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The Ideal Customer: How to find Your Million Dollar Target Audience

The Ideal Customer How to find Your Million Dollar Target Audience

Learn about: • Means-End Chain

Analysis • Ways to understand

your target audience for effective Marketing

• Value Segmentation • Attribution Theory

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The Ideal Customer: How to find Your Million Dollar Target Audience

What is Means-End Chain Analysis? - The Process and what we can Learn about Consumer’s Values

What is Means-End Chain Analysis?

A means-end chain analysis is a technique used to understand how values are linked to attributes in products and services.

The Process of a Means-End Chain Analysis

The process of a means-end chain analysis works as follows: A product is chosen to question a consumer about. Then, the consumer is asked which attribute of the product makes the consumer like the product. Then, the consumer is asked what the benefit of that attribute is. Fourth, the consumer will be asked which instrumental value will be served that makes the benefit important to the consumer. Finally, the consumer is asked about the terminal value (desired end state) they expect to achieve from usage or purchase of the product.

Consumer’s Values

A means-end chain analysis is supposed to inform marketers of which attributes are important in a product from the view of consumers. Furthermore, it is supposed to let marketers gain insight about consumers’ values, which direct consumer buying decisions and behavior. Finally, marketers can combine which product attributes are consistent with certain values that consumers have. With this information, marketers can develop products and services that will appeal to consumers’ values with the desired attributes found through a means-end chain analysis.

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The Ideal Customer: How to find Your Million Dollar Target Audience

How to Understand Your Target Market and Use this Information for Efficient Marketing

Understand Your Target Market via Their Lifestyle

One’s lifestyle is representative of one’s values and personality, which represent our internal state or characteristics. In contrast, a lifestyle is a pattern of behavior represented by one’s activities, interests, and opinions.

For example, one lifestyle could be an upscale, luxurious lifestyle. That lifestyle would be represented by one’s activities, interests, and opinions. For example, someone interested in the collection of old (car) classics. Their opinion is that there is nothing as fun as researching where to get a good deal on a classic (activity) and then purchasing it.

Obviously, only people that have the finances to follow such an interest are able to do so. Thus, the activities, interests, and opinions of this person would represent his or her upscale and luxurious lifestyle.

How to Collect this Data

There are various psychographic applications that are used in marketing research that combine consumers’ values, personality, and lifestyle variables, such as VALS, MindBase, and LifeMatrix. These applications collect consumer data about consumers’ values, personalities, and lifestyles by conducting consumer surveys asking questions, to which the answers will reveal something about the consumer’s values, personality or lifestyle to marketers.

We have the Data – Now what?

With that data, marketers can develop and design the most efficient marketing strategy or/and advertisement or even the best product offering that will meet consumer’s values and needs.

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The Ideal Customer: How to find Your Million Dollar Target Audience

Distinctive Values

Global values are the values at the broadest level, which can be divided into seven categories, called domains: restrictive conformity, self-direction, maturity, enjoyment, security, achievement, and prosocial behavior.

These domains of global values are then divided between instrumental values and terminal values. Instrumental values are values needed to achieve the desired end state. For example, some instrumental values under the domain ‘self-direction’ (which is a global value) are the attributes of being imaginative, logical, independent, intellectual, and broad-minded.

Terminal values are used in two ways: On one hand they represent the desired end state for which instrumental values are needed and on the other hand they represent the values (end states) that someone needs to achieve to reach a global value.

For example, one has to be cheerful (instrumental value) to lead a comfortable life, have pleasure, and happiness all of which are terminal values (one way the term is used). However to reach the global value of enjoyment, one has to have the terminal values of leading a comfortable life, having pleasure, and happiness (the second way the term is used).

Domain-specific values are values that are only relevant to particular areas, such as religion, family, or consumption. These values are not represented as any of the domains of global values and thus make up the difference between global values and domain-specific values.

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The Ideal Customer: How to find Your Million Dollar Target Audience

Value Segmentation and Attribution Theory: Targeting Different Social Classes

In one of reports Psychology of ConsumerBehavior - How Consumers make Purchase Decisions, I wrote about Consumers and how they base their purchase decisions on a broad set of psychological steps. It is important to understand these steps to create your marketing campaigns with this consumer behavior in mind. It also gives you some insight about building brand loyalty.

