Unit 3 Journal Building Customer Sales and Loyalty

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As a University student, you are part of a specific target market. Marketers have segmented you into a specific targeted group and have a marketing mix that is used just for your group. Thinking of this role that you play as a student:

  • Describe the five criteria for segment effectiveness as covered on page 138 of your text and how this applies to you as a target market at the Univeristy.

Measurable: the degree to which useful information exists on the segment. For example, a company may not have measures of a very small segment’s size, purchasing power, or other important characteristics. (This should not deter creative attempts to measure this however.)

  • 2. Substantial: the degree to which the segment is large enough and/or profitable to be worth attention. There are notable exceptions to this: the Orphan Drug Act of 1983 facilitates the development and commercialization of prescription drugs by pharmaceutical firms to treat rare diseases.45
  • 3. Accessible: the degree to which a firm can focus their marketing efforts on the segment. As most college students know, your time is limited and you represent a difficult market to reach. So, firms are especially glad to reach out to students with promotions on spring break, gift packs at dorms and rec centers, etc.
  • 4. Differentiable: the degree to which the segment is distinguishable and will respond differently to changes in marketing mix elements and programs. If younger and older urban Asian-American men within one mile of a restaurant respond exactly the same to a sushi lunch special, they may not represent different segments.
  • 5. Actionable: the degree to which the programs can be formulated and implemented. Sometimes, resources may not be available for a special marcom effort for a given segment.
    • Discuss your age structure as defined on pages 127–133 and how this impacts your segmentation as a student.

    TABLE 5.4: Population of the United States by Age Group, as of 2010

    Age

    Population (millions)

    Percent of Total

    Children and Teens (<20)

    Under 5

    21.10

    6.8

    5-9

    20.89

    6.7

    10-14

    20.40

    6.6

    15-19

    21.77

    7.0

    Total

    84.16

    27.10

    Young Adults (20-34)

    20-24

    21.78

    7.0

    25-29

    21.42

    6.9

    30-34

    20.40

    6.6

    Total

    63.60

    20.30

    Middle Agers (35-54)

    35-39

    20.27

    6.5

    40-44

    21.01

    6.8

    45-49

    22.60

    7.3

    50-54

    22.11

    7.1

    Total

    85.99

    27.70

    Olders (55-64)

    55-59

    19.52

    6.3

    60-64

    16.76

    5.4

    Total

    36.28

    11.70

    Elders (65-74)

    65-69

    12.26

    4.0

    70-74

    9.20

    3.0

    Total

    21.46

    7.00

    The Very Old (75+)

    75-79

    7.28

    2.3

    80-84

    5.73

    1.8

    85+

    5.74

    1.8

    Total

    18.75

    5.9

    Total U.S. Population

    310.23

    100%

    Source: Year Age Groups for the United States, Population Division, U.S. Census Bureau, July 22, 2011.

    Demographers (people who study demographic trends) termed the birth of around 77 million Americans between 1946 and 1964 the baby-boom generation. This population-boom period following the end of World War II (in 1945) persisted for nearly two decades. Using 2012 as a point of reference, the youngest person classified as a “boomer” is 48, and the oldest baby boomer is 66. Effects of the baby boom (and subsequent bust) have been manifested in the following major population developments:

    • 1. The original baby boomers created a mini baby boom as they reached child-bearing age. As shown in Table 5.4, the number of children and teenagers in the United States totaled about 84 million in 2010.
    • 2. Due to a low birthrate from the mid-1960s through the 1970s (prior to the time when most baby boomers were of childbearing age), relatively few babies were born. There now are proportionately fewer young adults (ages 20 to 34) than there were in prior generations.
    • 3. The number of “olders” (ages 55 to 64) has increased dramatically, totaling nearly 36 million Americans as of 2010. This maturing of the baby boomers is one of the most significant demographic developments marketers face.

    Children and Teenagers

    The group of young Americans age 19 and younger has fallen dramatically from 40 percent of the population in 1965 (during the baby-boom heyday) to slightly over 27 percent of the population in 2010. Yet this remains a substantial group, with over 84 million occupants. (See Table 5.4 for specific breakdowns by age group—i.e., under 5, 5 to 9, 10 to 14, and 15 to 19.)

