If Youre Not Thinking Segments, Youre Not Thinking - Assignment Example

If You’re Not Thinking Segments, You’re Not Thinking” SID Module “If you’re not thinking segments, you’re not thinking” Over the years the scope of evolution that has taken place in the facet of market segmentation has been phenomenal. By starting off with demographic segmentation and moving through geographic, distribution, price, media and psychographic segmentation, the field of market segmentation has proved its dynamic nature (Thomas, 2007, pp. 1-3). Before qualifying to present a critique on the topic of market segmentation, it is but important to establish a working definition of market segmentation which will be adhered to for the purpose of this analysis. Market Segmentation constitutes the first step in Brand Development; it is referred to as the process of dividing and sub-dividing the entire population into ‘meaningful segments’. The word meaningful can be elaborated upon to mean segments that have distinct needs and characteristics, which different products can cater to (Kotler, Armstrong, Saunders, Wong, 1998, pp. 185). This segmentation is not done arbitrarily rather it initially was done on the basis of the demographics that match with those of the ideal consumer of the product, however over the years the focus of segmentation has changed from demographics to more qualitative measures such as psychographics. Unilever Ltd, one of the leading Fast Moving Consumer Goods Company has developed its own model of psychographic segmentation, that is, VALS (Values and Lifestyles). Market Segmentation is done in order to channelize the Organizations resources towards a targeted population instead of aimlessly squandering them on the whole population, majority of which does not form a part of its target market. A few years ago market segmentation was taken to be an unquestionable theory of marketing. Recently however, its validity has come into question by many researchers and critics such as Yankelovich and Meer (2006, pp. 1-10), Hoek, Gendall and Esslemont (1996, pp. 25-34). Amongst a few of the arguments presented by the afore mentioned researchers against market segmentation was the fact that market segmentation involves a lot of subjective judgment that is practiced on behalf of the researcher, the psychographic market segmentation tactics have led to all the advertising emphasis on the emotional appeal, thus rendering product functionality as insignificant as a result of which product innovation is declining and so forth. Yankelovich quoted the example of Miller Lite as an example to state that the emotional appeal used due and lack of focus on the product functionality led to an unsuccessful advertising campaign, the advertisement of Miller Lite showed a catfight and paid no attention to the functional aspect of the product, consequently the light beer drinkers were not attracted towards Miller Lite where as the ad caught the attention of young men (Yankelovich, Meer, 2006, pp. 4). I feel this example shows how the advertisement failed to connect to the target market but does not prove that segmentation was not handy. The issue with the Miller Lite commercial was that wrong insights were used to create the advertising campaign which had no relation to the real target market. A proper market segmentation analysis would have helped Miller Lite from falling into this pitfall. Debate exists over the superiority of a particular market segmentation technique over the other and over the empirical proof of one base variable over the other. It is this lack in the development of market research in the field of segmentation that has led to the disbelief in the utility of market segmentation (Hoek, Gendall, Esslemont 1996, pp. 27). However, stating that market segmentation is a pseudo concept and marketers can do away with it seems absurd because no matter what all products cannot cater to the needs of all people. There are particular segments in the population to whom a particular product is relevant and such segments need to be identified and targeted. The Burton Group’s example can be taken over here since it is an organization that has structured its market offering around its market segments, as the target market evolves so does the Burton Group’s market offering (Jenkins, McDonalds, 1995, pp. 12). We know the concept of niche marketing; the entire concept revolves around the proper segmentation of the market which would then be able to identify that particular niche for which the product is meant. An example can be taken of organic food, for an organic food brand it would be foolish to target children, rather there is a niche market for organic food of health conscious consumers who prefer to eat food grown without pesticides, that is how the market should be segmented and the niche, targeted (McCorkle, Anderson, 1914, pp.2). In another one of his articles Yankelovich has suggested the use of segmentation analysis as a better way of segmenting the market (1964, pp. 1), segmentation analysis uses techniques which try to gauge how the target customer of a particular segment differs from the target customer of the competitors segment. In