Download mrkt 435 advertising midterm exam content 2

SELF STUDY QUESTIONS
IN THE EXAM YOU ARE REQUIRED TO ANSWER ANY 3 THE FOLLOWING QUESTIONS
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What is the difference between market aggregation or market segmentation?
What is market segmentation?
Why segmentation is necessary?
What do successful marketing campaigns depend on?
What is geographical/behavioral/pyscographical segmentation?
SEGMENTATION
Marketers can approach a market through either market aggregation or market segmentation.
Market aggregation (or mass marketing) is where there is little or no application of subdivision of the
market. Even though there is diversity between consumers, they are seen to be sufficiently alike to
approach as a homogeneous group when marketing a particular product. Alternatively, market
segmentation can be implemented. ‘Market segmentation is the process of splitting customers into
different groups, or segments, within which customers with similar characteristics have similar needs.
Successful marketing campaigns are dependent on accurate answers to the following questions: 1
Who are my customers? 2 What are they like? 3 What do they buy? 4 Where can I find them? 5 How
can I reach them?
By doing this, each one can be targeted and reached with a distinct marketing mix’. This definition has
three key tasks for the marketer:
to define the market and find segments within it (segmentation);
● to select the most profitable segments that can be served the most effectively and efficiently by the
company’s resources (targeting); and
● to communicate to that segment to appeal to their specific wants and needs better than
competitors (positioning). Segmentation is used when the differences between consumers are seen
to be substantial enough so that, to effectively market a product, customers are put into groups. By
dividing a larger market into smaller segments with different preferences and subsequently adjusting
the product (or service) to the preferences of the individual segments, the overall distance between
what the company is offering to the market and what the market requires is reduced. It is becoming
increasingly evident that most markets are not homogeneous, but are made up of different individual
customers, sub-markets or segments. The practice of mass marketing, where there are significant
differences, leaves an organization vulnerable to more clearly targeted competitors. Marketing is
concerned with identifying and satisfying user needs. Offering one product for all segments means
the needs of some users are not wholly satisfied, and is therefore wasteful on resources. Taken to
extremes, of course, every user is a unique market segment, for everyone has slightly different needs.
However, few companies have the resources to be all things to all people, and this implies that a
choice needs to be made concerning which segments to serve, thus taking up a position somewhere
between the two extremes. Consumers, and the neighbourhoods in which they live, vary greatly in
terms of the brands, advertising campaigns and promotions to which they will respond. An in-depth
understanding of the typical customer of a brand is required to plan and implement effective and
efficient marketing communications. Segmentation and targeting of customers allows marketing
communicators to more precisely position and deliver their messages and prevent wasted coverage
to people falling outside the target market.
Demographic segmentation
Demographics are general customer and consumer characteristics, e.g. age, income, education and
gender. Demographic segmentation is the most common method of dividing the overall market. Their
popularity is based on the ease with which they can be measured, their association with the sale of
many products and services, and the fact that they are useful for the targeting of advertising material
through related media. Croft (1994, p. 25) notes, however, that using a demographic base alone
‘rarely provides a complete understanding of user differences’. In particular, Croft highlights the
problems of segmenting by age alone and gives the examples of those consumers who are ‘young at
heart’ or ‘mature beyond their years’. These consumers would not necessarily behave according to
their age norms. In fact, changes in population demographics such as the ageing of baby boomers
(those born from 1946 to the 1960s) also questions the stability of demographic information. In one
study of lifestyle it was indicated that the majority of people 55 and over said they look, act and feel
at least 10 years younger than they are. This indicates that, in the case of age, there is a widening gap
between chronological age and psychological age. This effect could, therefore, have influence on
consumers’ purchasing behaviour. Education, income and occupation together form a socio-economic
segmentation basis. In the UK, the ABC1 socio-economic system is popular with many advertising
agencies. Consumers are divided into six classes (i.e. A, B, C1, C2, D and E) based on the occupation of
the head of the household. So for example, consumers in social grade A have higher managerial,
administrative or professional occupations and are of upper middle class. Consumers in social grade
C2 are skilled manual workers and belong to the skilled working class. However, with increased social
mobility and the blurring of class divisions, this socio-economic segmentation system is not as
accurate as it used to be. Lifestage is another composite socio-demographic variable that incorporates
age, marital status and family size. As lifestage is dynamic in that it incorporates changes that an
individual is likely to experience throughout life. Thus, this type of segmentation is not only a major
predictor of consumer needs, but indicates when the consumer will be attracted to a particular
product field. This is particularly useful for consumer durables. The lifestage segmentation tool was
first developed by Wells and Gubar (1966). In View 17.1 illustrates the application of lifestage to
financial products and Exhibit 17.3 highlights the nine lifestages in the family life cycle (FLC).
Segmentation based on the different stages of life that people go through, incorporating such factors
as age, marital status and family size. The Family Life Cycle (FLC) is an example of lifestage
segmentation
Behavioural segmentation
Consumers can be segmented by their behaviour towards a particular product or service.
Transactional information on existing customers can be used to derive behavioural segments that
produce information on current behaviour. For example, customers may be segmented according to
their frequency of purchase or the different benefits they seek when selecting a product or service
such as convenience, status and performance.
Psychographic segmentation
Psychographic segmentation differentiates and aggregates consumers in terms of psychological
dimensions, such as values, lifestyles, attitudes, interests and opinions. Such segmentation is generally
used when purchasing behaviour is correlated with the personality or lifestyle of consumers. In this
case, consumers with different personalities or lifestyles have varying product or service preferences
and may respond differently to marketing mix offerings.