Brand custodian: Maggie Wong, director and general manager, Canon Hong Kong
Treated by the user-friendly photo shooting function, the quick rise of Smartphone eclipses the development of digital camera market.
“Consumers’ preference and behaviours have shifted. They now prefer Smartphone for capturing snapshots at the expense of digital cameras,” Wong says.
The mid to low-range DC market has been increasingly competitive, she says, due to the rising smartphone dominance.
“Demand has been dropping mainly due to the threat from the more user-friendly photo function from Smartphone. The whole DC market size is shrinking.”
Canon looks to develop a new market with kids segment for the model IXUS and to become the first optical maker to extend its franchise into kids segment.
“In Canon, we always carve out new market in order to stay competitive. For example, we explored the realm in female photo shooting culture with a series of TV commercials a few years ago when taking photo were still percept as man activity. Then last year we started to open up a new market targeting parent-to-be, as youth segment is quite saturated. The results were proven successful,” explains Wong.
Kids segment is an under-developed market, Wong says. Throughout the past year Canon is trying to extend its target segment from parent-to-be to parent with kids, targeting mainly 5-9 years old and their parents.
“We noticed that parents are more willing to buy DC for their kids than Smartphone for its pure use of photography function. Kids photography is an untapped segment in DC market that our competitors haven’t explored yet.”
Phase one – raise awareness on kids photography in a soft approach
The first phase is all about opening up the target segment by provoking kid’s interest and passion on photography. To do so, Canon adopts an engagement journey to foster the kids photography culture in Hong Kong, spanning varies media and platform. It kicks off with a kids photo competition targeting parents and kids.
Dubbed Kidictionary, the three months contest asks participants to interoperate an ordinary word in a creative way through photography, and then to share online and social media.
“Many parents nowadays like to share photos of the life of their kids on Facebook. The contest does not only aims to provoke kid’s interest in photography, but also awaken parent’s interest through parent-child interactive activity.”
In order to drive better engagement, the company plants the seed via key opinion bloggers and online advertising to draw eyeballs. The competition updates were also sync with Facebook to create viral effect. Other than that, free photography related content were also provided on the campaign site to induce revisit.
“Hard selling no longer could be relied upon to deliver brand message. To open up a new market we need to adopt a soft approach. This is critical especially in the introduction phase.”
Phase two – Further implanting the idea of photography into kids mind in-depth
Targeting middle income families, the second phase aims to tight the brand closer to its target customers with an eight episode TV programme “Canon IXUS Kids Snapping” on Now TV and RoadShow, teaching audiences some tricks of photographing.
“Referencing on the success of the popular Now TV series ‘Jr chef corner’, our TV programme hooks with our target customers easily as they tend to be excited about participating in the TV show and seeing themselves on television.”
Apart from TV programme, the campaign has also pulled in some in-school workshops and photography courses to provoke the kids interest in photography.
“Opening a whole new segment is not of a short term task but a long journey. The purpose of all the efforts on this stage is to create a culture of kids photography, planting a seed for a long-tail business opportunity.”
The campaign website has pulled in 3,559 (64.3% ) new visitors and 1,976 (35.7%) returning visitors. In total, the site recorded 5,535 visitors per month and over 180 per day. Total submission on the “Kidictionary” has reached 344 and 348 users.
The campaign has also gained 40% market share on low-end DC compared to last year (according to GfK index ended October).
“The campaign has sufficiently achieved our key objectives of expanding our target market, building engagement with our new target segment of parents and kids,” Wong concludes and adds phase three next year will be more product-oriented.
Campaign: Canon Kidictionary
Client: Maggie Wong, director and general manager of Canon Hong Kong and the marketing department
Media: Mindshare Hong Kong
Creative agency: Draftfcb Hong Kong
Creative director: Iris Lo, Joseph Mok, Law Chi Hang
Writer: Daat Lai, Law Chi Hang
Art Driector: Arthur Tse, Wing Tsang,Tonkie Chan,Joseph Mok
Client Service: Daniel Chan,CY Kwan, Ivan Choi
Illustrator: Lio Yeung, Jacky Tong
Photographer: Karon (R Workshop)
Typographer:Wing Tsang, Tonkie Chan
Print Production: Bill Lam
How to Segment Your Target Market: A Porsche Success Story
How to Segment Your Target Market Successfully: A Porsche Case Study
Those of us in marketing are faced with the challenge of trying to improve our marketing strategy with tactics that resonate with our target market. Porsche provides a very successful example of how they segment their target market effectively and achieve bottom-line results.
