coded into the card. Time Cost Time poverty = problem for today’s consumers. They want to receive appropriate benefits for the time they spend online. Did the user get what she wanted for the time she invested? Internet firms to be sure their sites are well organized and easy to navigate so users can quickly find what they want. Search engines and shopping agents can help consumers find what they want to leverage their brief forays online. The Internet’s property of time moderator helps consumers manage their scarce time. This is because users can shop, e-mail, or perform other activities anytime. Time resource is a critical topic = online attention from consumers is a desirable and scarce commodity: Consumers pay more focused attention to Web sites than to the content in any other medium. Time Cost Concept of flow in Web navigation behavior: 1. 2. 3. 4. Characterized by a seamless sequence of responses facilitated by machine interactivity, Intrinsically enjoyable, Accompanied by a loss of self-consciousness, Self-reinforcing. Consumers are 100% involved and not easily distracted when they are online. This is different from TV and Radio When e-marketers capture consumer’s attention, they can make a big impression in a short time as long as the Web site is enjoyable, self-reinforcing, and engaging. Metric Quantity Number of sessions for the month 18 Number of domains visited 48 Page views for each session 43 Time spent online for the month 9:50 < hours Time spent per session 0:32 <mins Duration of page viewed 0:00:44 <secs April 2002 Global Internet Usage Source: Data from www.Nielsen//NetRatings Energy and Psychic Costs Energy + psychic resources = closely related to time. Sometime = Too much trouble to turn on the computer, log onto the Internet, and check e-mail. Rising popularity of short text messaging (SMS) via cell phones and handheld mobile devices. Consumers apply psychic resources when Web pages are hard to figure out or when facing technological glitches. 44% of all online shoppers abandon online shopping carts at one time or another due to technical problems. Reason Given % Reason Given % Page took too long to load 48 Returned the product 10 Site was confusing/couldn’t find 45 product Site wouldn’t accept credit card 9 Product not available/in stock 32 Tried/failed to contact customer service 8 Got logged off / system crashed 26 Site made unauthorized charge to my credit card 5 Had to contact customer service 20 Ordered product but never came 4 Product took too long to arrive 15 Wrong product arrived and couldn’t return it 4 Most Common Reasons for Failed Online Purchases Source: Boston Consulting Group Study as reported in Wellner (2001) Internet Exchange These facilitate Internet exchange: Browser bookmarks = quick jump to favorite online retailer. E-mail messages contain hyperlinks to bring consumers directly to specific information, news reports, or advertised specials. The Internet has the added feature of automation to facilitate exchange. CNN.com sends one sentence e-mails several times a day or week with breaking news for those who sign up for the service. Exchange Outcomes What benefits do consumers get by exchanging all that money, time, and energy? What American consumers do online and how the Internet has changed the way people behave. The myriad of online activities can be categorized by the following general outcomes: Relationships Entertainment Media consumption Information gathering Transactions. Each is ripe with marketing opportunity. Relationships 43% of online time = e-mail or other communication related activities: It is an inexpensive way to keep in touch, It is usually text based = can be easily accomplished with a slow modem or over a wireless handheld device. Form new relationships with the people they meet online. Spend time in chat rooms, make phone calls, and visit online dating sites. Communication can take place in communities of interest. Relationships E-mail popularity explains the success of Web based e-mail services, such as AOL (61% of the Internet population), Hotmail (60%), and Yahoo (57%)! E-mail services are an important part of the traffic draw. These companies bring a lot of eyeballs to their sites=They exchange these eyeballs for commissions on products sold at the site and on advertising revenues. The paying customers = retailers + advertisers, these sites are exchanging free services with consumers. Outcome % Outcome % Send e-mail 95 Chat in online discussion 23 Send instant message 48 Make Internet phone call 12 Share files with others (music, video, games) 37 check e-mail on cell phone or 10 PDA Visit online support group 36 Visit dating Web site Proportion Performing Relationship Activities Online in the U.S. Source: Data from www.pewinternet.org 9 Entertainment Consumers use the Internet for entertainment (50%). Internet’s big promises= audio and visual entertainment: 51% of U.S. users watch video online + 37% listen to music. These activities are difficult without a fast broadband connection. Only 20% of all users have broadband at home; Until more do, firms won’t produce much of this type of online entertainment; BUT, until more entertainment is available, mass audiences won’t be lured into paying for broadband. 