Marketing
Class #2
August 6, 2009
John W. Huppertz, Ph.D.
Associate Professor of Management
Christie M. Griner, MBA
Adjunct Instructor
Today’s Agenda
• Fill out 1-page survey• Quick review from last class• Where to, for Marketing?• Market data and analysis
Break
• Segmentation• Green marketing and social marketing• Framing
Some key concepts from Week 1:
• Definition of Marketing, the Marketing Concept• Difference between marketing and selling, advertising• Different types of markets (consumer, business, government, etc.)• The four “P’s”• Disintermediation• Push and Pull marketing strategies
Strategic Business Planning and Decision Making
• How marketing links to strategic business planning• Translating business goals to marketing strategy• From---To: Where are we now in terms of a marketing approach and
where do we want to be in terms of marketing at NYSERDA
Translating business goals to marketing strategy
• NYSERDA ‘s business goals are intertwined with marketing.– How to get customers to change behavior?– How to get customers to care?– How to make sure that energy considerations get factored into their decisions?
• Choosing the right markets, the right products, the right messages.– That is what marketing strategy is all about.
Strategic Business Planning and Decision Making
• From---To: Where are we now in terms of a marketing approach and where do we want to be in terms of marketing at NYSERDA – Where do we go now?
QuizQuestion 1.
• Your friend comes to you, all excited about a great idea for a business, and she wants you to invest some money to help start it.
• If you were considering investing in her new business venture, what should you know before writing a check?
QuizQuestion 2.
• You’re the Director of NYSERDA. The leader of the group in charge of new energy technologies comes to you, all excited about a great idea for a NYSERDA program, and wants your support and additional funding.
• If you were considering investing in this new idea, what should you know before writing a check?
Category Development Index (CDI) CalculationExample: Foot-Joy Golf Shoes
Market Penetration =
Annual Golf Rounds / Population (1,000’s)
Golf Population Market Rounds (000's) Penetration
Dallas 61,800 5,221.8 11.8
Minneapolis 12,200 2,868.8 4.3
Orlando 78,100 1,644.6 47.5
Miami 66,200 3,876.4 17.1
Seattle 21,500 3,554.8 6.0
AVERAGE: 47,960 3,433.3 14.0
Category Development Index (CDI) CalculationExample: Foot-Joy Golf Shoes
Market Penetration
AverageCDI = x 100 Golf Population Market
Rounds (000's) Penetration CDI
Dallas 61,800 5,221.80 11.8 85
Minneapolis 12,200 2,868.80 4.3 30
Orlando 78,100 1,644.60 47.5 340
Miami 66,200 3,876.40 17.1 122
Seattle 21,500 3,554.80 6 43
AVERAGE: 47,960 3,433.30 14 100
CDI Summary
CDI.Albany County,
New York
Allegany County,
New York
Bronx County,
New York
Broome County,
New York
Cattaraugus County, New York
Cayuga County,
New York
Chautauqua County, New York
Chemung County,
New York
Chenango County,
New York
Clinton County,
New York
Total: 100 100 100 100 100 100 100 100 100 100
Utility gas 132 114
85 131 110
98 143 148
30
4
Bottled, tank, or LP gas
57 233
68 119 263 287 165
90 245
63
Electricity 117
71
93
80
93
79
93
71
99 284
Fuel oil, kerosene, etc.
55
42 133
57
44
81
15
30 176 197
Coal or coke
21 332
77 128 132 228
38 373 334
23
Wood
41 621
1 114 502 259 255 155 572 268
Solar energy
57
22 157
39 -
19
7
84
59 -
Other fuel
22
48 153
37
62
45
93
46
48
8
No fuel used
22
9 176
16
8
15
3
22
23
23
• Let’s apply this tool to energy.
Census data: Consumers
• http://factfinder.census.gov/servlet/DatasetMainPageServlet?_program=DEC&_submenuId=&_lang=en&_ts=
• http://factfinder.census.gov/servlet/DTSubjectKeywordServlet?_ts=267529505781
Census data: Businesses
• http://factfinder.census.gov/servlet/IBQTable?_bm=y&-ds_name=BE0200I101&-_lang=en
Target Market
• Having a customer in mind when designing a product, advertising campaign, channel strategy, or price level.