Porsche has taken on an incredibly challenging goal of retaining its heritage and attracting a younger and more female audience using segmentation. Using segmentation, Porsche can reach this target audience and create messages and products that resonate with each segment.
Ultimately, segmentation provides Porsche the ability to reposition the brand without losing its core customers.
Porsche the Car, the Myth, the Legend
If you are anything like me, you grew up with pictures of the 911 and 944 in your room daydreaming of driving one of these mythical vehicles. No doubt this image included you wearing sunglasses with the top down feeling the wind in your hair and listening to your favorite tunes.
Porsche represents an ideal, a lifestyle that a lot of us aspire to become.
So, how does Porsche make us feel this way and achieve the level of success in the automotive industry?
One of the most significant reasons behind Porsche’s success is their approach to their target market that includes how the company performs market segmentation, market targeting, and positioning.
I think it’s important to give the background on Porsche to provide a thorough understanding of the subject matter. Porsche is a global market leader in the premium segment of the automotive industry currently the most profitable automotive brand in the world.
The company was founded in 1931 by Professor Ferdinand Porsche in Stuttgart, Germany building motors, designing vehicles, and consulting. Porsche designs, manufactures, and markets sports cars, crossover utility vehicles, and automobile parts worldwide.
Porsche also offers services through its operating divisions and subsidiaries, including Porsche Design Group, Porsche Engineering, and Porsche Consulting.
Photo by Basheer Tome http://bit.ly/1vxgWil/CC
Porsche and Volkswagen’s Other Brands
On August 1, 2012, Volkswagen Ag purchased Porsche operating it as a subsidiary (brand) in its automotive division. It came as somewhat of a surprise that Volkswagen owns brands you may not directly associate with their brand. Volkswagen also owns:
- Ducati (motorcycles)
Porsche performs target marketing concentrating on the consumers the organization has the strongest potential to satisfy. Porsche performs effective target marketing by:
- Identifying and profiling different consumer groups with differing wants and needs (market segmentation).
- Choosing one or multiple segments to target (market targeting).
- Communicate and establish the unique product/service offerings of the organization in the mind of the consumer (positioning).
Porsche markets to an elite and upscale target audience effectively using market segmentation, market targeting, and positioning continuing to build on its strong brand focused on products exclusively in the premium (luxury) automotive segment.
Philip Kotler provides a quote that summarizes Porsche’s approach and provides guidelines for target market segmentation in general:
“If markets are to be segmented and cultivated, they must meet certain requirements. Segments must be Measurable, Substantial, Accessible, Differentiable, and Actionable.” – Philip Kotler
Automotive Industry Segmentation
The automotive industry has approximately 23 different segments according to J.D. Power and Associates. J.D. Power and Associates do not include segments for vehicles from brands, such as Maserati, Ferrari, Lamborghini, Bentley, Rolls-Royce, Fisker, McLaren, and others.
Most of these brands compete with Porsche in varying degrees along with more traditional luxury brands, such as BMW, Mercedes, Lexus, Audi, Infiniti, Land Rover plus others.
J.D. Power and Associates classifies Porsche, BMW, Mercedes, Lexus, Audi, Infiniti, Land Rover plus others as part of the premium segment.
The automotive industry segments consumers based on demographic data, geographic information, and a psychographic profile of consumer behaviors with marketing messages targeted to these groups.
Porsche’sMarket Segment Strategy
The product lineup for Porsche includes:
- 911 in the midsize premium sporty car segment
- 718 Boxster in the compact premium sporty car segment
- 718 Cayman in the premium sport coupe segment
- Cayenne in the midsize crossover utility vehicle (CUV) segment
- Macan (latest addition) in the compact CUV segment
- 918 Spyder(latest addition) in the open-top super sport car segment
Macan Photo by Motorblog
The price of a Porsche ranges from approximately $50,000 to $845,000 with segmented price points based on the model selected.
The basis of market segmentation for Porsche involves dividing a market according to defined smaller easily defined group of consumers with the same wants and needs.
Descriptive and Behavioral Elements
Porsche identifies segments to target using two variables including, descriptive elements and behavioral elements.
