Once the variables that form a lucrative cluster of customer base for the product is identified, advertising campaigns are decided to target those customers. The E-marketer arrives at the second stumbling block here “portals”. Portals have the most popular URLs on the web today. They claim to be a one-stop solution for anything and everything that the netizen looks for. For the netizen it means less URLs to remember and a place to meet people & socialize. It could have, in most probability, also been the place of a successful electronic transaction before, quelling his/her security concerns. Although portals deny their comparison with the supermarkets of the real world, they are doing just that right now. A portal is not exactly a marketers’ paradise. He would rather prefer sites, which have a niche target audience in sync with his requirements.
The next step is to select segments for targeting online that are most attractive in terms of growth and profitability. These may be similar or different from the segments targeted offline. Some examples of customer segments that are targeted online include:
- the most profitable customers – using the Internet to provide tailored offers to the top 20 per cent of customers by profit may result in more repeat business and cross-sales;
- larger companies (B2B) – an extra-net could be produced to service these customers, and increase their loyalty;
- smaller companies (B2B)- large companies are traditionally serviced through sales representatives and account managers, but smaller companies may not warrant the expense of account managers. However, the Internet can be used to reach smaller companies more cost-effectively. The number of smaller companies that can be reached in this way may be significant, so although individual revenue of each one is relatively small, the collective revenue achieved through Internet servicing can be large;
- particular members of the buying unit (B2B) – the site should provide detailed information for different interests which supports the buying decision, for example, technical documentation for users of products, information on savings from e-procurement for IS or purchasing managers and information to establish the credibility of the company for decision makers;
- customers who are difficult to reach using other media an insurance company looking to target younger drivers could use the Web as a vehicle for this.
- customers who are brand-loyal services to appeal to brand loyalists can be provided to support them in their role as advocates of a brand;
- customers who are not brand-loyal – Conversely, incentives, promotion and a good level of service quality could be provided by the web site to try and retain such customers.
Such groupings can be targeted online by using navigation options to different content groupings such that visitors self-identify. This approach has potential for subsidiary navigation on other sites. Other alternatives are to setup separate sites for different audiences. Once customers are registered on a site, profiling information in a database can be used to send tailored e-mail messages to different segments.
The most sophisticated segmentation and targeting schemes are often used by E-retailers, who have detailed customer profiling information and purchase history data and they seek to increase customer lifetime value through encouraging increased use of online services through time. However, the general principles of this approach can also be used by other types of companies online. The segmentation and targeting approach used by E-retailers is based on five main elements which in effect are layered on top of each other. The number of options used and so, the sophistication of the approach will depend on resource available, technology capabilities and opportunities afforded by the list:
1. Identify customer lifecycle groups:
As visitors use online services they can potentially pass through seven or more stages. Once companies have defined these groups and setup the customer relationship management infrastructure to categorize customers in this way, they can then deliver targeted messages, either by personalized on-site messaging or through E-mails that are triggered automatically due to different rules.
First time visitors can be identified by whether they have a cookie placed on their PC. Once visitors and then registered, they can be tracked through the remaining stages. Two particularly important groups are customers who have purchased one or more times. For many e-retailers, encouraging customers to move from the first purchase to the second purchase and then onto the third purchase is a key challenge. Specific promotions can be used to encourage further purchases. Similarly, once customers become inactive, i.e. they have not purchased for a defined period such as 3 months, they become inactive and further follow-ups are required.
2. Identify customer profile characteristics:
This is a traditional segmentation based on the type of customer. For B2C e-retailers this will include age, sex and geography. For B2B companies, this will include size of company and the industry sector or application they operate in.
3. Identify behavior in response and purchase:
As customers progress through the lifecycle, by analysis of their database, they will be able to build up a detailed response and purchase history which considers the details of frequency, monetary value and category of products purchased.
4. Identify multichannel behavior (channel preference):
Regardless of the enthusiasm of the company for online channels, some customers will prefer using online channels and others will prefer traditional channels. This will, to an extent be indicated by RFM (recency, frequency, monetary) and response analysis since customers with a preference for online channels will be more responsive and will make more purchases online. Drawing a channel chain for different customers is useful to help understand this. It also useful to have a flag within the database which indicates the customers channel preference and by implications, the best channel to target them by. Customers that prefer online channels can be targeted mainly by online communications such as e-mail, while customers who prefer traditional channels can be targeted by traditional communications such as direct mail or phone.
5. Tone and style preference:
In a similar manner to channel preference, customers will respond differently to different types of message. Some may like a more rational appeal in which case a detailed e-mail explaining the benefits of the offer may work best. Others will prefer an emotional appeal based on images and with warmer, less formal copy. Sophisticated companies will test for this in customers or infer it using profile characteristics and response behaviour and then develop different creative treatments accordingly. Companies that use polls can potentially use this to infer style preferences.
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.
E-marketers select among the following four targeting strategies:
- 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.
- Micro-marketing; 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. The Internet is ideal for gathering people with similar interests and tasks into communities.
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. In discussion groups, users feel part of the site by posting their own information and responding to other users. For example, 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.