• Which customer offers the greatest opportunity?
Defining the Target Market
How would you define the target market for:• Solar water heating?• Geothermal wells?• Energy audits?• NYPA Power?• Compact fluorescent bulbs?• Co-generation?
Target Market Segmentation
2000
% in Childbirth Classes,
70%
2005
% in Childbirth Classes
56%
Source: Childbirth Connection, survey of 1,600 new moms.
Market Segmentation
In the Target Market Not In the Target Market
Market Segmentation
O ne segm ent250 million Am ericans
*
* Ages 14+
Market Segmentation
Or, 280 million segments with
N = 1
Market Segmentation
F emale Am ericans M ale A m ericans
250 million Am ericans *
* Ages 14+
D o g o w n e rs C a t o w n e rs P et- free
F e m a le A m er ica ns M ale A m er ica ns
2 5 0 m illio n A m er ica ns
Market Segmentation
*
* Ages 14+
P aren ts N on -p aren ts
F em ale A m erican s M ale A m erican s
2 5 0 m illion A m erican s
Market Segmentation
*
* Ages 14+
D og ow n ers C at ow n ers P et-free
P aren ts N on -p aren ts
F em ale A m erican s M ale A m erican s
2 5 0 m illion A m erican s
Market Segmentation
Market Segmentation: Age
Under 18 72,293,812
25.7%
18-24 27,143,454
9.6%
25-34 39,891,724
14.2%
35-44 45,148,527
16.0%
45-54 37,677,952
13.4%
55-64 24,274,684
8.6%
65-74 18,390,986
6.5%
75+ 16,600,767
5.9%
Source:
Census 2000 Summary File 1 (SF 1) 100-Percent Data
Who Wants to Be a Millennial?
What Age Do You Want to Be?
05
101520253035404550556065707580
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80
Current Age
Age You Want to Be
Source: Harris Interactive YouthPulse/The Harris Poll
Market Segmentation
• You can create segments on almost any characteristic.– Demographics – Lifestyle – Buying habits– Behaviors– Health status– Benefits– ??
• Find those which are relevant.
C ouch potatoes C asual w alkers R egular exerc isers E xerc ise nuts M arathon runnersP rofessional ath letes
250 million Am ericans
Market Segmentation
Benefit Segmentation
• Segment customers based on the benefits they seek from a particular product.
• Group customers based on their needs.• EX: non-prescription pain relievers and exercise.
If you have aches and pains, do you prefer:
male female
aspirin 9% 4%
Tylenol 28% 27%
Advil 63% 69%
Strongly agree
Agree somewhat
No opinion Disagree somewhat
Strongly disagree
I enjoy exercising whenever I get the chance. □ □ □ □ □
It is important to watch your caloric intake. □ □ □ □ □
When I exercise daily, I feel better. □ □ □ □ □
I get nervous when my physician isn’t fit.
□ □ □ □ □
I’m not sure exercising regularly really helps. □ □ □ □ □
Strongly agree
Agree somewhat
No opinion Disagree somewhat
Strongly disagree
I enjoy exercising whenever I get the chance. □ □ □ □ □
It is important to watch your caloric intake. □ □ □ □ □
When I exercise daily, I feel better. □ □ □ □ □
I get nervous when my physician isn’t fit.
