280 The Marketing Book
is something that marketers do to the minds of
consumers. It relates to how consumers per-
ceive the product in terms of image relative to
competing offerings (Reis and Trout, 1986).
Figure 10.8 shows an example of position-
ing for travel agencies. This suggests that the
segments of customers labelled ‘specialist’,
‘price buster’ and so on require differing
degrees of (a) control over the travel/tour
buying process and (b) with the degree of
specialized or standardized ‘package’ the
agency provides. Whether this approach would
be adopted by travel agencies is debatable, but
it could be a significant and worthwhile change
in how different known customers are treated
in store, perhaps even a good example of the
one-to-one segmentation that this chapter has
questioned?
Conclusions
It can be said that market segmentation is a real
cornerstone of marketing. The very essence of
the marketing concept itself leads to an inevit-
able consideration of market segmentation. If
marketing is concerned with satisfying con-
sumer needs and wants as a means to achieving
the goals of the organization, it should be
recognized that, whereas the human condition
means we all have a similar need structure, the
same needs will not be salient to every person
at the same point in time. Also outlined in the
chapter are the stages subsequent to segmenta-
tion, such as targeting and positioning.
The chapter has explored some of the
traditional approaches to segmenting and tar-
geting markets, and highlighted the value of
the more affective ones, in terms of helping to
identify salient needs and requirements.
However, the chapter has also submitted
the view that data-driven segmentation and
targeting is ‘taking over’ and facilitating
greater accountability via the more effective
identification of those segments likely to be
more profitable. Rather than relying exclusively
on generalized characteristics such as age,
social grade and gender, from which buying
behaviour is often inferred, the trend is away
from profiling and toward using transactional
data for targeting. The resulting segmentation
data lead to targeting those who are known to
buy in that product category on the basis of
data fusion to form biographic segmentation.
The new marketing is becoming increas-
ingly reliant upon the metrics of RFM, LTVs,
CHAID and data mining. The danger is, per-
haps, that these are subverting the role and
importance of more affective research that aims
to explain why segments behave as they do,
rather than just whether and how they
behave.
It is interesting to go back in time and
remember a prediction from Shubik (1967):The computer and modern data processing
provide the refinement – the means to treat
individuals as individuals rather than parts of a
large aggregate... the treatment of an individ-
ual as an individual will not be an unmixed
blessing. Problems concerning the protection of
privacy will be large.This is not a misprint – it was 1967.
The last point is another story – but one not
to be ignored.Review questions
1 If a market is segmented according to age,
gender and social grade, what are the
contributions of these variables to satisfying
the various criteria for segmentation?
2 What are the implications of biographic
segmentation for:
(a)markets
and
(b)marketing?
3 How do RFM, LTV and allowable cost metrics
help in the segmentation and targeting
process?