this way the entire marketing canvas is altered because instead of coming up with a product and then identifying segments that would use it, strategic segments are identified first and then according to their personality traits products are designed for them, the segmentation analysis goes beyond demographic analysis and bolsters the fact that demographic segmentation limits the marketers and does not prove to be very valuable in creating value for the target segments. Bloom also acknowledges the limitations of demographic segmentation and supports psychographic segmentation in order to be able to understand the attitude customers have towards a product or a product category (2005, pp. 94). Thus, in order to differentiate yourself from the competition you need to build products after defining the strategic segment whose needs you want to meet. This approach is very similar to the blue ocean strategy used in marketing where the marketers talk about changing the canvas by creating a new product category/ niche as elucidated by Kim and Mouborgne (2005, pp. 3). When McDonalds decided to expand in India, it knew that it was up against a lot of challenge primarily because it was a foreign chain and secondly because the religious sentiment in India does not allow the Indians to taste meat, therefore being in the “Burger” business, McDonalds had to do something exceptional, which it did in the form of the Vegetable Pattie instead of the beef/ chicken pattie. McDonalds knew who the customer was, but it had to differentiate its product to suit the customer. Many critics feel that even psychographic segmentation is not effective for fact that it does tell us about the consumer profile but does not tell us about the way the consumer perceives our product (Curry, 1996, p. 2). In order to counter this argument, a relatively new technique of conjoint analysis has been developed. It creates a simulated environment in which consumers are made to feel the product and their responses are measured so as to find out the consumer attitude towards the product (Green, Krieger, 1991, pp. 20). I feel the topic of the article beautifully suggests the importance of market segmentation, the strategic thinking in brand management starts with segmentation and its importance cannot be undermined, the inhibitions expressed by many researchers regarding the validity and objectivity of the methods of implementation of market segmentation such as cluster analysis (Pratter, 2008, p. 2) can be further researched upon but the entire concept of market segmentation is not sham. In fact many of the times for example in times of recession the only hope for a company to make profits is through proper market segmentation because the consumer patterns change (Quelch, Jocz, 2009, pp. 1). The heterogeneity of the population is evidence enough that consumption patterns across individuals differ, which makes segmentation useful to optimally utilize resources (Dibb, 1998, p. 394). Just like there is no objective measure to prove that the increase in sales of a product is due to a particular advertising campaign so is the situation with market segmentation. There is no adequate way of attributing the success of a brand to proper the market segmentation done behind it, but it does not mean that the entire exercise should be abandoned. Rather developments need to be made in the field of segmentation. Works Cited Bloom, J. (2005). Market Segmentation: A neural Network Application. Annals of Tourism Research, Vol. 32, No. 1 , pp. 93–111. Curry, J. (1996). Understanding Conjoint Analysis in 15 Minutes. Sawtooth Software: Research Paper Series , 1 - 5. Dibb, S. (1998). Market segmentation: Strategies for Success. Marketing Intelligence and Planning , 394–406. Green, P. E. (October, 1991). Segmenting Markets With Conjoint Analysis. Journal of Marketing , 20 - 31. Hoek, J. G. (1996). Market Segmentation: A Search for the Holy Grail. Journal of Marketing Practice: Applied Marketing Science, Vol. 2 , pp. 25-34. Jenkins, M. M. (February,1995). Market Segmentation: Organizational Archetypes and Research Agendas. European Journal of Marketing , 12. Kim, W. C. (February 2005). Blue Ocean Strategy. London: Harvard Business Press. Kotler, P. A. (August, 3, 1998). Chapter 07: Customer-Driven Marketing Strategy: Creating Value for Target Customers. In P. A. Kotler, Principles of Marketing, 8th Edition (p. 184). Upper Saddle River, New Jersey: Prentice Hall College Division. Kulkarni, D. S. (January, 31, 2009). McDonald’s Ongoing Marketing Challenge. Online Journal of International Case Analysis, Volume 1, Issue 2 , 1 - 19. McCorkle, D. A. (1914, June 30). Risk Management - Niche Marketing. Agrilife Extension , p. 2. Pratter, F. (2008). Clustering for Market Segmentation. SAS Institute Inc. , 1 - 10. Quelch, J. A. (April 2009). How to Market in a Downturn. Harvard Business Review , 1 - 12. W., T. J. (2007). Market Segmentation. Decision Analyst , pp. 1-3. Yankelovich, D. M. (February 2006). Rediscovering Market Segmentation. Harvard Business Review , 1 - 10. Yankelovich, D. (March/ April1964). New Criteria for Market Segmentation. Harvard Business Review , 1 - 12. Read More