□ □ □ □ □
I’m not sure exercising regularly really helps. □ □ □ □ □
5
5
5
5
5
4
4
4
4
4
3
3
3
2
3
3
1
2
2
2
2
1
1
1
1
Segmentation by Attitude
Segmentation by Attitude
5-10 Couch potatoes
11-19 Casual exercisers
20-25 Exercise nuts
If you have aches and pains, do you prefer:
attitude toward exercise
Couch
potatoesCasual
exercisersExercise
nuts
aspirin 0% 22% 0%
Tylenol 37% 22% 24%
Advil 63% 56% 76%
If you have aches and pains, do you prefer:
Hours exercising per week
0-2 3-6 7+
aspirin 18% 0% 0%
Tylenol 27% 32% 20%
Advil 55% 68% 80%
Green Marketing: Best Practices
Shades of Green• Most adamant supporters• Engage in variety of green activities• Well-informed and actively involved, willing to pay more for eco-friendly productsEco-Centrics• Willing to pay more for green products• Community and culturally focused• Idealistic
Respectful Stewards
• Buy green to save money• Hard-working and focused on family, run environmentally responsible homes• Experiment with eco-friendly products
Proud Traditionalists
• Women who save money when possible and look for “wholesome good products”• Prudent, lower-income womenFrugal Earth Mothers
• Highly-educated, high income men who question benefits of green products• Not-community – or spiritually-focused• Skeptical about corporate green initiatives
Skeptical Individualists
• Young adults-see green as new and hip• Impulse buyers and early adopters• Like “the cause” but haven’t considered the state of the environment in-depthEco-Chic• Young, lower-income shoppers• Have not registered cause/effect of environmental responsibilityGreen Naives• Middle-income men, small/mid-sized metro areas• Black-and-white perspective• Have dismissed environmental concerns outright; do not seek eco-friendly productsEco-Villains
Green Segmentation
Points of interest• Respectful Stewards: 86% Hispanic
• Eco-Villans are mostly middle income white males• Green Naivesmostly female
• Most Gen X’s are lighter green, reason?
Why market to Millennial’s?
• Born early 80’s-late 90’s• Market Segmentation is critical
– Two segments-13-17; 18-29
– Most educated demographic
• 79% get info from web– Problem: Understand why but not how
– Must quantify not simply preach-give them instant gratification» If families recycle newspaper for 1 year saves half million trees» Cut shower time down by 2 minutes saves 10 gallons of water» Put a sweater on when cold, turn thermostat down save 500,000
barrels of oil/day
• Marketing technique Align marketing with corporate responsibility – Creates loyalty
Commercial Case Study: Wal-Mart
• Does WMT market “green” to each segment? How?
Who is this targeting?
..and this?
How is WMT reaching their audience?
Wal-Mart’s LT Goals
1. To be supplied by 100% by renewable energy
2. To create zero waste
3. To sell products that sustain resources and environment
Are they attainable?
The Power of Wal-Mart
• Choose Suppliers• Wal-Mart will list criteria and suppliers must adhere to
be part of the supplier list– Requests full-disclosure on products via supplier
Will it be worth it long-term for suppliers to alter their practices for one retailer?
Supplier Survey
Sustainability 360
Alternative Energy to Power Facilities Purchased Solar Power (22 CA&HI stores) Wind energy supplies 15% of power to run TX stores
Energy-Efficient Transportation Fleets Wants to improve by 25%
Overnight trucks have APUs to regulate temperature and communication Testing hybrid trucks and alternative fueled trucks
Sustainable Packaging Network Reduce packaging by 5% by 2013
Laundry liquid, private labels, digital media packaging
Plastic Bags Reduce by 33% by 2013
High-Efficiency Store Formats
High-Efficiency Store Format
• HE.6- Western US-Sacramento, CA– Post HE.5 (Vegas)– 30% more energy efficient than the 2005 baseline –added
evaporative cooling and radiant flooring• Goal: Conserve energy, and reduce greenhouse gas emissions
through heating, cooling, refrigeration and lighting systems. – Cooling Towers reduces temperature– CO2 refrigerant system reduces the refrigerant charge in the
store by 90%
Why does HE.6 matter?
• Market Pioneers– Skylights– LED lighting– Recycled cement– Low flow toilets/faucets
• Improved customer experience – Wider isles– Lower shelves– Improved sightlines– Service area
NYSERDA implementation
• How can you get a local retailer to implement a high-efficiency store format?
What goals has WMT achieved?
• Sold 100M compact fluorescent light bulbs in 2007– Effect: does away with the need for 100 million old-fashioned
bulbs to be manufactured, packaged, shipped, bought, and discarded next year--and every year until 2012 or beyond
• Most of WMT’s goals slated out 4-5yrs
Do these companies “feel” green to you? Why?