1. 2. 3. All television content will be transmitted digitally within five years by federal mandate. More devices will allow TV programs to be delivered on demand. Consumers will adopt broadband as part of their cable TV service. Outcome % Outcome % Surf for fun 64 Listen/download music 37 Watch video or audio clip 51 Play a game 37 Visit adult Web site 14 Download games, videos, 41 pictures Proportion Performing Entertainment Activities Online in the U.S. Source: Data from www.pewinternet.org Media Consumption Consumers are accessing news, weather, sports scores, and radio broadcasts over the Internet. Consumers have a limited amount of time to exchange for media consumption, and that the Internet takes away from offline media time. Consumers use whatever medium is handy when they want news, including a handheld PDA—another indication that the Internet has morphed from novelty to utility. 33% of Internet users mentioned watching television less often, 25% read magazines less frequently, 23% read newspapers less often, 16% listen to the radio less frequently. Media Consumption This switch to online media consumption is why all the major media disseminate information on their Web sites: The challenge is making it pay off in profits. The advertising models are not paying the bills. Some, like the Wall Street Journal, charge for subscriptions. Online media firms must decide what strategic purpose their Web site investment serves. Outcome % Outcome % Get news 70 Political news / information 40 Check the weather 64 Sports scores 38 Listen to music from radio station, music store, recording artist 37 Proportion Performing Media Consumption Activities Online in the U.S. Source: Data from www.pewinternet.org Information Second to e-mail, consumers spend much of their time gathering research and information online: How do Internet users find information? Activity is especially acute during holidays and special events. 73 million Americans use the Internet for health information. 52 million Americans use the Internet to find job information. 85% have used search engines. Queries range from “the ridiculous”, to the sublime to the heartbreaking. Google.com is the most popular search engine: visitors spend 25.9 minutes per month there. Users spend 10.8 minutes a month on Yahoo! and 6 minutes at MSN. Google’s revenue model is entirely advertising based, It has drawn a larger user base because it does not crowd the home page with offers. Outcome % Outcome % Hobby information 80 Find phone number /address 53 Map or driving directions 79 Research for school/training 53 Travel information 66 Financial 44 A job 37 Books, activities movies, leisure 63 Health/medical 61 A place to live 29 Government site 57 Religious/spiritual 28 Research for job 54 Family history/genealogy 20 Proportion Performing Information Consumption Activities Online in the U.S. Source: Data from www.pewinternet.org Buy and Shop for Products 75% all Internet users seek information online prior to buying products: To purchase online, To purchase at a local brick-and-mortar. In total, U.S., consumers spent 79% of their shopping dollars in brick-andmortar stores, 15% online, and 6% on catalog sales. Consumers might not spend more: 5.5 billion people are not Internet users, and have no drive to get connected. The Internet does not provide the social experience found in the physical world. Consumers may not shop for most products online unless they are motivated by dissatisfaction with offline retailers. Some people do not trust the Internet enough to enter personal and credit card information on Web pages. 182 m illion (6 4% ) U .S. Inte rne t U se rs 103.7 m illion (5 7% ) Sho p o nline 92.8 m illion (51% of a ll use rs) B uy o nline T e n tra nsa c tions Spe nt $46 0 on line in pa st 12 mont hs Online Shopping Landscape Source: Data from www.bcg.com 89.2 m illion (49% of a ll use rs) D o n’t buy o nline Buy and Shop for Products A final consideration involves the types of products appropriate for online and offline consumption, 3 types of products : Search goods can be evaluated by reading about them = software, automobiles, and computers, = the most appropriate for online purchasing Experience goods can only be evaluated through product use = clothing and flowers, Credence goods = items that are difficult to assess without someone else’s opinion, such as expensive wine or even a book. 51% of Internet users are buyers. Outcome % Outcome % Research product before buying 75 Groceries 8 Buy a product 56 Charity donation 7 Buy/make travel reservation 42 Gamble 5 Bank online 23 Take class for college credit 5 Participate in online auction 20 Take any online class 5 Buy/sell stocks, bonds, mutual 12 funds Proportion Performing Transaction Activities Online in the U.S. Source: Data from