Question

Assume you are the VP Global Marketing of BMW. Explain how you could use the concept of backward innovation and another concept you have learned in this Global Marketing Management course to promote your company’s products in China.

Answer 1

The story of General Motors raises an important point, which is that segmenting and targeting markets doesn’t necessarily mean “skinnying down” the number of your customers. In fact, it can help you enlarge your customer base by giving you information with which to successfully adjust some component of your offering—the offering itself, its price, the way you service and market it. More specifically, the process can help you do the following:

• Avoid head-on competition with other firms trying to capture the same customers.
• Develop new offerings and expand profitable brands and products lines.
• Remarket older, less-profitable products and brands.
• Identify early adopters.
• Redistribute money and sales efforts to focus on your most profitable customers.
• Retain “at-risk” customers in danger of defecting to your competitors.

The trend today is toward more precise, targeted marketing. Figuring out “who’s who” in terms of your customers involves some detective work, though—often market research. A variety of tools and research techniques can be used to segment markets. Government agencies, such as the U.S. Census Bureau, collect and report vast amounts of population information and economic data that can reveal changing consumption trends. Technology is also making it easier for even small companies and entrepreneurs to gather information about potential customers. For example, the online game company GamePUMA.com originally believed its target market consisted of U.S. customers, but when the firm looked more closely at who was downloading games from its Web site, they were people from all over the globe. With the increased use of social media, companies are able to get information on consumers’ search behavior. Loyalty cards that consumers scan at many grocery and drug stores provide an incredible amount of information on consumers’ buying behavior.

The great product idea you had? Companies are now using the Internet to track people’s Web browsing patterns and segment them into target groups. Even small businesses are able to do this cost-effectively because they don’t need their own software and programs. They can simply sign up online for products like Google’s AdSense and AdWords programs. You can locate potential customers by looking at blog sites and discussion forums on the Web. Big-boards.com has thousands of discussion forums you can mine to find potential customers interested in your product. Do you have a blog? Go to BlogPoll.com, and you can embed a survey in your blog to see what people think of your idea. If you have a Web site, you can download an application onto your iPhone that will give you up-to-the-minute information and statistics on your site’s visitors.