Industrial Case Study: HP
• In general, HP..1. Owns “e-waste” recycling plants that shred discarded,
obsolete computer products into raw materials that are reused in the industrial food chain
2. Takes back computer equipment of all brands
3. All HP products are 100% recyclable
4. Promises to lower energy consumption 20% by next year
HP Campaign: Power to Change
“Power to Change”
• HP Philosophy: industry leadership is about an ongoing contribution to society
• Launched 6/09 by Leo Burnett– Modern, stylish, innovative, colorful, results-driven– Gives consumer autonomy and purpose– Taps into behavioral changes
• Quantitative– Tracks cumulative energy savings if turning off idle PCs when
not in use
• Method– Widget
• Commitment: must enroll & install– Gathers demographic information
» Enables campaign success metrics
Campaign Motives
• Small commitment yields large impact
– If 100,000 users shut down work computers each day, energy savings could total more than 2,680 kilowatts
– Reduce carbon emissions by 1,500 kilos/day
equivalent to removing 105 cars from the road/day
HP Recycling Campaign
Education at POS via Labeling
Energy Star labeling impacts Green Purchases 66%
Ex: HP Labeling
Greater Variety + Eco-labeling = Increased sales + Customer Loyalty
Recession
• Primary motivation– Save money in difficult times
• Consistent trends– Recycled paper– Green household cleaning products– Environmental safe laundry detergent
• This links to where people see the need but not know how to implement it
– Cloth grocery bags– Unplugging unused chargers
Geodemographic Segmentation
• PRIZM (Claritas, Inc.)• Cluster-analysis based • Residential neighborhoods• “Birds of a feather flock together.”
# Nickname HH's # Nickname HH's
1 Upper Crust 1,580,481 24 Up-and-Comers 1,386,087
2 Blueblood Estates 795,686 25 Country Casuals 1,473,101
3 Movers Shakers 1,835,521 26 The Cosmopolitans 1,087,462
4 YoungDigerati 1,309,575 27 Middleburg Managers 1,934,907
5 Country Squires 998,314 28 Traditional Times 2,872,735
6 Winner'sCircle 845,478 29 American Dreams 2,231,878
7 Money&Brains 1,888,898 30 Suburban Sprawl 1,623,648
8 ExecutiveSuites 1,268,469 31 Urban Achievers 1,951,203
9 BigFish,SmallPond 2,049,909 32 New Homesteaders 1,069,600
10 SecondCityElite 1,085,788 33 Big Sky Families 1,007,871
11 God's Country 1,352,638 34 White Picket Fences 1,121,855
12 Brite lites Li'l City 1,520,173 35 Boomtown Singles 1,537,145
13 Upward Bound 1,190,121 36 Blue-Chip Blues 1,173,086
14 New Empty Nests 1,046,019 37 Mayberry-ville 2,753,857
15 Pools & Patios 1,221,801 38 Simple Pleasures 2,621,647
16 Bohemian Mix 2,043,024 39 Domestic Duos 1,057,459
17 Beltway Boomers 754,924 40 Close-In Couples 1,139,269
18 Kids & Cul-de-sacs 1,341,192 41 Sunset City Blues 1,770,041
19 Home Sweet Home 1,947,149 42 Red White & Blues 2,146,003
20 Fast-Track Families 776,715 43 Heartlanders 2,097,708
21 Gray Power 1,059,216 44 New Beginnings 2,052,365
22 Young Influentials 1,856,004 45 Blue Highways 2,265,696
23 Greenbelt Sports 1,593,251 TOTAL: 107,748,645
Cohort Segmentation
• Simple age combination / aggregation into generational segments
• Message tailoring• Example of simplistic segmentation (Yankelovich and
Meer, 2006)
Cohort Segmentation
Pre-boomer Boomer I Boomer II Gen X’er N-Gens / Millenials
Energy efficiency means...
Turning off the lights
Avoid long lines for gas
Generally good
Latest technology
Web-based information
Approach to message…
Cohort Segmentation
Pre-boomer Boomer I Boomer II Gen X’er N-Gens / Millenials
Energy efficiency means...