www.pewinternet.org E-Marketing, 3rd edition Judy Strauss, Adel I. El-Ansary, and Raymond Frost Chapter 8: Targeting Market Segments and Communities © Prentice Hall 2003 Overview Segmentation and Targeting Overview Market Segmentation Bases and Variables Geographic Segments Important Geographic Segments for E-Marketing Demographic Segments Psychographic Segments Behavior Segments Targeting Online Customers Targeting Communities on the Internet Segmentation and Targeting Overview Companies need to clearly understand the needs and behavior of its target market. It must have in-depth: Market knowledge A savvy segmentation Targeting strategy E-marketing strategic planning occurs in two highly interrelated tiers: The first tier = segmentation, targeting, differentiation, and positioning, Second tier = the 4Ps and CRM. Segmentation and Targeting Overview Marketing segmentation = the process of aggregating individuals or businesses along similar characteristics that pertain to the use, consumption, or benefits of a product or service. Targeting = the process of selecting the market segments that are most attractive to the firm and selecting an appropriate segment coverage strategy. Sources, Databases, and Strategy: Tier 1 Strategies Overview Segmentation and Targeting Overview Market Segmentation Bases and Variables Geographic Segments Important Geographic Segments for E-Marketing Demographic Segments Psychographic Segments Behavior Segments Targeting Online Customers Targeting Communities on the Internet Market Segmentation Bases and Variables Marketers can base their segmentation of consumer markets on: Demographics, Geographic location, Psychographics, Behavior with regard to the product. Within each base, there are many sub categories. Market Segmentation Bases and Variables Companies create segments: Combining bases + focus on categories = geodemographics. Using any combination of variables that makes sense for their industry. That can be used to identify and reach the right people at the right time. Using any of these four bases alone or in combination + many other variables. To know which variables broadly identify the target segment + which simply further describe it because marketers use identification variables to enumerate and access the target. Bases Geographics Demographics Psychographics Behavior Identifying / Profiling Variable Examples City County State Region Country Age Income Gender Education Ethnicity Segmentation Bases and Examples of Related Variables Activities Interests Opinions Personality Values Benefits sought Usage level Brand loyalty User status Overview Segmentation and Targeting Overview Market Segmentation Bases and Variables Geographic Segments Important Geographic Segments for E-Marketing Demographic Segments Psychographic Segments Behavior Segments Targeting Online Customers Targeting Communities on the Internet Geographic Segments Geographic location of computers is not important to users accessing Web sites, but it is very important to organizations with an Internet presence. Most firms target specific cities, regions, states, or countries with their product offerings = develop multisegment strategies based on geographics. Product distribution strategy is a driving force behind geographic segmentation: Companies want to reach only customers in countries where it distributes products. Firms offering services online will only sell to geographic areas where they can provide customer service. Companies must examine the proportion of Net users in its selected geographic targets before deciding to serve the Web community. Posadas: • The leading hotel chain in Mexico, • Targets tourists in Mexican and United States markets. • Focuses heavily on the U. S. market and built its first site for the United States because it recognized that Internet penetration was much higher. Fiesta Americana Site in Spanish and English Source: www.posadas.com Overview Segmentation and Targeting Overview Market Segmentation Bases and Variables Geographic Segments Important Geographic Segments for E-Marketing Demographic Segments Psychographic Segments Behavior Segments Targeting Online Customers Targeting Communities on the Internet Important Geographic Segments for E-Marketing The United States = the largest Internet usage in the world. 