A CASE STUDY ON

IBM CORPORATION: TARGETING THE LGBT SEGMENT

Group no: 1 Auroshman Kartheek Karunakar Kasi Viswanadh

EXECUTIVE SUMMARY:
This case talks about the target marketing strategies of New York-based International Business Management Corporation (IBM), towards the LGBT (lesbian, gay, bisexual and transgender people) community. IBM's usual marketing efforts were targeted at business-tobusiness markets and customers, using mainstream advertising channels. However, with increasing competition, IBM identified the remarkable feasibility in LGBT market as the LGBT customers were affluent, educated, self-sufficient and had more disposable income than other customers. Moreover, they felt that the risk of isolating existing mainstream customers was outweighed since LGBT customers were more loyal toward a brand. They started tapping this niche market by advertising its products targeted at LGBT consumers. The target marketing strategies included Print ads like pop and pop, mom and pop etc., in minority publications for gays and lesbians, mainstream publications, On-line marketing by posting ads on gay sites like Gay.com, Planetout.com, etc., Sponsoring events and conferences supporting LGBT people, etc. In addition to this, internally they had a strong diversity training programs, benefits to same-sex partners of employees and recruiting LGBT people in its workforce as a dedicated sales team for LGBT customers. The company widened its LGBT diversity initiatives to its suppliers by choosing to do business with vendors belonging to the LGBT community. In addition to earning millions of dollars in revenue from the LBT community, the initiatives taken by IBM provided it access to a segment that was known for its brand loyalty and was on the verge of further growth. Experts felt that the LGBT market had tremendous potential for growth since the customers were generally brand loyal.

MARKET ANALYSIS:
International Business Machines (IBM) is a global technology and innovation company that stands for progress. It had earned a name for itself for its diversity initiatives. In the 1980s, with the globalization, organizations initiated efforts to broaden their market place. In an attempt to uphold in the continuously increasing competition, IBM started focusing on diverse cultures across borders in order to offer products and services that suited the specific needs of different markets. In this process, they recognized the increasing purchasing power of LGBT segment and started attentive efforts to tap this segment

Micro analysis:
IBM identified the opportunity to fill the gap between LGBT customers and buyers and due to the high income of LGBT customers; they started targeting them by advertising its high end products thus generating maximum profit. It always differentiated itself from the competitors by targeting the LGBT customers through Print ads like in minority publications for gays and lesbians, mainstream publications, On-line marketing, Sponsoring events and conferences supporting LGBT people, etc. which helped them to gain the brand loyalty from the LGBT customers. In addition to this, internally they had a strong diversity training programs, benefits to same-sex partners of employees and recruiting LGBT people in its

workforce as a dedicated sales team for LGBT customers and made them to believe IBM as their own company. This resulted in gaining a competitive advantage for IBM.

Macro analysis:
Economical factorsy

According to Simmons market research, readers of gay publications had an average individual income of US$ 47,090, in 1997. Companies publicizing in minority publications like THE ADVOCATE and OUT recorded an increase in revenues from US $ 73.7 million in 1996 to US $ 117.1 million in 1998. As of 2007, the US LGBT market had 15 million people with a purchasing power of US $ 660 billion. While it was poised to reach US$ 845 billion by 2011.

Technical factors y

The LGBT community members were called early adopters by Marketers since they were expected to have access to the latest technology or devices. Gay Americans were 1.5 times more likely to have an internet connection as compared to others with high speed. With the internet penetration of US LGBT adult users reaching 12.1 million in 2007, the LGBT market was expected to provide more opportunities for further growth.

Social factors y y y

Organizations started recognizing LGBT as a new market segment. LGBT community members favoured companies embracing their community. The nature of the gay community is strong networks, based on personal contacts, which extend through peer companies and customers.

Political factorsAfter legalizing the same sex marriages by Government of Massachusetts in 2004, companies were more interested in targeting this niche market to grow their business.

MARKET SEGMENTATION:
IBM's usual marketing efforts were targeted at business-to-business markets and customers, using mainstream advertising channels. However, with increasing competition, IBM identified the significant feasibility in LGBT market as the LGBT customers were high

income, self sufficient, early adopters, more disposable income than other customers, and having their interest in newest and the best product. Moreover, they felt that the risk of isolating existing mainstream customers was outweighed since LGBT customers were more loyal towards a brand. MARKETING STRATEGIES: PRODUCTProducts include Consulting services, Software, Hardware, and solutions. IBM unbundled its products and starts selling in the market which paved the path for IBM to become a leader in the multibillion dollar software and services industry PLACEIBM made itself available everywhere through online selling of their products and special dedicated sales team for LGBT customers. The availability of products through internet and door to door made them to earn millions of dollars in revenue. PRICEPricing was based on product and made available everywhere to reach the LGBT customers. PROMOTION IBM promotional strategies includes Print ads like pop and pop, mom and pop etc., in minority publications for gays and lesbians, mainstream publications, On-line marketing by posting ads on gay sites like Gay.com, Planetout.com, etc., Sponsoring events and conferences supporting LGBT people, etc. Advertising: Print ads: IBM marketed its products by publishing it ads in gay publication magazines and gay journals.IBM regularly published their ads in THE ADVOCATE and OUT to appeal customers from diverse backgrounds. The pop and pop Mom and pop ads in the advocate and mainstream publications were huge success. The ad showing California male couples who has a photo-processing business with the tag line A perfect relation is more than one was also a huge hit. Online Marketing: IBM marketed it products by posting it ads on gay sites like Gay.com and Planetout.com. As the LGBT customers were high income, self sufficient, early adopters, more disposable income than other customers, they easily adapt to the new

innovations like online marketing etc. Digital media and any emerging technologies can attract the LGBT customers easily. LGBT sales team: The LGBT- dedicated sales team was set up as the research revealed that LGBT customers favoured companies embracing their community.IBM met people belonging to the LGBT community through its The Employee Alliance for Gay, Lesbian, Bisexual and Transgender Empowerment58 (EAGLE) group. Sponsorships: In order to increase its availability and visibility in the LGBT community IBM started sponsoring several LGBT Networking organizations. IBM along with 150 other companies contributed US $ 1500 each for setting up booths to sponsor the first National Gay and Lesbian Business and Consumer Expo. In 1996, IBM co-sponsored the Parents, Families and Friends of Lesbians and Gays (PFLAG) National Conference held at Washington DC, to support the LGBT community.

CONSUMER DECISION MAKING:

IBM was able to reach out the diverse and wide range of customers through its diversity initiatives. IBM positioned its company as a better LGBT friendly organization amongst its peers and created a positive association with the customers. This helped in increasing the trust and loyalty in the brand. LGBT members also favoured companies embracing their community. Most of the LGBT consumers appreciated the print ads pop and pop and mom and pop by sending letters and emails. Gay consumers felt that advertising through business magazines like Time magazine indicates that the company is truly dedicated to the community.

OUTCOMES:
Being an early mover on the scene, IBM had a good opportunity to tap this LGBT segment and earned a greater market share in LGBT segment. By publishing ads in different Gay magazines and journals company recorded an increase in revenue of US$ 73.7 million in 1996 to US$ 117.1 million in 1998. Since IBMs commitment to the LGBT customers and suppliers helped it grow significantly, it planned to continue to sponsor philanthropic organizations for the benefit of the LGBT community and target the LGBT customers in innovative ways in future.