Turning off the lights
Avoid long lines for gas
Generally good
Latest technology
Web-based information
Approach to message…
What can you do with this?
Segmenting Business Markets
NAICS Sector Title
21 Mining
22 Utilities
23 Construction
31-33 Manufacturing
42 Wholesale Trade
44-45 Retail Trade
48-49 Transportation and Warehousing
51 Information
52 Finance and Insurance
53 Real Estate and Rental and Leasing
54 Professional, Scientific, and Technical Services
55 Management of Companies and Enterprises
56 Administrative and Support and Waste Management and Remediation Services
61 Educational Services
62 Health Care and Social Assistance
71 Arts, Entertainment, and Recreation
72 Accommodation and Food Services
81 Other Services (except Public Administration)
Note: SIC NAICS
2002 NAICS code Meaning of 2002 NAICS code
Pur utilities, amount ($1,000)
Purch utilities, pct op ex (%)
Cost purch elect
($1,000)
Cost fuels ex motor ($1000)
444 Building material & garden equipment & supplies dealers S S S S
446 Health & personal care stores S S 739,631 S7213 Rooming & boarding houses S S S S7223 Special food services S S S 54,06072 Accommodation & food services 16,025,739 4.9 10,467,205 2,741,729722 Food services & drinking places 10,247,819 4.7 6,835,867 1,770,336445 Food & beverage stores 6,256,038 4.9 5,225,114 431,581721 Accommodation 5,777,921 5.4 3,631,338 971,3947211 Traveler accommodation 5,490,952 5.3 3,454,201 924,9677221 Full-service restaurants 5,041,593 5.1 3,220,361 988,0017222 Limited-service eating places 4,224,970 4.6 2,986,496 622,403452 General merchandise stores 3,107,606 3 2,677,861 205,100441 Motor vehicle & parts dealers 2,058,856 1.6 1,443,554 328,076447 Gasoline stations 1,890,742 5 1,483,551 105,753448 Clothing & clothing accessories stores 1,678,174 2.5 1,395,326 89,929453 Miscellaneous store retailers 971,225 2.4 712,375 130,804442 Furniture & home furnishings stores 881,288 2.3 645,623 101,676451 Sporting goods, hobby, book, & music stores
700,033 2.4 546,447 81,5687224 Drinking places (alcoholic beverages) 600,540 S 403,191 105,872454 Nonstore retailers 516,253 0.7 391,509 76,221443 Electronics & appliance stores 427,809 1.7 362,731 29,4077212 RV (recreational vehicle) parks & recreational camps
218,224 6.8 139,255 30,341
66,115,782 46,022,005 9,735,158
2002 NAICS code Meaning of 2002 NAICS code
Pur utilities, amount ($1,000)
Purch utilities, pct op ex (%)
Cost purch elect
($1,000)
Cost fuels ex motor ($1000)
QUARTILE ANALYSIS
444 Building material & garden equipment & supplies dealers S S S S
446 Health & personal care stores S S 739,631 S 7213 Rooming & boarding houses S S S S 7223 Special food services S S S 54,060 72 Accommodation & food services 16,025,739 4.9 10,467,205 2,741,729 24.2%722 Food services & drinking places 10,247,819 4.7 6,835,867 1,770,336 39.7%445 Food & beverage stores 6,256,038 4.9 5,225,114 431,581 49.2%721 Accommodation 5,777,921 5.4 3,631,338 971,394 57.9%7211 Traveler accommodation 5,490,952 5.3 3,454,201 924,967 66.2%7221 Full-service restaurants 5,041,593 5.1 3,220,361 988,001 73.9%7222 Limited-service eating places 4,224,970 4.6 2,986,496 622,403 80.3%452 General merchandise stores 3,107,606 3 2,677,861 205,100 85.0%441 Motor vehicle & parts dealers 2,058,856 1.6 1,443,554 328,076 88.1%447 Gasoline stations 1,890,742 5 1,483,551 105,753 90.9%448 Clothing & clothing accessories stores 1,678,174 2.5 1,395,326 89,929 93.5%453 Miscellaneous store retailers 971,225 2.4 712,375 130,804 94.9%442 Furniture & home furnishings stores 881,288 2.3 645,623 101,676 96.3%451 Sporting goods, hobby, book, & music stores
700,033 2.4 546,447 81,568 97.3%7224 Drinking places (alcoholic beverages) 600,540 S 403,191 105,872 98.2%454 Nonstore retailers 516,253 0.7 391,509 76,221 99.0%443 Electronics & appliance stores 427,809 1.7 362,731 29,407 99.7%7212 RV (recreational vehicle) parks & recreational camps
218,224 6.8 139,255 30,341 100.0%
66,115,782 46,022,005 9,735,158
Segmentation Conclusion:Three Reasons to Segment the Market
Better understand the customer
• Develop new products to meet needs of similar users.
