Topic 2.1 · Marketing to Customers
Marketing to Customers
How marketers collect customer data, segment markets, build customer profiles and relationships, and manage the privacy risks that come with data.
Learning objectives
- 2.1.AExplain why and how marketers collect customer data.
- 2.1.BUse market segmentation to identify target customers and develop a customer profile.
- 2.1.CDescribe the purpose of building customer relationships and develop a plan to build customer relationships.
- 2.1.DExplain how the collection and use of customer data may make customers vulnerable to privacy infringement, identity theft, and fraud and create risks for businesses.
Objective statements © College Board, quoted from the Course and Exam Description.
Marketing is much more than advertising. It covers everything a business does to identify customers' problems, needs and wants, and then to promote, sell and deliver products that meet them. Good marketing starts with good customer data.
What data marketers collect, and how
| Type | What it describes | Examples |
|---|---|---|
| Demographic | Measurable facts about a population | Age, sex, race, ethnicity, income, location |
| Psychographic | How people think and behave | Interests, activities, values, lifestyles |
Businesses gather this data with digital tools (subscriber lists, online accounts, click-tracking, tracking apps, social-media monitoring), with traditional research (surveys, interviews), and by buying data from other businesses.
Segmentation, targets and profiles
- Segment the market into groups with shared characteristics.
- Choose target customers: the segment most likely to buy because of its needs and preferences.
- Write a customer profile: a fictional, specific person who represents the target.
Focusing on a target is usually more effective and less costly than trying to appeal to everyone, because product design, branding, pricing and advertising can all be tailored.
Key terms
- Marketing
- All the activities businesses undertake to identify customers' problems, needs and wants and to promote, sell and deliver products.
- Demographic characteristics
- Measurable qualities of a population such as age, sex, race, ethnicity, income and location.
- Psychographic characteristics
- Cognitive and behavioral factors such as interests, activities, values and lifestyles.
- Market segmentation
- Grouping potential customers into segments based on shared demographic and psychographic characteristics.
- Target customers
- The buyers most likely to purchase a specific product because of their needs, wants and preferences.
- Customer profile
- A fictional description of one sample target customer, combining demographic and psychographic data with their needs, wants and preferences.
- Customer acquisition cost (CAC)
- Total marketing, advertising and sales costs of acquiring customers divided by the number of customers acquired.
- Customer lifetime value (CLV)
- The estimated amount a customer will spend on a business's products over time.
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