    Marketers typically refer to children ages 4 through 12 as “kids” to distinguish this cohort from toddlers and teenagers. Children in this broad grouping either directly spend or influence the spending of billions of dollars worth of purchases each year. Aggregate spending by kids or on behalf of this age group roughly doubled every decade in the 1960s, 1970s, and 1980s, and tripled in the 1990s.

    Preschoolers

    Preschool-age children, age 5 or younger, represent a cohort that has grown substantially in recent years. As part of the “baby boomlet,” more babies were born in the United States in 1990 (4.2 million) than at any time since the baby boom peak of 4.3 million babies born in 1957. Marketers of toys, furniture items, clothing, food, and many other products and services routinely appeal to the parents of these children, or, on occasion, directly to the kids themselves.

    Elementary-school-age children

    This group includes children ages 6 to 11. These children directly influence product purchases and indirectly influence what their parents buy. Children in this group influence their parents’ choice of clothing and toys and even the brand choice of products such as toothpaste and food products, as Figure 5.4 illustrates. Advertising and other forms of marketing communications aimed at young children, or their families, have increased substantially in recent years. Numerous new products annually hit the shelves to cater to kids’ tastes. For example, Mattel, which is known for its line of Hot Wheels toy cars, has extended the brand into the area of marketing skateboards, snowboards, and extreme-sports apparel under the Hot Wheels name. The Walt Disney Company introduced the Disney Dream Desk PC, a computer and monitor combo where the monitor is shaped in the form of Mickey Mouse ears. Marketers are increasingly reaching these young consumers, especially girls, via online virtual communities. The Barbie Girls site, for example, has millions of registered users.14 (To learn more about how children are socialized as consumers and develop understanding of advertising, the reader is encouraged to examine the articles identified in the following footnote.15)

    FIGURE 5.4: An Appeal to Preschoolers’ Parents

    Tweens

    A category of children that marketers have dubbed “tweens”—not quite kids nor yet teenagers—is an age cohort actively involved in consumption. Tweens are usually classified as children between the ages of 8 and 12. Tweens generally have well-formed ideas about what brands they like and dislike and are largely influenced by their peers to own those products and brands that are considered “cool.” Retailers such as Limited Too gear much of their marcom efforts at garnering tweens’ growing desire for fashionable clothing items (www.limitedtoo.com).

    An important study of tweens (including also some teens aged 13 and 14) examined their materialistic values and how these values relate to a variety of demographic variables, purchase-related behaviors, and involvement with advertisements and promotions.16 A “youth materialism scale” (the YMS) consisted of 10 statements with response options ranging from “disagree a lot” to “agree a lot,” including “I’d rather spend time buying things than doing almost anything else”; “I really enjoy going shopping”; and “When you grow up, the more money you have, the happier you are.” A national sample of nearly 1,000 youths between the ages of 9 and 14 produced the following set of findings:

    • 1. Boys are more materialistic than girls.
    • 2. Youths from lower-income households are more materialistic.
    • 3. Highly materialistic youths shop more frequently.
    • 4. Highly materialistic youths show a greater interest in new products.
    • 5. Highly materialistic youths are: (a) more likely to watch TV commercials, (b) more likely to ask parents to buy products because they’ve seen them on TV, (c) more responsive to celebrity endorsements, (d) more likely to exert pressure on their parents to purchase products, (e) inclined to want more spent on them for Christmas and birthdays, and (f) prone to like school less and to have somewhat poorer grades.

    Teenagers

    Consumers in this age group, totaling in the United States over 25 million 13- to 19-year-olds, have tremendous earning power and considerable influence in making personal and household purchases.17 Teenagers often are referred to as members of the Millennial Generation, Millenials, or Generation Y (in contrast to the generation that preceded it—Generation X—born between 1965 and 1981). Although there is no single definition of when people were born into the millennial generation, we will consider Generation Y as the generation of people who were born from 1982 to 1996. Thus, as of 2012, Gen Yers would include all people between the ages of 16 and 30, or more than 60 million Americans. The present discussion focuses just on the subset of teenagers who are members of this millennial generation.

    A study by Teenage Research Unlimited, which follows teen trends and attitudes, estimated that American teenagers spend more than $159 billion annually.18 Teenagers have purchasing influence and power far greater than ever, which accounts for the growth of marcom programs aimed at this group (see Figure 5.5). For example, Hewlett-Packard changed its back-to-school computer marketing strategy from efforts to appeal to parents with price-oriented ads placed in conventional media to the use of humor appeals placed in online media that reach teenagers.19 For their older counterparts, the IMC Focus insert offers one illustration of a creative marcom initiative on Facebook.