Although people all around the world make their decisions based on the same broad set of psychological steps, once you take your business to a global level, there are many things you need to consider when creating your international marketing campaign, some of which I wrote about in my post Taking Your Business to the Next Level - Global Business,International Marketing, International Target Audience and Cultural Differences- Global Logistics.

Understanding Your Target Market

Understanding the target market is a crucial aspect of the communication process. When companies launch a new product or change a current product, they try to promote this particular product to increase/maximize profits. Marketers can do that through a marketing communication process. Through mass media, such as television, newspapers or internet advertisement, a target market can be reached by the communication. The Marketing manager acts as the sender and with his/her form of the communication (it could be for example the advertisement on television), the “message” is encoded. The people who view the commercial on television (which is the message channel), decode the message by using their own interpretation. Interpretations can vary from individual to individual, because everyone’s personal experiences and current circumstances influence the way one interprets the message. Thus, messages can even be interpreted differently by the same person at different times.

Feedback

The only way that marketers (and essentially also companies) can know how their message has been received is by the feedback of the viewers. Because selling is only emphasized on the target market, it is most crucial for companies and marketers to understand the target market’s feedback in this communication process.

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The Ideal Customer: How to find Your Million Dollar Target Audience

This however is not an easy task. The target market starts a new communication process when leaving feedback by encoding their message, sending it through a message channel until the company or marketers receive the message and decode it, which has the risk of being misinterpreted as well. Hence, the communication process is quite difficult to understand correctly.

Because the target market determines the sales performance of a company, it is very important to understand the target market correctly. Feedback such as the words “I agree”, positive comments on internet web sites, many recommendations and a high sales rate of a product mean usually that the target market is providing positive feedback.

If the target market sends negative feedback, in the form of negative comments about the product or no sales activity for a given product, the marketers have to not only interpret the feedback as being negative, but also analyze and understand why the target market does not like the product.

In addition, marketers need to understand the target market in regards to consumer surveys. The answers/results need to be closely analyzed so that marketers can understand and predict purchasing behavior and develop products and services that will meet customer’s wants and needs and thus be high in demand, which in turn would lead to high profits.

Targeting Different Social Classes

It is important for companies to adjust their marketing strategy and develop different offerings for consumers in different social classes

Each social class usually has differing needs, wants, and consumption patterns. The upper class and upper middle class usually tend to invest more than people of other social classes. Other consumer behavior patterns among the upper class and upper middle social class that have been identified are that only half of the social class purchases gifts from upscale stores, while the remaining half buys gifts at regular stores. Furthermore, for this class the product characteristics determine the quality one assigns to a product rather than the price.

A distinct consumer behavior habit between the middle class and the lower class is for example that higher percentage of people in the middle-class subscribe to premium cable channels. One reason for this behavior is the financial factor, namely that more people in the middle class can afford the monthly payments for premium cable channels.

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The Ideal Customer: How to find Your Million Dollar Target Audience

Finally, homeless people who do not have shelter and often times much food, have significantly different values than people in the upper class for example. Homeless people will spend money primarily on food and shelter, which are their primary and basic needs. In contrast, since upper class consumers have shelter and food, they rather take it for granted and value luxurious items more.

There are many other distinct consumer buying habits that each social class has. And only with the knowledge of these differences, can a company develop an offering that will suit a targeted social class in their wants, needs, and expectations. Offerings that would be valued and affordable by the upper class, such as a Rolls-Royce car are not affordable for someone in the working class. Thus, other car models that will be affordable to the working class as well as meet their needs of commuting every day to and from work have to be developed.

To meet consumers’ values, needs, and expectations of all social classes, a company should develop different offerings for consumers in each social class.

Value Segmentation

Not only should a marketing strategy and/or an advertising campaign be adjusted to the social class one is targeting, but it can also be based on another factor.

Value segmentation, also known as Market Segmentation, is the process of identifying groups of consumers who have a similar or same set of values that differ from those of other groups.

Examples

One example is the market for cosmetics. Women who value luxury and price as well as brand name to be considered someone who values high quality and has the finances to purchase the product might buy a Lancome Definicils for $25, while someone who simply wants to lengthen and darken their lashes and doesn’t value the brand name or quality of the mascara might rather purchase the Maybelline Full’n Soft Mascara from Walmart for $7.

Another example would be the purchase of a cell phone. While some people, especially teenagers, will value for a cell phone to be “new”, and “trendy” as well as expensive and having the latest technology and thus purchase an iPhone for $450, another group of people might simply value the ability to communicate with a cell phone regardless of their location in the United States and buy an LG Rumor for $80.

