MN302: Lecture 4 Essay Questions 1. Market segmentation accrues many benefits for organisations.

Provide an overview of the main segmentation techniques. How is technology likely to impact on the collection of consumer data? Will it lead to a better knowledge of your customers and, ultimately, the segment of one? The main segmentation techniques for organisastions are behavioral segmentation, Psychographic segmentation and Profile segmentation. The three categories of segmentation are essential for good marketing strategy, despite being three different categories the three can be used in conjunction, depending on the size of the company and its aims. Behavioral segmentation is the segmentation of a market based on behavioral trends, for example the benefits that the consumer seeks from a product and consumer buying patterns. These are examples of behavioral influences on consumption and, as segmentations purpose is to isolate differences in behavior that have implications for decisions, it may be considered the best basis for segmentation. Behavioral segmentation is split up into more categories, these include benefits sought. This is a segmentation technique based on the understanding of why people buy in a market, for example buying a car for pleasure, functionality or image. The understanding of why people buy in the market is crucial as it gives an opportunity for companies to identify a segment and cater to the needs of those people. Customers can also be distinguished based on the occasions that they buy products, for example buying products during the Christmas period for gifts, of self-buying at other times during the year. Furthermore purchase behavior segments on the basis of when a product is bought by an individual relative to the launch of the product, i.e. whether they are innovators, early majority etc. Frequency of use is also a basis by which consumers can be segmented, the reason is marketing strategies will be targeted towards the heavy-users of a product much more than the light-users of a product. Consumers can also be grouped based on whether they view the market in a similar way and based on their beliefs. Psychographic segmentation is the grouping of consumers based on their lifestyle and personality characteristics. For example grouping people by lifestyle attempts to put people who have similar interests and opinions and take part in similar activities. This is difficult as sometimes interests and opinions will not overlap and people who share the same opinions may not necessarily take part in the same activities. segmentation based on personality is where personality is related to brand choice, although this seems viable in theory in practice it is much harder, it is rare to see people who wear a product because they believe that it reflects their personality or what they believe in, brands are not necessarily a measure of selfexpression.

Profile segmentation is used mainly to allow customers to be reached by the communications media, i.e. offers in the post. Demographic grouping is one of the main ones used for this purpose, people are segmented based on their age, gender and life cycle. Age is used effectively, for example children have their own television channels so specific advertising can be aimed their, as are foods with a sweeter element, such as frosties, they are marketed to children. Age is also used to segment in the services industry, for example Butlins the holiday destination in the UK is marketed towards children to get them to persuade the family to go. Gender is also used to segment the market, magazines and clothing use segmentation based on gender, for example Gillette the best a man can get. Lifecycles is also used a technique and is important, depending on where a consumer is in their various stages of life, their purchase habits change, an example of this is the car market, the BMW 3-Series is marketed towards the young professionals where as the X5 is marketed towards a couple with children. Socio-Economic variables are also used, people are segmented based on variables such as their incomes, terminal age of education and social class. This can provide companies with crucial information as they can strategically target specific classes, for example, there is no point advertising a product a low-income individual cannot afford. Geographic segmentation is also very useful as customers are segmented based on their geographic location, this is advantageous in specific markets for example, beer drinkers in the north of the UK prefer a frothy top on their beer, whereas in the south they prefer not to have that layer. Geo-demographic segmentation is a hybrid of both the geographic and demographic segmentation people are segmented on the basis of their income and social class, as well as other factors within their specific geographical locations. Technology will lead to a wider scope for consumer data collection as more information will be available to be collected and stored on computers. It will lead to a better understanding of customers as digital data can be stored and transferred from place to place with considerable ease. For example, the emergence of the credit card generation has lead to individual transactions being recorded much more easily which in turn allows companies to target buyers based on the purchasing frequency and specific products that they purchase. Also when on the internet, keywords in a search will be identified and appropriate advertisement will be shown on the side. There will be much better knowledge of your customers, however, I do not believe that this will lead to the segment of one as it is extremely difficult to profile each individual accurately and the amount of time it would require, even with modern day technology, would not be practical or worth it for companies to take part in. More and more the segments are being filtered but I highly doubt an absolute segment of one will ever be reached. 2. Critically examine the extent to which online social networks, such as Facebook, provide marketers with an alternative to segmenting consumers as opposed to more traditional marketing segmentation techniques.

Online social networks have changed the way marketers go about their jobs, the sheer amount of information about individual consumers available to companies on these networks is so substantive that companies can target consumers very effectively. Segmentation has become easier and quicker, people are now segmented based on keywords on their Facebook profile and specific adverts are targeted towards these individuals. Traditional segmenting techniques would involve profiling on the basis of purchases and frequency of purchase, which would be analysed and the information used to target a segment effectively. Segmentation would also take place on the basis of some of the techniques described in the previous question, such as profiling people with similar earnings and similar beliefs (religious or otherwise). The issue with this is it is hard to personalise adverts, and despite my personal belief that adverts will not be specifically personalised, they can be aimed a lot better through the use of social networks rather than traditional segmentation. Segmentation is used by marketers to enable them to direct marketing for a product in a better manner, for example by knowing that business people generally watch certain programs marketers can advertise business flights on that channel, and economy flights on other channels. However, online social network sites have changed this, regimented segments are not as essential, consumers are often segmented on a basis of keywords in their profile or in searches, this makes traditional segmenting very difficult and changes as keywords change. Online social networks also provide marketers with an advantage traditional segmentation cannot provide, it can segment on the basis of individuals a certain person looks up to. For example, a famous individual who likes a certain product can be used to market the product and his followers on twitter will be grouped in a segment and marketed to through that means. Overall I believe online social networks provide alternative in some respects to traditional segmentation. I believe that traditional segmentation is essential because sometimes it is difficult to catergorise an individuals purchasing traits based on keywords in their profile, for example what if somebody is not being entirely true, i.e. if they say they earn over 250,000 to impress people but in reality they dont, marketing solely on this basis would be inaccurate and would not reap many benefits. However, on the other hand they do provide marketers with a quicker, easier and more direct level of personalised advertising. True/False Questions 1. Consumers who belong to the same segment have identical needs and wants. False. Segments are there to create categories to make it easier for marketers to target consumers and market the right products to them and in the right fashion. Using the socio-economic method for segmentation, two low-income individuals

may well have different wants, i.e. a low income individual may like to drink beer because it is cheap, whereas another may not due to religious reasons. 2. Benefits sought is an example of a behavioral segmentation variable. True. The seeking of benefits by individuals is a behavioral trait, for example the reason for wanting to own a car, functionality, pleasure or image. The reason behind buying a product is sometimes down to behavioral traits. 3. The more diversity there is in the market place, the more segmentation becomes essential. True. A very diverse market would be difficult to market to without segmentation, having some sort of category you can place consumers in to help improve marketing is much more beneficial than not having one, and in a diverse market place this would become essential.