10 other country markets have more than 40% Internet penetration. = 11 countries represent good markets for new technology. E-marketers use geographic variables for segmentation also evaluate online markets by region, city, urban area, and so forth. The quality of a country’s market is evaluated using additional criteria: infrastructure variables designed to predict their ability to access and absorb information technology: computer adoption, information, Internet, social. In 2001, Sweden and Norway held the top two positions as the world’s dominant information economies because of a high mobile Internet access. Rank Country Percent of Population Internet Users Rank Country Percent of Population Internet Users 1 United States 64.0 6 United Kingdom 48.7 2 Iceland 60.1 7 Switzerland 46.6 3 Hong Kong 54.2 8 Canada 44.9 4 Sweden 49.4 9 The Netherlands 42.5 5 Norway 48.9 10 Finland 41.3 11 Japan 40.5 Country Markets With Over 40% Internet User Penetration Important Geographic Segments for E-Marketing English is no longer the language of most Web pages and online bulletin boards, a major change from just two years ago. Top Internet languages: English (42%), Japanese (9%), Chinese (9%), Spanish (7%), German (7%). Huge implications for e-marketers desiring to reach global markets via the Internet Until more online text appears in local languages, users in those countries will not able to participate in e-commerce or other online activities. P ortugues e 3% Italian Korean O ther 9% 4% 5% D utc h C hines e 9% Englis h 2% 42% F renc h 3% S panis h 7% G erm an J apanes e 7% 9% Less Than Half of Web Users Access in English Source: Adapted from Cutitta (2002) Overview Segmentation and Targeting Overview Market Segmentation Bases and Variables Geographic Segments Important Geographic Segments for E-Marketing Demographic Segments Psychographic Segments Behavior Segments Targeting Online Customers Targeting Communities on the Internet Demographic Segments In the Internet’s early years, the typical user was: In developed nations, A young male, college educated, with a high income = an innovator. Now, this is true in countries with low levels of Internet adoption. 76% of U.S. users are 18-49 years old, The annual average household income: about $50,000, The population is almost equally divided by gender. Knowing that U. S. Internet users mirror the population, marketers need to identify attractive demographic niches. Occupation Few years ago, the Internet = a place for the technologically- and financially-savvy. Today = a place where U.S. residents from all professions find something of use. Huge implications for e-commerce and advertising, and big changes are still taking place. Occupation Blue-collar workers: Are currently the fastest growing online occupational group in the U.S. This group is busy surfing and exploring, Represent a major marketing opportunity because segment members have not yet developed site loyalty and have some different product and entertainment needs from users in other professions. Other fast growing occupational groups include homemakers (49%), service workers (37%), and salespeople (34%). E-marketers can use such facts about occupational segments online as information and then knowledge to drive e-marketing strategy. Teens and Children In the US, 75% of 14-17 year olds + 65% of 10-13 year olds use the Internet: “The Net Generation” or Generation Y, One of the fastest-growing online niches. 12-17 year old: send e-mail (81%), instant messages (70%), play games, and purchase music, tickets, and videos. 58% use the Internet for homework, Teens’ repeated requests for online access is what leads families into computer and ISP purchases. Teens and Children Driving future growth in this market is the fact that 95% of all U.S. schools now have Internet access. This market: Is not impressed with brand names online; wants utility + particular activities. Teens spread the news through online word of mouth (viral marketing). 38% of teens share their online findings with friends = a great marketing opportunity. Teens and Children One big problem = payment: They do not have credit cards for online purchases (only 12% have purchased online). Some are allowed to use their parents’ credit cards. Those over 16 years of age can obtain a debit card. Innovative approaches such as “Splash Plastic” prepaid cards or “cyber allowance” accounts deposited at designated online retailers have emerged. Important characteristics of this market = the need to be honest about marketing tactics: revealing the motives behind asking for personal information. Teens are eager to play online games, download music and movies, and sign up for sales promotion premiums and free samples. Ethnic Groups African Americans: One of the largest and most quickly growing ethnic groups online in the United States. Tend to be younger, more highly educated, and affluent. Are heavy purchasers of music online and buy less clothing and travel. Go online from academic and public locations and are less likely to register at Web sites. Hispanics: A huge segment with 14.5 million users + 19-26% growth rate. 55% use the Spanish language when online = a market with unique needs in the US. Miami-Fort Lauderdale, Florida is the 15th largest market overall, but 3rd largest for Hispanic Web users. Hispanics who use the Internet outspend those non-users by a margin of 7%, a statistic that has caught the eye of marketers. Ethnic Groups Chinese-Americans: More than 50% have Internet access, 65% of those are online everyday, Purchase books, computer products and electronics online and enjoy a large purchasing power—the average income is $69,000. Differently Abled = “The Internet’s next niche” : Spend 20 more hours a week online than