Since the customer is the cornerstone of marketing, it is imperative to answer these two questions: Who are our customers? What do we know about them? This section of the marketing plan delves into market research, market segmentation, target marketing, and consumer behavior.
Market research is the systematic process of collecting, analyzing, and reporting information to enhance decision making throughout the marketing planning process (Shank 2005). Market research is used to answer any number of questions about products and customers, including the following:
Product Information Needs
- What do customers want from our products?
- How do they view our products?
- What products do they use?
- How big is our market?
- Where and when do customers register for programs?
- How often do they participate in programs?
Customer Information Needs
- What is the customer’s contact information (e.g., name, children, age, address)?
- How far do customers drive to use our products?
- Where do customers hear about our products?
Market research data are either primary or secondary. Primary data come directly from consumers. Data can come from surveys, interviews, observations, focus groups, or Internet surveys. The process for collecting these data is much like that for collecting evaluation data (see chapter 4). Secondary data, on the other hand, are compiled by market research firms and are available for purchase. These data include demographics, psychographics, product use, advertising preferences, and so on.
Primary data can come from internal and external sources. Good sources of internal data come from registration systems because customers must complete basic information about themselves and their families. Amazon.com tracks purchases for customers logging into their accounts. Amazon asks for basic demographic data, tracks purchases, and then recommends books or materials that are similar to those of past purchases. Customer loyalty cards are another source of information. Grocery stores promote these cards as a way of giving discounts, but they are really using the cards to track purchases and gain a demographic profile of purchasers and their products. External primary data can be gathered from the Census Bureau, a local chamber of commerce, or libraries. Much of these data are demographics, but demographics can prove valuable when determining the target market.
Market research is essentially gathering data so that marketing decisions can be made. Without data on customers, good decisions become guesses. Poor guessing results in wasted resources.
Market Segments and Target Markets
Market research provides the ability to segment markets. Market segmentation is the process of dividing a large and heterogeneous group of people into smaller, more homogenous groups with similar wants, needs, and demographic profiles. Market segments divide the population into groups who are likely to respond to a certain marketing mix (Mullin, Hardy, and Sutton 2007). Target marketing then selects one or more of the market segments to direct its efforts toward.
Some parks and recreation agencies, especially those in the public and nonprofit sectors, feel they must provide services for everyone. Thus they direct their marketing efforts to the general public instead of a targeted group. Known as mass marketing, this approach is often a waste of resources. Selecting a target market does not mean that people outside the target market are excluded from participating. Target marketing means that the marketing mix is aimed at a group of people most likely to participate and most likely to respond to that particular marketing mix. For example, the Manhattan Beach Parks and Recreation Department in Manhattan Beach, California, offers a trip to the Catalina Silent Film Festival. The trip is designed and promoted as a trip for people 55 years or older, but this does not mean that a 50-year-old would be excluded from the trip (City of Manhattan Beach 2009).
There are five bases of segmentation, or means to segment a market. These are demographics, geography, psychographics, behavioral characteristics, and benefits (Hurd, Barcelona, and Meldrum 2008).
Demographics are characteristics used to define a population. They include age, race, family income, and education level, among others. Demographic data are relatively easy to access through the Census Bureau and are commonly used by many parks and recreation agencies. For example, the Burlington (Connecticut) Parks and Recreation uses age to classify its programs (Burlington Parks and Recreation 2010). Its brochure has activities for children and youths, adults, and older adults.
A second segmentation base, geography, focuses on geodemographics and proximity. The premise behind geodemographics is that people who are similar in income, culture, and perspectives naturally gravitate toward one another. Once these people move to their neighborhoods, they become even more alike and share similar consumer behaviors (Carroll 2009). When a store asks for your zip code when you make a purchase, it’s using geodemographics as a segmentation technique.
One example of segmentation is the PRIZM lifestyle segmentation system, which divides every U.S. neighborhood into 1 of 62 clusters. Variables such as demographics, lifestyle, urbanization, and socioeconomic status are used to cluster these neighborhoods. Here are few examples of the clusters (Claritas 2000):
- Blue Blood Estates—People aged 45 to 64, predominantly White and Asian, established executives, old-money heirs, used to luxury and privilege, one-tenth are multimillionaires.
- Urban Gold Coast—People aged 45 to 64, predominantly White and Asian, highly educated, live in urban apartments and condos, few have children or own cars, very busy and affluent, many live in places like New York City.
- American Dreams—Mixed age and ethnically diverse, immigrants, descendents from multicultural backgrounds, multilingual neighborhoods, married couples with and without children, high school education with some college, work in trades and public service jobs.