Descriptive elements include demographic, psychographic, and geographic.
Behavioral elements include individual responses to brands, usage, and benefits.
Porsche segments markets based on five critical elements required to evaluate a segment. These elements include ensuring a market segment is measurable, accessible, substantial, differentiable, and actionable.
Demographic segmentation is a form of market segmentation involving dividing a market on the basis of descriptive elements. Data provides Porsche with a distinguishable way to measure variables of a market estimating the market size and the media to use to reach the market segment. Demographic segmentation is based primarily on income, age, gender, education, occupation, and social class.
The demographic of the Porsche owner, includes a college graduate, household income over $100,000, 85% male, and 15% female. The typical Porsche owner is 40 years old and up with Porsche targeting the 25-54 age demographic seeking a slightly younger audience with the “Engineered for magic, every day” campaign.
Targeting a Younger Audience and Females
Photo by Martin de Witte
The age demographic rose from an average age of 48 in 2007 to an average age of 51 in 2012. Porsche’s targeted marketing efforts focus on reducing the average age of the Porsche owner and increasing the number of female owners.
Porsche provides an example of an automotive icon focusing on demographics using age and gender. The “Engineered for magic, every day” campaign, in part, targets women with an image of a mother in a Porsche 911 in front of a school with the text reading school bus.
Additionally, Porsche uses tennis star Maria Sharapova as a spokesperson to engage a younger female audience. The results in the last two years indicate a growth from 8% to 15% in female purchasing the Cayenne CUV and Panamera four-door sports sedan primarily.
Psychographic segmentation uses psychology to increase understanding of consumers’ wants and needs. Porsche uses a psychographic segmentation approach dividing the segment based on behavioral elements, such as psychology, lifestyle, personality traits, and values to gain deeper insight of the consumer. The same demographic can possess different behavioral elements.
Customizing Messages to Specific Psychographic Profiles
Psychographic profiling provides Porsche with the ability to customize the messaging to target the specific psychographic profiles developed by Porsche.
- The top gun profile consists of an ambitious and driven individual who cares about power and control expecting to be noticed.
- The elitist profile, includes an individual from old money (blue blood), has the attitude a car is just a vehicle and not an expression of a person’s personality.
- The proud patrons owner profile sees a Porsche as a trophy considering it a reward for hard work with ownership as the main goal not being noticed.
- The bon vivants profile consists of thrill seekers and jet setters with the Porsche as a means of excitement.
- The fantasist profile sees the Porsche as a form of escape and does not care about impressing others.
Porsche has added another profile consisting of individuals enjoying a sporty vehicle for daily use by women and younger drivers with the latest marketing campaign, “Engineered for magic, every day”.
Porsche uses a traditional geographic segmentation approach grouping markets based on countries, continents, regions, states similar to other worldwide automotive brands. Porsche is a global brand with dealerships located on every continent in major cities.
In the United States dealerships are located in major cities with the manufacturer dividing the market into four regions (north, south, southwest, northwest).
Porsche varies the product mix offered by dealerships within each region. As an example, the dealers in the warmer south and southwest regions offer a higher percentage of convertibles in the product mix versus the north and northwest regions in the United States with marketing following suit.
Creating New Segments
Photo by Alexandre Prévot
In 2003, Porsche launched the Cayenne creating the first sports utility vehicle with luxury and high performance. Porsche’s introduction of the Cayenne created a new market segment in an attempt to expand the brand. The introduction of the Cayenne has resulted in a vehicle that accounts for half of Porsche’s profits.
In 2009, Porsche launched the 2010 Panamera a four-door sports coupe based on the market research department identifying a need for a sporty four-door that drives like a sports car. The Panamera is the first of its kind creating a new segment of the four-door luxury sports car.
Porsche’s effort to move outside of the sports car niche with the Cayenne and Panamera product launches have stimulated demand resulting in increased sales for the brand. The Panamera and Cayenne have proved to be effective brand extensions appealing to a wider audience by offering unique product offerings.
Market targeting involves Porsche evaluating the viability of each market segment and deciding which segment or segments to pursue (target). Porsche uses a hybrid market targeting strategy focused on a large share of the premium sport car and sport CUV segment using a finely tuned marketing mix based on marketing messages tailored to Porsche’s psychographic segmentation.