other Internet users. Fifty-four million U.S. consumers have disabilities, health problems, or handicaps that prevent full participation in work, school, or housework. Exists Web accessibility guidelines to accommodate disabled people. BUT this segment is a demographically diverse group, and tend to have low incomes, making them difficult and undesirable targets for some firms. Differently Abled Why do marketers target this segment, despite its low income and accessibility challenges? Social values of full accessibility and potential legal action. To draw a larger consumer audience. The huge baby boomer group is headed for some of these problems as they reach age 65 and older. This market can be a productive target: The 2000 Paralympics Games from Australia last fall experienced good traffic. Most importantly, a market consisting of 54 million Americans has a great deal of purchasing power. Overview Segmentation and Targeting Overview Market Segmentation Bases and Variables Geographic Segments Important Geographic Segments for E-Marketing Demographic Segments Psychographic Segments Behavior Segments Targeting Online Customers Targeting Communities on the Internet Psychographic Segments User psychographics include: Personality: Values: Traits (other-oriented / self-oriented) and habits, Deeply held convictions (religious beliefs), Lifestyle: Activities: Non-product-related behavior (playing sports or eating out), Interests: Opinions: Attitudes and beliefs people hold. Attitudes And Behaviors How do attitudes and behavior differ? Attitudes: Internal evaluations about people, products, and other objects Either positive or negative The evaluation process occurs inside a person’s head. Attitudes And Behaviors Behavior: Refers to what a person physically does (calling a 1800 number to order, shopping, or purchasing a product), Product behaviors are such a vital segment descriptor that they form an entirely separate category. Psychographics: The general ways that consumers spend time, Help e-marketers define and describe market segments so they can better meet consumer needs, Important for Web page design. Attitudes Toward Technology Marketers believe that demographics are not helpful in predicting who will purchase online. BUT it is important to know which demographic target is online. The segment’s attitudes toward technology determine whether or not these users will buy when they surf the Web. Attitudes Toward Technology Forrester Research measures consumer and business attitudes toward technology. The system, Technographics, works by combining three specific variables: 1. 2. 3. Determine if a person is optimistic or pessimistic toward technology, Measure a user’s income level ( important determinant of online shopping behavior), Query users about their primary motivation for going online. Attitudes Toward Technology Examples of the 10 consumer technographics segments in the United States: Fast Forwards the biggest users of business software New Age Nurturers the most ignored group of technology consumers Gadget Grabbers buy low cost, high-tech toys such as Nintendo Traditionalists use VCRs but not much more Media Junkies love TV and are early adopters of satellite television Attitudes Toward Technology Examples of the 10 consumer technographics segments in the United States: Mouse Potatoes Love interactive entertainment on the PC Techno-Strivers Highest proportion of PC ownership among lowincome groups Digital Hopefuls Strong potential markets for low cost PCS Hand shakers Don’t uses technology for business (dinosaurs) Sidelined Citizens Technology laggards Motivation for Using Internet Technology Optimists 52% Technology Pessimists 48% Career Family Entertainment High Income (>$40,000) Fast Forwards 12% New Age Nurturers 8% Mouse Potatoes 9% Low Income (<$40,000) Techno-Strivers 7% Digital Hopefuls 7% Gadget Grabbers 9% High Income Handshakers 7% Traditionalists 8% Media Junkies 5% Low Income Sidelined Citizens 28% Consumer Technographic Segments and Proportion in the United States Source: Adapted from Modahl (2000) Attitudes Toward Technology Forrester’s research revealed some interesting findings: Technology optimism declines with age: Older users tend to have a more negative attitude toward technology, Their attitudes may be less negative if they use a PC at work or live in one of the largest 50 U.S. cities, Men tend to be more optimistic, Peer pressure can increase optimism in all demographic groups, Income: 40% of high-income citizens are optimistic, Certain low-income groups such as college students and young families are also optimistic about technology. Attitudes Toward Technology How do these findings translate to online purchasing? Twice as many high-income optimists shop online (19%) compared with other groups. Only 2% of low-income pessimists shop online and, therefore, are not a good target for e-commerce firms. Combining Technographics with adopter categories, Early adopters = high-income technology optimists = the first consumers to shop