    FIGURE 5.5: An Appeal to Teenagers

    IMC FOCUS: College Students: An Inviting Target for Odor-Fighting Products

    Imagine the worst dorm room (or apartment) you ever encountered: A dirty, cluttered, smelly, disgusting space filled with uneaten food items, dirty clothes, empty beer bottles, and perhaps even a pet. Your dorm room (or apartment) is likely much cleaner and less smelly than the hypothetical “disaster” just described. Nonetheless, with immense pressures on your time and the likelihood of two or more students occupying the same room, it is probable that your room is not as clean or as odor-free as you may desire. Like millions of other college students, you are a good candidate for odor-fighting products while living in a dorm, fraternity/sorority building, or off-campus apartment.

    One maker of such products, Procter & Gamble, has focused its marketing of Febreze line of products explicitly to college students, who, in the United States alone, number 18 million potential customers! Realizing that reaching college students via conventional mass media such as television and magazines would be too costly and ineffective, P&G and its advertising agency opted for an online campaign using Facebook and postings to YouTube. An interactive online site (www.facebook.com/pages/Telling-Febreze-WHAT-STINKS…) was developed and housed within Facebook, and postings were made to YouTube (“I Tell Feberze What Stinks”). The site uses humor designed to appeal to college students, and includes features such as a video game (the “Dank Game”) where players armed with a bottle of Febreze take aim at dirty laundry items. In addition to the online site, campus tours (posted to YouTube) were designed in which improvisational actors conducted interactive performances with students and queried them about things in their lives that stink. All in all, this campaign is a clever way to target a previously untapped group of consumers who represent a large and viable audience for Febreze products.

    Source: Adapted and updated from Rupal Parekh, “Febreze Sniffs Out New Target: Dorm Dwellers,” Advertising Age, October 29, 2007, 12.

    © Jim Barber/Shutterstock.com

    Young Adults

    Scholarly treatment of this age cohort, commonly referred to as Generation X (or Gen X), identifies it as Americans born between 1961 and 1981.20 However, to avoid overlap with the baby boom generation (1946 to 1964) and Gen Y (1982 to 1996), it is convenient to define this age cohort as people born between 1965 and 1981. As of 2012, Gen X included over 65 million Americans in the age category from 31 to 47. Because Gen Xers were born immediately after the baby boom, which ended in 1964, this group also is referred to as baby busters.

    One well-known marketing research firm has classified Gen Xers into four groups based on their attitudinal profiles: Yup & Comers, Bystanders, Playboys, and Drifters. Yup & Comers have the highest levels of education and income and account for approximately 28 percent of Gen Xers. They tend to focus on intangible rewards rather than material wealth and are confident about themselves and their futures. Bystanders represent nearly 37 percent of Gen Xers and consist predominantly of female African-Americans and Hispanics. Although their disposable income is relatively low, this subsegment of Gen Xers has a flair for fashion and loves to shop. Playboys is a predominantly white, male group accounting for almost 19 percent of the Gen X cohort. Playboys adhere to a “pleasure before duty” lifestyle and are self-absorbed, fun loving, and impulsive. Drifters constitute the smallest subset at 16 percent of Gen Xers. They are frustrated with their lives, are among the least educated, seek security and status, and choose brands that offer a sense of belonging and self-esteem.21 Thus, Gen Xers are not a uniform group.

    Middle-Aged and Mature Consumers

    Although somewhat arbitrary, we can think of middle age as starting at age 35 and ending at 54, at which point maturity is reached. Actually, there is some disagreement over the dividing point between middle age and maturity. Sometimes a 65-and-over classification is used, because age 65 normally marks retirement. In this text we will use the U.S. Census Bureau’s designation, which classifies mature people as those who are 55 and older.

    Middle-aged

    As of 2010 there were roughly 86 million Americans between the middle ages of 35 and 54 (see Table 5.4). These individuals represent two generations of people: younger baby boomers and older Gen Xers. The following discussion focuses on baby boomers, or “boomers” for short, because Generation X already has been discussed.

