2. Customer Segments of The Middle East Part III I The Youth
The third in a series around the most common and important market segments
observed in the Middle East and strategies & tactics to acquire and serve them
effectively…
Our third market segment studied in this series is the youth, including both the
local and expats aged between 16 and 25, who have a considerable appetite for
new products and technologies, and hold the key to the future for businesses
looking for long-term success. This segment’s increasing level of sophistication in
needs and expectations as well as the higher word-of-mouth effect observed
among them requires special attention be placed on these factors.
Acquiring the Segment
With a substantial lifetime value, yet, at the same time, a value that will not be
realized in the short-term, acquisition efforts in this segment need to be cost-
effective. That said, the youth segment also requires customized and attractive
offers in acquisition efforts, as their sensitivity to promotions and incentives is
higher than the norm. Luckily, the customers in this segment are accessible in a
targeted manner through various means, making it possible to meet both
requirements at the same time. Some of the opportunities for targeting them
based on their distinctive activities and interests include:
Through Schools: For school-aged youth (including graduate and post-
graduate level), schools and their campuses create the perfect means for
targeting this segment in masses, and also allow to some degree the ability to go
after micro-segments. Youth studying at expensive private schools are most
likely to be in the affluent youth micro segment, whereas those studying at the
top-notch schools can be expected to be future affluent professionals. The fields
of study of these students can also be used as proxies for their psychographic
micro-segments. Various companies use on-campus marketing activities with
giveaways they would be sensitive to, such as the Bank of America providing
blankets for students signing up for its services during a college football game.
Through Parents: Most youngsters, despite their continuous search for
independence, are significantly influenced by the products and services used or
recommended by their parents. As a result, the existing adult customer base of
most companies present vast opportunities for reaching out to the youth
segment. Telecommunications companies are already banking on this with family
talk plans, catching the youth early on – when they have financial dependence
for paying their mobile phone bills – through their parents.
Through Each Other: The youth segment is one of the most connected
segments, where referral programs and viral marketing pay off with handsome
returns on investment. Taking into account the more social nature and
promotional sensitivity of this segment, it is not hard to predict why various
companies, such as Bank of America launch student and youth referral programs.
3. Through the Web: Customers in this segment are among heavy users of
Internet, and many social networking platforms (e.g. Facebook, Myspace) as well
as portals with relevant content (e.g. music, sports, fashion) provide effective
means in reaching out to them in mass. Most of the leading organizations now
are actively participating and marketing in social media (e.g. Honda went as far
as putting its Facebook link instead of its own web site in one of its ads) and
frequently utilize ad spaces available in relevant portals and web sites.
Through their Interests: Members of the youth segment usually have an
active interest in various social activities, such as sports, music, entertainment
and fashion. All these activities facilitate targeted access to the youth in specific
physical locations – such as at gyms, concert halls, clubs and fashion shows.
Companies can tap into this opportunity by making their brands visible in these
locations, partnering with the operators of them or having direct sales and
promotion teams on-site. An extension of this strategy is visibility in publications
targeted at these interests – such as sports newspapers, music magazines, etc.
Serving the Segment
As the youth, especially within a certain age range, seek to be recognized as
‘individuals’ and need to feel that their distinctive needs are well-understood,
serving this segment requires mass customization and unique value offerings.
Although every industry would have specific product-related customization
requirements based on their needs (e.g. different talk plans in telecoms,
different credit cards in banking), certain other areas can be addressed by all, a
couple of which are:
Youth require a considerably different tone in messages as it relates to
marketing communications. In most cases, the standard communication going
out to the market would be deemed typical and irrelevant by this segment,
which calls for customized messages. Target’s 2008 commercial with students
dancing in a dorm room is one of the examples which leverage fun and relevance
for this segment.
With financial dependency on parents and relatively limited budgets, the
youth segment is among those sensitive to promotional offers. Companies can
easily tap into this, by providing promotions relevant to the needs and lifestyle of
the customers in this segment. Coca Cola had been running promotions allowing
students to download two songs for free when they buy two bottles of Coke
Zero, whereas Red Bull offers free drinks during exam periods.
In addition to the promotional sensitivity, the financial dependency of this
segment also creates interest in alternative payment plans and pricing models.
With limited assets at hand, the youth prefer longer term payment plans without
down-payment. Various car companies, such as Lexus, already take this into
account and offer no down-payment and delayed first payment financing
schemes for new college graduates.
Companies should also take into account that the youth segment falls short
in many standard requirements when it comes to bureaucratic procedures. Very
few in this segment can come up with last year’s salary certificate required for a
loan application, or present their fixed-line bill for address verification.
Companies need to keep in mind the profile and nature of this segment when
designing their processes and policies.
4. This segment is among those most open to experimentation and learning
about new products and services. As a result, tactics such as product sampling
and trial subscriptions turn out to be effective means for introducing new value
offerings in this segment. An example is the Cinnabon Premium Coffee Latte
product sampling run by brand ambassadors in various campuses.
In terms of the channels, customers in this segment require easy access to
products and services from their areas of interest (e.g. campuses, clubs,
shopping malls), as their mobility is limited to public transportation in many
cases and would consider proximity a key benefit. Most banks try to position
their ATMs or branches within school campuses, as a result.
As a result of their social interests, customers in this segment consider any
networking offerings and customer clubs, geared towards their demographics,
attractive propositions. An example is gnctrkcll of Turkcell, which offers relevant
content and benefits for its members, while making them part of one of the
largest youth clubs in Turkey. Similar to the networks and clubs, activities and
events that bring members of this segment together are also effective tools in
marketing.
An important sub-segment in the youth, which shall be paid special attention
through customized experience and value offerings, is the VIP youth. Some banks
already recognize them – which they call the future private – and pay special
attention to their needs, offering personal financial advice. These customers are
those which are expected to become among the high value customers of
tomorrow, which calls for special attention on them today. Since customers in
this segment are likely to see themselves apart from their peers, companies
cannot afford to treat them the same, and have to tackle the challenging task of
recognizing them within the segment and providing attractive propositions and
service levels without risking losing money with their current level of relatively
lower value.
Last, but not least, is the educational needs of this segment. Companies can
not only appeal to the youth, but also grab the attention of their parents via
value propositions relevant to their education. As an example application, some
companies offer free career advice to students, while others sponsor certain
educational programs and raise their awareness in specific subjects.
Treating the high-value customers better is one of the key agenda items of any
successful marketing manager today. Although this is a must have, it only secures
a high market performance in the short-term, and needs to be complemented
with a complete strategy and propositions for the youth segment. Five to ten
years down the line, the high-value customers will emerge from this youth
segment, and companies cannot afford to turn a blind on them today, when the
acquisition costs is much lower than what it will become in the future. The
opportunities listed in this article are just a few examples to begin with, for those
who would like to secure their future. Still, a good start for many.
5. About Forte Consultancy Group
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impact as well as benefits for stakeholders. Forte Consultancy Group provides a variety
of service offerings for numerous sectors, approached in three general phases -
intelligence, design, and implementation.
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