online. Laggards = low-income pessimists = last to shop online. Technographic segments can be used to profile customers who shop online and to determine where to allocate resources to attract more of the same. Overview Segmentation and Targeting Overview Market Segmentation Bases and Variables Geographic Segments Important Geographic Segments for E-Marketing Demographic Segments Psychographic Segments Behavior Segments Targeting Online Customers Targeting Communities on the Internet Behavior Segments Two behavioral segmentation variables are: Benefit segmentation: form groups of consumers based on the benefits they desire from the product. “70% of online shoppers can be segmented into two groups: Bargain hunters: includes Hooked, Online & Single (16%), HunterGatherers (20%) Convenience shoppers: includes Time-Sensitive Materialists (17%), brand loyalists (19%), E-Bivalent Newbies (5%), and Clicks & Mortars (23%).” Product usage: Light, medium and heavy product usage. Brand loyal, loyal to the competitive product, switchers (who don’t care which brand they use), and nonusers of the product. Benefit Segments On the Internet, there is something for everyone: information, entertainment, news, social meeting places, and more. Marketers form segments based on the benefits sought by users to design products to meet those needs. What better way to determine benefits sought than to look at what people actually do online? Check which Web sites are the most popular. Sites report monthly on the top online properties displays the top Web site parent companies. AOL, MSN, and Yahoo! are consistently among the top sites in most countries. Benefit Segments Commonly used segmentation variables: E-mail: 8 billion e-mails flying over the Internet worldwide. Shop. (eCommerce) Information search. Online stock trading and online banking. Online banking has a high usage but online stock trading is quite active. Streamies: People who listen to online audio. Rank Parent Company Millions of Visitors Percent Reach of all Users 1 Microsoft 39.4 50.7 2 AOL Time Warner 37.2 47.9 3 Yahoo! 33.8 43.5 4 Google 10.9 14.0 5 eBay 9.0 11.5 6 Terra Lycos 8.0 10.3 7 About-Primedia 7.3 9.4 8 Amazon 7.1 9.2 9 The Gator Corporation 6.0 7.6 10 USA Network 5.3 6.8 Top Web Properties in June 30, 2002 Source: Data from www.nielsen-netratings.com Usage Segments E-marketers: Identify segments according to how users behave and use the Internet. Profile the segments by user characteristics, geographical location, and so on. Difference between usage-based segmentation and user-based segmentation = when users shop online: sometimes they browse aimlessly, but sometimes they have a specific goal. Home and Work Access Segmentation by access point is important because the needs are different: Home: 80% of home users have slow connection speeds, making large graphics and other files undesirable on sites frequented from home. A small but growing number of households have more than one PC and are networking them within the home. Work: 42 million U.S. users access the Internet from work. People spend nearly twice as much overall time online than those who access only from home. The audiences in all countries are much more heavily male. Home and Work Access The most popular sites for U.S. at-work access follow: Telecom or Internet services (29.7 million visitors) Finance, insurance, or investment (21.2 million visitors) Travel (18.4 million visitors) Corporate information (14.6 million visitors) Special occasions such as greeting cards, gifts or flowers (14.1 million visitors) E-marketing strategists can use such information to target their Web site offerings. Strategies might include special products, the language in sites, and the amount of interactivity and multimedia possible for work users. Access Speed The type of Internet connection + the information receiving appliance both affect usage behavior. Faster connections at work allow users to receive larger data files filled with multimedia content. 20% of the U.S. population has broadband Internet access from home (21.9 million). 25.5 million office broadband users (60%). Home users: Are connected through ISPs offering cable modems and DSL (satellite). Cost is still a barrier for many home users. Broadband penetration is nearly high enough to reach the critical mass needed for true video and audio program delivery on demand. This will certainly change the face of the Web. Access Speed Broadband users operate differently from narrowband users online. They: Play audio CD’s (75%), Play online games (60%), Download music (48%), Watch streaming video or DVD’s (67%). Mobile wireless users have very small screens and slow access speed. About 200 million wireless devices were in use during 2001 = hard for marketers to resist! 