• Create features that most segment members want.
• Message development: figure out what to say, so that they “get it” even if others don’t.
Reach customers more efficiently
• Get message to your customer with out wasting money on reaching others.
• Locate where your customers are.
Select the best target market
• Select customers with highest potential.
• Profitability (ability to buy)
• Loyalty – for long-term profitable relationship
Web 2.0 is changing the dynamic
Better understand the customer
• Develop new products to meet needs of similar users.
• Create features that most segment members want.
• Message development: figure out what to say, so that they “get it” even if others don’t.
Reach customers more efficiently
• Get message to your customer with out wasting money on reaching others.
• Locate where your customers are.
Select the best target market
• Select customers with highest potential.
• Profitability (ability to buy)
• Loyalty – for long-term profitable relationship
Things are changing
In politics: • 50% plus one. • Red states, Blue states
In marketing research:• Survey research• Sales analysis• Consumer testing, R&D cycle
In marketing plans:• Charge premium “Price”• More “Promotion”
In customer selection: • It’s easier to sell $10,000 to
one customer than to sell $1 to 10,000 customers.
• Some customers just aren't worth chasing.
Things are changing
In politics: • 50% plus one. • Red states, Blue states
In marketing research:• Survey research• Sales analysis• Consumer testing, R&D cycle
In marketing plans:• Promotion to everyone
In customer selection: • It’s easier to sell $10,000 to
one customer than to sell $1 to 10,000 customers.
• Some customers just aren't worth chasing.
In politics: • Everyone counts. • United States
In marketing research:• Qualitative observation• Analytics• Quick prototyping
In marketing plans:• Promotion to those ready to
respond
In customer selection: • It’s becoming easier to sell $1 to
10,000 customers. (Think i-tunes).
• More customers than you think are worth chasing.
Segmentation Conclusion:Three Reasons to Segment the Market
Better understand the customer
• Develop new products to meet needs of similar users.
• Create features that most segment members want.
• Message development: figure out what to say, so that they “get it” even if others don’t.
Reach customers more efficiently
• Get message to your customer with out wasting money on reaching others.
• Locate where your customers are.
Select the best target market
• Select customers with highest potential.
• Profitability (ability to buy)
• Loyalty – for long-term profitable relationship
Framing
In politics:• Senator Moyer missed 14 critical opportunities to vote on matters of
importance to her constituents.• Senator Moyer had a “99% perfect voting attendance record.
See: Tversky, A., and Kahneman, D. (1981). The framing of decisions and the psychology of choice. Science, 211, 453-458.
Framing
In retail promotion:• Hurry in and save $20.• Hurry in and save 20%.
Framing
In energy:• Lower your energy use and save the environment.• If you don’t lower your energy use, you won’t have an environment to
save.
Framing
In energy:• Lower your heating bill by 30% and save the environment.• Lower your heating bill by 30% and enjoy a vacation with the money
you save.
Framing
In class strategy session:• Three teams, five minutes• Come up with two alternativesways of framing the following:
“You should buy compact fluorescent bulbs instead of incandescent bulbs because _________________________.”
Assignment, due next class
• Marketing “best practices”
• Teams:1. Marketing Services
2. EES, EA, Clean Energy, REAP
3. Economic Development
4. New Technologies
• 10 pages, 10 minutes.
Summary
What did we learn today?
– Some key take-aways?– Some things you won’t forget?