    As mentioned previously, the baby-boom generation encompassed approximately 77 million Americans born immediately after World War II in 1946 and through the year 1964. The baby boomers offer tremendous potential for many marketers. What makes boomers such an attractive target group is that they are relatively affluent and thus represent a good general target for second homes, quality vehicles, investments (insurance, real estate, and securities), travel, self-help products, cosmetic surgery, grown-up “toys” like golfing equipment, automobiles with convertible tops (the average convertible buyer is 50 years old),22 and motorcycles—Harley-Davidson’s best customers are middle-aged men, and the typical buyer is an average age of 46.23 Given their relative affluence, baby boomers also represent an attractive target for a variety of “luxury” goods. For example, appliance maker Whirlpool appeals to affluent boomers who want the very best appliance quality with a line of items named Whirlpool Gold. And luxury skin-care marketers have experienced revenue growth by introducing high-priced anti-aging products such as L’Oreal’s Absolut.

    Moreover, just because baby boomers are aging does not necessarily mean they are getting psychologically old or are significantly altering their consumption patterns from a younger age.24 Rather, there are indications that baby boomers are retaining many of their more youthful consumption habits and, in a sense, are unwilling to change. For example, the rather dramatic increase in purchases of hair-color products by baby boomers reflects this tendency for boomers to prolong youth and to gravitate toward products that support their youth obsession. Manufacturers of health-care items, cosmetics, exercise machines, and food products have actively appealed to baby boomers’ passion for remaining in youthful shape. Unfortunately, with their indulgent personalities, financial planning and retirement savings have not been a major priority with many boomers.

    Mature Consumers

    Turning to mature consumers (also called seniors), in 2010 there were nearly 77 million U.S. citizens age 55 or older, representing approximately 25 percent of the total U.S. population. In other words, nearly one quarter of all Americans are senior citizens. Historically, many marketers have ignored mature consumers or have treated this group in unflattering ways by focusing on “repair kit products” such as dentures, laxatives, and arthritis remedies.25 Not only are mature consumers numerous, but also they are relatively wealthier and more willing to spend as the economy improves. Mature Americans control nearly 70 percent of the net worth of all U.S. households.

    People age 65 and older are particularly well off, having the highest discretionary income (i.e., income unburdened by fixed expenses) and the most assets of any age group. The number of people in this 65-plus age category is quite large, totaling about 40 million in 2010, which represents nearly 13 percent of the total population.

    A variety of implications accompany marcom efforts directed at mature consumers. In advertising aimed at this group, it is advisable to portray them as active, vital, busy, forward looking, and concerned with looking attractive and being romantic. Advertisers now generally appeal to seniors in a flattering fashion such as using attractive models to represent clothing, cosmetics, and other products that had been the exclusive advertising domain of youthful models.

    It is important to reiterate that just because mature consumers share a single commonality (i.e., age 55 or older), they by no means represent a homogeneous market segment. The results of a national mail survey of over 1,000 people age 55 and older led to the classification of seniors into four groups: Healthy Hermits, 38 percent; Ailing Outgoers, 34 percent; Frail Recluses, 15 percent; and Healthy Indulgers, 13 percent.26 Brief descriptions follow.

    • Healthy Hermits, although in good health, are psychologically withdrawn from society. They represent a good market for various services such as tax and legal advice, financial services, home entertainment, and do-it-yourself products. Direct mail, the Internet, and print advertising are the best media for reaching this group.
    • Ailing Outgoers are diametrically opposite to Healthy Hermits. Although in poor health, they are socially active, health conscious, and interested in learning to do new things. Home health care, dietary products, planned retirement communities, and entertainment services are some of the products and services this group most desires. They can be reached via the Internet and through select mass media tailored to their positive self-image and active, social lifestyle.
    • Frail Recluses are withdrawn socially and are in poor health. Various health and medical products and services, home entertainment, and domestic assistance services (e.g., lawn care) can be successfully marketed to this group via mass media advertising.
    • Healthy Indulgers are vigorous, relatively wealthy, and socially active. They are independent and want the most out of life. Mature consumers in this group represent a good market for financial services, leisure/travel entertainment, clothes, luxury goods, and high-tech products and services. They are accessible via in-store promotions, direct mail, specialized print media, and the Internet.

    Access the Journal grading rubric.

    Your response should be a minimum of 200 words. Make sure to share your posting with your instructor.

    Submitting Your Journal

    Please submit your Journal to the Unit 3 Journal Dropbox.

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