The “Engineered for magic, every day” campaign uses a niche concentrated marketing approach tailored to change position slightly. Porsche is trying to change the perception that a Porsche is an everyday vehicle appealing to a larger audience to increase sales. Porsche targets consumers at differing performance and price levels in the premium sport car and CUV market segment.
Porsche offers high-quality products for a premium price with various price points for the products in their lineup. The Porsche brand is a lifestyle brand because of its legendary status and attributes associated with their products.
Porsche achieves the ultimate goal of locating a brand in the consumers’ mind differentiating it in terms of attributes or benefits, quality, price, and use or user to maximize the brand. Porsche positions itself as a high priced, high quality, exclusive sports car.
Focusing on the premium (luxury) segment with sports cars (five segments) and crossover utility vehicles (two segments), Porsche provides the consumer with a frame of reference for the company. Porsche offers a distinct product in each vehicle segment. The Boxster, 911, Cayman, and 918 Spyder provide the vehicles traditionally associated with Porsche.
The Porsche brand evokes primarily consists of exciting, sporty, beautifully designed, performance, and German engineering. Other attributes commonly associated with Porsche, include quality, powerful, highly sophisticated, style, purity, very exclusive, exotic, racing heritage, and elegant.
The benefits associated with Porsche, include excitement, performance, achievement, success, status, and high income.
The Porsche product lineup offers products that are more fun to drive and faster than any competitor in the segment providing the latest technology with a historic culture making the brand impossible to imitate.
Porsche’s legendary association with racing and numerous appearances in television, movies, and books gives Porsche a unique position in the automotive industry and automotive history. Porsche with 70% of all vehicles built by the company still in operation provides indisputable evidence of their unique position.
Points of Parity
Porsche has points of parity with the American performance vehicles, such as the Chevrolet Corvette and the Dodge Viper. A segment of Porsche products also have point-of-parity with Cadillac, when comparing United States luxury vehicles.
Porsche’s German design, performance, and engineering along with its racing heritage provide a point-of-difference on performance compared to the competition. The tagline used by Porsche in the past “There is no substitute” sums up the iconic brand immortalized in the movie Risky Business starring Tom Cruise.
Repositioning the Brand
In an effort to reposition the Porsche brand to expand into different, but similar markets the company has introduced the “Engineered for magic, every day” campaign. The campaign primarily uses the 911 to reposition the brand for everyday use.
The essence of peak performance designed to excite your everyday driving and lifestyle provides an appropriate positioning statement considering the repositioning of the brand. The slogan captures the essence of the Porsche brand remaining consistent with its heritage and conveys the revised position of the company.
The results have seen Porsche 911 sales increase year over year since the campaign started. Porsche continues to be the most profitable automobile manufacturer, with a 17% profit margin. The Cayenne, Macan, and Panamera provide Porsche with the ability to extend the brand with vehicles better suited for everyday use.
Innovative Model Strategy
Porsche’s innovative strategy to expand consists of introducing a combination of non-sports models and sports vehicles. Porsche has expanded the product lineup with vehicles such as an SUV, sedan while launching new sports cars directly aligned with its heritage.
Porsche provides an intelligent and effective balance of market expansion for the brand while remaining true to its Porsche heritage especially critical for the loyal Porsche consumer.
The introduction of the Macan crossover utility vehicle with the 918 Spyder supercar provides evidence of this strategy. The Macan has been a massive success with a 43% increase in sales for North America in 2016 and this continued into 2017 with 2% growth worldwide in 2017. However, the new Panamera is the star of the show with 83% sales growth in 2017 worldwide.
Porsche has continued its record-breaking success story in 2017 with another successful year with a 4% sales increase for a total of approximately 246,000 vehicles sold worldwide.
Photo by Benoit cars
The target market segment strategy of Porsche provides an example of an iconic brand and its ability to reinvent itself creating new markets extending the Porsche brand in a meaningful manner while remaining true to its heritage.
The Porsche strategy of targeting female consumers to optimize the demographic profile by expanding the product lineup and repositioning the brand as an everyday vehicle has resulted in great success. The repositioning of the brand has started to change perceptions of Porsche as a weekend vehicle resulting in additional sales.
Porsche with its many awards for quality, style, and engineering also have sophisticated marketing complementing the superior products making it easy to understand why it’s the most profitable automotive brand in the world.
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