13.1 million PDAs (personal digital assistants) The majority of the other 187 million devices are cell phones. Access Speed Wireless users do a lot more than talk on their cell phones. They send and receive data—anyplace, anytime: Wireless devices cannot access typical Web pages on their tiny screens E-mail and voice mail, Online banking, Access Internet, Track information on package shipment, stock quotes, airline schedules and changes, and news. Site developers have a mobile viewing mode and a regular viewing mode. The mobile mode = 100% text and serves precise information on demand. The mobile wireless segment = huge opportunities for firms wanting to produce wireless portals: a customized point of entry to the Net where subscribers can access Web sites and information in text format. Big technical problems BUT the market is unstoppable and will grow considerably. Activity Data Service % Activity Data Service % E-mail, Fax, Voice mail 30 Mobile office 7 Online banking 15 Telemetry 5 Location dependent information services 15 Games 3 Internet access/surf 13 Payments 1 simple info services 10 Telematics (in car) 1 2002 Predicted Revenue Proportion for Data Type on Mobile Devices Worldwide Source: Fichter (2001) Time Online Although the Internet has been growing, not all the people with access are as active logging on as others. Six user segments based on the active user’s time online, pages, domains accessed, and the amount of time spent per Web page: Simplifiers want end-to-end convenience. Surfers want what’s new. Connectors are novelty seekers. Bargainers look for deals.. Routiners want something special.. Sportsters desire highly interactive content. These segments are likely to overlap because people use the Internet for different purposes at different times—such as research, e-mail, chat, work, and so forth. Segment Important Facts Online Time 7 hours per month. Simplifiers 50% of total online purchases. 49% have been online for over 5 years. Longest online tenure. Surfers 8% of active user population. 32% of online time usage—far more than any other segment. More than the average 9.8 hours per month. Less than the average of 9.8 per month. Connectors 36% active user population. 40% have been online under two years. 42% have made online purchases. Bargainers 8% of active user population 52% are eBay users Less than the average of 9.8 per month. Routiners 6% have purchased online. They visit fewer domains. 9.8 hours per month. Sportsters 4% of active user population. 7.1 hours per month. User Segments Based on Online Viewing Behavior Source: Adapted from McKinsey and MediaMetrix study Industry Specific Usage Segments Segmenting by usage vary from one business type to the other. Visitors to car sites behave differently than visitors to other ecommerce. Even serious car buyers tend to visit car sites only a few times—64% of all buyers complete their online research in five sessions or fewer. Three visitor segments for car Web sites: Explorers are the smallest group, but almost half buy their new vehicle within two months of visiting a car site. They want a convenient, explicit buying process. Off-roaders tend to do a lot of research online and subsequently are very likely to purchase in an offline showroom. Cruisers visit car sites frequently but only 15% buy a car in the short term Still, they have a strong interest in cars and heavily influence the car purchases of others, making them important visitors. Targeting by Usage Occasions Marketers identify segments based on how consumers are using the Web at particular moments = occasionalization. Behavior patterns = “usage occasions.” 4 key variables for defining discrete clusters of online behavior: Session length—the time a user stays online. Time per page—the average time a user spends on each page during a session. Category concentration—the percentage of time a user spends at sites belonging to the most frequented category. Site Familiarity—the percentage of total session time a user spends at familiar sites, defined as those previously visited four or more times. Targeting by Usage Occasions 7 Occasionalization Segments: 1. Quickies: users concentrate on visits to two or fewer familiar sites extracting specific bits of information or sending e-mail (duration = 1 minute). 2. Just the Facts: users look for specific information from related sites = transaction-oriented or time-consuming sites such as shopping, travel, and sports sites (duration = 9 minutes). 3. Single Mission: users want to complete a certain task or gather specific information (involve more reading), duration = 10 minutes. Targeting by Usage Occasions 7 Occasionalization Segments: 4. Do It Again: users spend 95% of the session at familiar sites for auctions, games, investments (duration = 14 minutes). 5. Loitering: leisure visits to familiar sticky sites, such as news, gaming, and entertainment sites. (duration = 33 minutes). 6. Information Please: used to build in-depth knowledge of a topic by gathering broad information from a range of sites, typical for travel and automotive Web sites (duration = 37 minutes). 