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The Ideal Customer: How to find Your Million Dollar Target Audience

Another product market where value segmentation can be easily observed is the car-market. The group of people valuing their status as perceived by others might purchase an expensive Lexus or an Audi, while another group of people valuing the basic ability of transportation from one place to another will buy an inexpensive Toyota that will meet their needs.

Segmentation Examples

Geographic

Selling inflatable water toys, swimming noodles, surfboards, and other water sports and water related products next to coasts and beaches (a geographic areas). They do sell some everywhere at Walmart, even in North Dakota, but when you go to Florida, you can find them in every single store.

Demographic

Age: Adult diapers are age-specific and are usually marketed to older people who are in their sixties and older.

Gender: Barbies and dolls are segmented for girls. Swords and guns are marketed for boys.

Income: The Dollar Tree tries to appeal to low-income customers by marketing each product for only one dollar.

Ethnic: Theme parks and travel agencies target specifically multicultural consumers.

Family Life-Cycle: Jewelry stores market engagement rings to men that are in a relationship but not married yet.

Psychographic

Personality: Cell phones are marketed to appeal to a person’s personality. There is cell phones that would fit to someone’s wild personality as well as some that are very conservative with their technology and would fit to someone with a shy personality.

Motives: Guns appeal to consumers’ motives of fear. Women usually buy guns to feel protected.

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The Ideal Customer: How to find Your Million Dollar Target Audience

Lifestyle: DSK8 is a store to appeal to skaters with clothing and accessories that would fit into their lives.

Geodemographics: K’s Café focuses on specifically appealing to that town’s breakfast and lunch needs.

Benefit

GNC segments its products according to the benefits that consumers are seeking: Losing weight, gaining muscle, gaining strength are just some examples of how the products appeal to consumers with different benefit expectations of these products.

Usage-rate

Organic stores usually focus on high retention rates of their heavy-users, since most people who do have an organic approach find a store that they are loyal to and return to every time.

Attribution Theory

Customer Satisfaction and Dissatisfaction

Attribution theory implies that consumers tend to evaluate a product that does not meet consumers’ expectations and one’s own feelings toward it (either dissatisfaction or satisfaction) based on three factors: Stability, Focus, and Controllability. If the cause of the product “failure” is temporary (Stability), consumers will most likely not be dissatisfied and vice versa. If the problem is market related rather than consumer related (Focus), consumers are more likely to be dissatisfied, because the product itself has an underlying product. If the problem was consumer related, it would be handled and possibly fixed on an individual basis. Finally, if the problem is under the customer’s control rather than the marketer’s control, customers tend to be not dissatisfied, because they will not “blame” the marketer for the problem.

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The Ideal Customer: How to find Your Million Dollar Target Audience

Personal Examples

Dissatisfaction

I booked a flight through Priceline from Fargo to Raleigh in North Carolina for a business conference in January of 2010. Usually, it never snows in Raleigh, but on the second day of the conference, it snowed so much that the people in North Carolina did not know how to “behave” in this weather (particularly traffic), so they cancelled all of the flight from Raleigh-Durham Airport. Because the problem was temporary and not controllable by the marketer (Priceline), I was not dissatisfied with Priceline.

However, when it came to rescheduling our flight to the next possible flight, the staff with Priceline was not helpful and after three hours on the phone with different staff and management personnel, they were still telling me that I would not be able to fly out until Monday night (that was on Saturday and the original return flight was scheduled for Sunday early morning). Because this was a permanent problem with Priceline (I have had many negative experiences with them) and it was controllable (as it turned out later when I did get a flight on Sunday) by the marketer and further was consumer related, I was very dissatisfied.

Satisfaction

In August of 2008, I bought a surround sound system from Samsung. Only a few months later, the surround sound system stopped playing the DVD in the middle of a movie, because as I found out later, the little “needle” that scrolls over DVDs to play them got off-track. It turned out that this problem was consumer related and I simply had ‘bad luck’ picking exactly this surround sound system. The problem was only temporary (I received a new surround sound system in exchange) and it was not under the marketer’s control, I was not dissatisfied with the product or the marketer.

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The Ideal Customer: How to find Your Million Dollar Target Audience

If you have any questions or suggestions regarding target audience marketing or any other related topic, feel free to comment below.

Information About Your (Targeted) Customers

I have created this worksheet for you to download to help you learn more about your customers.

Who Are My Customers Worksheet

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