Developments in consumer segmentation techniques: databases, one-to-one marketing and the Internet - Marketing Management

Given its central importance to the development of marketing plans, segmentation is one of the most widely researched concepts in marketing. Marketers, academics and practitioners are constantly looking for new and more effective ways to segment and target markets. There is no totally right way to segment a market. Over time markets and customers change. We must, therefore, be constantly looking for new and more meaningful ways to segment markets. We now find many creative and thought-provoking segmentation bases that reflect the contemporary environment and market factors ranging through, for example, ‘Green’ segmentation (Paco and Raposo)9 ‘familiarity expertise and involvement’ (Taloe-West et al.)10 and even ‘odd or even’ price endings (Harris and Bray).

As we might expect, some of the most significant developments in market segmentation and targeting stem from developments in information technology and the Internet.

Effective segmentation and targeting, like many areas of marketing, requires information and analysis of consumer data. The development of inexpensive and readily available software programs puts this information increasingly at the disposal of the marketer. Modern data collection, storage and analysis techniques enable marketers to understand customer buying preferences and habits much better. It is now economically viable to profile buying patterns of individual customers and access this information through a database.

Interrogation of company databases to search for information on customers, called data mining, is now extensively used by marketers with segmentation and targeting being one of the most fruitful of these uses (Liu and Chen). This development is moving to a situation where instead of thinking of marketing to groups or segments of customers, the marketer is able to consider one-to-one marketing. The Internet plays a significant role here as the marketer can build an effective and detailed database on individual customers.

Through this mechanism, the marketer can reach individual customers with tailored marketing programmes. Similarly, research has shown that the Internet and databases can be combined with effective segmentation and targeting to provide significant cross-selling opportunities (Ansell et al.).

Perhaps one of the most significant developments in recent years, affecting potentially every facet of marketing has been the growth of ‘mobile marketing’. As the term implies, mobile marketing uses the technology of the mobile phone to target customers. Many think of mobile marketing as simply using their mobile phones to vote out a contestant on ‘Big Brother’ but in fact mobile marketing encompasses mobile advertising, mobile sales promotions, ‘click and buy’ technology, mobile CRM to allow customers to track their orders, and of course mobile applications which allow customers to access entertainment content such as games, ringtones and mobile videos, all using the ubiquitous five number short-code systems.

A recent report by the Internet Advertising Bureau (IAB) and PricewaterhouseCoopers reported that the UK mobile advertising market was worth £28.6 million in 2008, a 99.2 per cent increase on the previous year. Mobile marketing in particular allows marketers to target individual customers and will continue to grow in importance.

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