teachthe4ps.com - For instructors of marketing.

Recent research finds that consumers enjoy online shopping on tablets (like the iPad) more than they do on their standard PCs.  All kinds of measures — from conversion rate (orders divided by visits) to order size — are showing this trend.  This knowledge is driving online retailers to invest in optimizing the online experience for the tablet shopper.  This Wall Street Journal article, “Tablets:  Ultimate Buying Machines” (September 28, 2011, non-subscribers may need to click here).  We also posted this at Learn the 4 Ps.

This example suggests some interesting ideas to bring up in class.  For example, the customer market continues to fragment for retailers, many now aim (at least) two segments of online shoppers — PC users and tablet users.  And retailers are adapting their marketing strategies to each target market.  The article provides some good examples of the types of online retailers are using to better address tablet customers.  While many retailers initially invested in apps specifically for their store, research shows that most tablet shoppers still prefer the browser interface.

The business side of online games is quite fascinating.  In our text book, the segmentation chapter opens with a case highlighting how Nintendo grew the gaming market by designing products for new gamers.  The easy-to-use Nintendo DS hand-held and the Wii console targeted girls and senior citizens with easy to learn, fun games.  Zynga did Nintendo one better when it developed online games for Facebook.  Its FarmVille soared in popularity with 10% of all Facebook users growing virtual crops online.

This example is a bit complicated, but it demonstrates a number of important marketing concepts:

• Price and the freemium business model.  Freemium refers to a business model where most customers use a product for free, while a few power users cover costs.  More than 95% of Zynga’s 150 million monthly visitors pay nothing to play its games.  The other 5% pay hundreds and even thousands a year for virtual products that enhance their gaming experience.  For example, $5 might get you a chicken in FarmVille, a skyscraper in CityVille, or an anglerfish in FishVille.  Of course they love to sell these low cost virtual products…
• Fixed and variable costs.  There are minimal fixed costs for creating a new anglerfish, but the variable cost of producing hundreds of thousands of them is very small.  Almost no variable cost.Segmentation and targeting.  In this post at TechCruch (“Who Spends The Most Money In Freemium Games?” September 8, 2011), you can see by age group, who uses mobile freemium games — and who “spends”.  Not surprisingly, while more than half of users are under age 24 — this younger market contributes just 21% of the spending.  Consequently, most of the action in online games targets an older demographic.  And of course a little analytics can identify what products encourage spending…
• Marketing research.   In “Virtual Products, Real Profits,” (Wall Street Journal, September 9, 2011, non-subscribers click here), Zynga’s president of data-analytics says, “We’re an analytics company masquerading as a games company.”  Zynga analyzes game player behavior and adapts the game to get players to play longer or spend more.  For example, after finding that FishVille players bought the translucent anglerfish much more often than other sea creatures, they created more variations on the anglerfish.

I don’t play these games — but I have Facebook friends who love them.  Some of your students might relate to these examples.  Also posted at Learn the 4 Ps.

When I teach segmentation and targeting this week, 5-hour ENERGY will be one of my examples.  Many of our students are familiar with this or similar products that help them stay awake and focused.  5-hour ENERGY can be found at check-out counters in stores around campus.

Marketing managers at 5-hour ENERGY are now targeting the senior citizen market.  I got a first-hand look at one element of the strategy at the Cherry Creek Arts Festival this past summer, where 5-hour had a tent with promotional material and free samples.  For more on the new target market and strategy, see “Bottlers of Buzz Wake Up to Find Seniors as Newest Customers” (Wall Street Journal, June 2, 2011 - non-subscribers may need to click here) will give you more information.

Here is how I plan to use 5-hour ENERGY in class.  I will start by using 5-hour ENERGY as the example when I explain how to define a product market – and use the student market as my customer type.  Later, as my lecture continues and I get into qualities of a good market segment (homogeneous within, heterogeneous between, substantial and operational), I will introduce the senior market (which fits these criteria).  Then I will get the students active and talking.  I like to use an approach called “Think Pair and Share” which works well in the large 90-student sections I teach.  I will focus students with the question – “What ideas do you have for 5-hour ENERGY if the company pursued a senior citizen target market?  Think about all 4 Ps.”  To motivate and reward their effort, I have them turn in a page with their ideas.