7. Surfing: 70 minutes, with few stops at familiar sites with wide, but not deep, exploration. Users gravitate to sites that grab their attention immediately, such as shopping, online communities, and news. Why Use Occasionalization in Targeting? None of the session types was dominated by a single demographic group. Usage occasion data + demographics, online marketers: Raise the chances of communicating with their target consumers when they are paying attention to and influenced by the message. Can tailor their environments in real-time to meet the interests of the user + the occasion. By examining how the four session variables (session length, time per page, category concentration, and site familiarity) define the different segments, A marketer can identify behavioral patterns that can help in the creation + placement of communications. Occasionalization allows marketers to reach a larger number of users more effectively by pinpointing when they are most likely to be receptive. Reaching Users During Sessions When sessions are long: In Surfing occasions, user behavior is impatient, impulsive clicking. Site or message need to be interesting to appeal to impulse users attracted to novelty. When the sessions are shorter: Users are less inclined to buy, Marketers want to post messages to generate click-throughs to their own sites as a way to build brand awareness. Click-throughs should be the goal only in very specific situations. How can marketers identify usage sessions? Cookies are small bits of text placed on user hard drives that allow Web sites to identify users and send them the appropriate advertising. Overview Segmentation and Targeting Overview Market Segmentation Bases and Variables Geographic Segments Important Geographic Segments for E-Marketing Demographic Segments Psychographic Segments Behavior Segments Targeting Online Customers Targeting Communities on the Internet Targeting Online Customers Marketers must select the best potential segments for targeting: Review the market opportunity analysis, Consider findings from the SWOT analysis, Look for the best fit between the market environment and the firm’s expertise and resources. Sometimes it is easy to discover a new segment and experiment with offers that might appeal to this group Other times it is a lengthy and thorough process. To be attractive, an online segment must be accessible through the Internet, sizable, growing, and hold great potential for profit. Targeting Online Customers 1. 2. 3. 4. E-marketers select among 4 targeting strategy: Mass marketing = undifferentiated targeting = when the firm offers one marketing mix for the entire market. Multi-segment marketing = when a firm selects two or more segments and designs marketing mix strategies specifically for each. Most firms use a multi-segment strategy. Niche marketing = when a firm selects one segment and develops one or more marketing mixes to meet the needs of that segment. Micromarketing, = individualized targeting = when a firm tailors all or part of the marketing mix to a very small number of people. The Internet’s big promise is individualized targeting =giving individual consumers exactly what they want at the right time and place. Overview Segmentation and Targeting Overview Market Segmentation Bases and Variables Geographic Segments Important Geographic Segments for E-Marketing Demographic Segments Psychographic Segments Behavior Segments Targeting Online Customers Targeting Communities on the Internet Targeting Communities on the Internet The Internet is ideal for gathering people with similar interests and tasks into communities. People join communities to feel connected with others who have the following common interests: 44.8% with folks who share their hobbies; 31.5% with other professionals; 27.2% with family members; 15.7% in support groups… Targeting can be achieved by building community through online chat rooms, discussion groups, bulletin boards, and online events. Motivation: value received in both information and social bonding. A firm needs to build and maintain the watering hole to present products and messages customized to the group’s interests. Targeting Communities on the Internet Two of the most publicized consumer community sites include: Yahoo! GeoCities: Members build Web pages that Yahoo! hosts for free and also join in chats and bulletin board postings geocities.yahoo.com. Google groups provides Web access to the Usenet with over 35,000 special interest bulletin board discussion groups and 700 million community messages. Business communities also play a big role in B2B commerce. Most professionals subscribe to discussion groups containing information in their field, and many Web sites promote community. Targeting Communities on the Internet In discussion groups, users feel part of the site by posting their own information and responding to other users. Amazon allows users to write their own book reviews and read the reviews of others. These kinds of Web sites encourage users to return again and again and see what their cyber friends are discussing and doing online. Yahoo! Games: Chess Source: www.yahoo.com. 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