Another common geography-based segmentation strategy is proximity, or how close people live or work to a service. A person living or working 10 minutes from a fitness center is more likely to use that location than someone 30 to 40 minutes away (especially if there are other options that are closer). Some agencies locate facilities based on proximity so as to serve an entire community. For example, the Houston Parks and Recreation Department has a multitude of branches because it serves such a large community. Today, the Houston Parks and Recreation Department manages 350 parks and 56 community centers located throughout the city to accommodate its users (Houston Parks and Recreation Department 2009).
A third base of segmentation is psychographics. Psychographics are lifestyle and personality descriptors. There is a relationship between lifestyle and consumer behavior (Fullerton 2007), so people with similar lifestyles buy similar products. Lifestyle descriptors are often categorized as activities, interests, and opinions. Table 11.2 depicts psychographics that can be used to segment a market.
Behavioral characteristics are based on the product consumption habits of the consumers, the skill level of the users, and the product loyalty of the consumers. Agencies must be cognizant of use levels and understand how products should be offered to meet the needs of a multitude of user levels. Think about how companies are increasingly recognizing their high-level users, such as with the Hilton Honors rewards program and airline frequent-flier miles. The Chicago White Sox offer a variety of ticket packages, including a single-game package, a seven-game package, and season tickets. Also, for mid- to high-level users they offer premium seating in areas such as the LG Skyline Club, Jim Beam Club, and Diamond Suites. High-level users who purchase season tickets also receive many benefits such as gift packages, lower-priced parking, resell opportunities, and discounted suite prices (Chicago White Sox 2009).
Here are a few things to keep in mind when segmenting by behavioral characteristics (Mullin, Hardy, and Sutton 2007):
- It is wise to offer programs at all use levels so that light users can possibly increase to medium or heavy use over time. This ensures a steady stream of users.
- Levels of consumption will vary from product to product and by age group.
- Sales volume is more likely to increase by moving light and medium users up to medium and heavy users than by attracting first-time users.
Understanding the skill level of consumers is valuable in knowing what products to offer to meet their needs. Agencies can offer softball leagues for various skill levels or golf leagues for various golf handicaps.
Finally, markets can be segmented by product benefits, because consumers seek certain qualities in a product. For example, Nike has shoes for basketball players, dancers, lacrosse players, and walkers. Each line of shoes offers the benefits the consumer is seeking. For instance, the lacrosse shoes offer traction, comfort, support, and speed. Trek makes bikes for roads, triathlons, mountains, and bike paths, among others. Each bike has unique features, from the size of the tire and seat to how upright the rider sits. These two companies thus use benefits as one way to segment their markets.
Combining Segmentation Methods
Most agencies use one or more of the five market segmenting methods. The more data the agency has, the more able it is to select the best market and to utilize a marketing mix to reach that market. Once the market is segmented, the agency selects which market to target. Market segmentation and target marketing are keys to all aspects of marketing and ensure that agency resources are put to best use. Haphazard marketing and mass marketing rarely attract the number of consumers sought.
Consumer behavior involves the decision making and buying patterns of users. Although much information can be gathered through the segmentation process, there is still the matter of how customers decide to buy the products they buy. Understanding consumer behavior is enhanced by knowing the consumer decision-making process.
Consumers move through a four-step decision-making process (figure 11.4). First, they identify a need through media exposure, friends, family, self-awareness, or environmental factors. Next, they seek ways to meet the need through products and services, and they evaluate their options. Once the options are evaluated, they make a purchase or experience a service. Afterward, the product or service is evaluated. Customers evaluate their satisfaction with the purchase decision and weaknesses of this choice. People mentally perform a cost–benefit analysis, measuring the costs of the product (such as time or money) in relation to the benefits they receive. If the benefits outweigh the costs, the consumer is satisfied with the product purchase. If the costs outweigh the benefits, then the consumer is dissatisfied.
Marketing can affect all levels of the consumer decision-making process. For example, an agency can launch an advertising campaign to convince a potential consumer that a need exists, can make information readily available so the customer can make an informed decision about which product to buy, can make the purchase easy and can build the anticipation of the experience via e-mail messages or photos of past experiences, and can send reminders of the experience that has passed by giving certificates, providing photos, or making phone calls to follow up on the experience.
The customer analysis part of the marketing plan is all about market research and gathering data that provide insight into who the customer is, how to segment the market, and how the customer behaves. These data are the impetus for the next section of the marketing plan.