Here at T4Ps, we think the marketing strategies of both Ford and Zipcar are worth sharing with students.  Both companies have extended coverage in our books. Now these two companies have teamed up with a joint marketing strategy that looks like a win-win-win as Ford, Zipcar, and the college student target market all look like winners.  Ford gets more exposure for its Focus and Escape SUV in one of its key target markets.  These two vehicles will make up up half of Zipcar’s college fleet.  Zipcar hopes to get more rentals – as college students use Zipcar more in response to buzz about the high-tech Focus.  And students get discounts — we all know how they love discounts.  Learn more at “Ford and Zipcar court college kids with high tech Focus” (USA Today, August 31, 2011).  Also posted at Learn the 4 Ps.

This article might work well when you talk about market segmentation and targeting.  If you are using our books, we have an extended example of Ford’s marketing strategy planning over the years in chapter 2 — this provides a way to add a recent twist.

Have you ever been felt stalked on the web?  We have found it downright creepy when ads start following us all around the web.  Recently Joe went to the iRobot website to get the latest on the Roomba which we have as a chapter opening case in our books.  For the next month, he kept seeing ads for the Roomba as he surfed the web.  It can get very creepy.

A previous T4Ps post “How Advertisers Use Internet Cookies to Track You” includes a video with some background on hot it works.  A recent article at PCWorld, “Help!  A Web Ad Is Stalking Me” (June 20, 2011) offers a lot of detail and insight on how it works.

We find that our students notice the “creepy ads” and sometimes ask about them.  Now after reading this article, we have a much better idea about how to answer the question.  I am not sure I will give my students this level of detail, but it will help me understand how things work.

The whole topic of behavioral targeting raises a lot of interesting questions.  Technology offers marketers many new targeting capabilities.  But just because they can do this, does it mean they should do this?  The article might help you lead a thoughtful discussion about the ethical implications of behavioral targeting.  The article could also provide you with useful background and examples to use when you cover segmentation and targeting as well as online advertising.

combination

Sometimes marketing managers are afraid to rule out segments of the market.  But that is what targeting and positioning is all about — making decisions about which target market our offering will serve and which it will not.  By designing a marketing mix that appeals more to one market segments, you will probably make it less appealing to others.  That is almost always a good trade-off.  Dr Pepper Ten makes it clear that this soft drink is for men — and a great example of targeting for our students.  Also posted at Learn the 4 Ps.

Intel created this great video to demonstrate why one of its prime target markets — gamers and social media users — need the 2nd Generation Intel Core i5 Processor.  I think the video is likely to resonate with this target market.

I have embedded the video below, but you may enjoy it best by clicking through to YouTube and playing it full screen.  File under segmentation, target market, advertising and viral video.

Many of my students enjoy sports — and examples of creative marketing by sports teams tends to capture their attention.  This article in the Wall Street Journal, “NBA Game Promises to be a Turkey?  Call In the Turks — or the Filipinos,” (January 19, 2011 – non-subscribers may have to click here)  shows some classic target marketing efforts by the National Basketball Association — and they seem to be working.  For example, the Sacramento Kings, one of the worst teams in the league, are drawing big crowds on Jewish Heritage nights in Toronto, Washington, Atlanta, and Boston.  Why?  They have the leagues only Israeli, Omri Casspi.  Teams have give away yarmulkes and provided kosher foods to further appeal to the Jewish fan.

You might want to show this video in class, and then ask your students what other organizations could offer similar special nights?  How could they increase their appeal to such a target market?   This was also posted over at Learn the 4 Ps.

BredaPhoto International Photo Festival is an annual event in the Netherlands.  The company developed a clever campaign that clearly identified a target market – and personally invited them to the 2010 festival.  I really like the targeted communication, that the promotion is for a non-profit organization, and that it worked.  Plus, the short (1:51) video format makes it a great in-class use of media. This is a great example of low-cost, highly targeted media — that grabs attention.

Want to embed the video below right into your PowerPoints?  Click here.  Note, also posted at Learn the 4 Ps.