Micromarketing

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Micromarketing was first referred to in the UK marketing press in November 1988 in respect of the application of geodemographics to consumer marketing. [1] The subject of micromarketing was developed further in an article in February 1990, which emphasised understanding markets at the local level, and also the personalisation of messages to individual consumers in the context direct marketing. [2] Micromarketing has come to refer to marketing strategies which are variously customised to either local markets, to different market segments, or to the individual customer.

Micromarketing is a marketing strategy in which marketing and/or advertising efforts are focused on a small group of tightly targeted consumers. For example, markets can be grouped into narrow clusters based on commitment to a product class or readiness to purchase a given brand. The approach requires a company to define very narrow market segments, and tailor offers or campaigns for that segment. Although, the approach can be more expensive due to customization and difficulties attaining scale economies, advancements in technology have facilitated the delivery of highly customised products to small groups or even individual customers. Nike ID [3] and Shoes of Prey [4] are often cited as practical examples of this approach. It should be evident that micromarketing is closely related to the concept of mass-customisation.

In some of the literature, different labels are used to describe micromarketing. In a seminal article, Kara and Karnak (1997), referred to finer segmentation (FS) as "the final advancement in market segmentation as it combines the use of differentiated marketing and niche marketing to reach the smallest groups in the marketplace". [5] Richard Tedlow (1993) thought that he detected evidence of what he called hyper-segmentation which he saw as a logical extension of the market segmentation era. [6] These approaches combine multiple segmentation variables in ways that have been elusive within conventional approaches to segmentation.

Micromarketing or hyper-segmentation rely on the extensive information technology, big databases, computerized and flexible manufacturing systems, and integrated distribution systems. Data is captured from electronic communications devices, mapped and logged with a management information system. This enables the integration of observed behaviour (domains accessed) with motives (content involvement), geographics (IP addresses), demographics (self-reported registration details) and brand preferences (site-loyalty, site stickiness). Additional data inputs might include behavioural variables such as frequency (site visits), diversity including visitation across different landscapes and fluidity spanning multiple time periods. Programmed business intelligence software analyses this data and in the process, may also source data inputs from other internal information networks. Given this reliance on digital data inputs, some theorists have also used the term, cyber-segmentation to describe micromarketing. [7]

The level of targeting can sometimes boil down to 'one-on-one marketing' or individual marketing, wherein the needs and wants of the individual buyer are taken into consideration. It revolves around targeting one customer and providing them with products and services which they desire. It often requires mass customisation of products and services. If the marketer is able to carry it out on a large scale perfectly, it proves highly successful. For instance, offering the chance to customers to customise M&M candies in their preferred colour with custom printed alphabets gave the company a unique way to market their product. [8]

With increased availability of electronic scanner data there has been a greater focus on research of micromarketing and pricing problems that retailers encounter. Research in 1995 by Stephen J. Hoch et al. provided empirical evidence for the micromarketing concept. In 1997, Alan Montgomery used hierarchical Bayes models to improve the estimation procedures of price elasticities, showing that micromarketing strategies can increase gross profits. [9]

"Global ad spending is predicted to reach $662.73 billion by 2018. Unfortunately, a lot of those dollars will go to waste." [10] However, the advent of micromarketing or hypersegmentation allows advertisers the opportunity to get "more bang for their buck" by targeting consumers who exhibit a readiness to buy.

A report from 2007 by Tech Crunch titled "Facebook Will Use Profiles To Target Ads, Predict Future" talks about how Facebook was planning to target individuals based on each particular profile. [11] Moreover, the Wall Street Journal claimed in a report, that the new system will "let marketers target users with ads based on the massive amounts of information people reveal on the site about themselves." [12]

See also

Related Research Articles

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Marketing research is the systematic gathering, recording, and analysis of qualitative and quantitative data about issues relating to marketing products and services. The goal is to identify and assess how changing elements of the marketing mix impacts customer behavior.

In marketing, market segmentation is the process of dividing a broad consumer or business market, normally consisting of existing and potential customers, into sub-groups of consumers based on shared characteristics.

Personalized marketing, also known as one-to-one marketing or individual marketing, is a marketing strategy by which companies leverage data analysis and digital technology to deliver individualized messages and product offerings to current or prospective customers. Advancements in data collection methods, analytics, digital electronics, and digital economics, have enabled marketers to deploy more effective real-time and prolonged customer experience personalization tactics.

Mass customization makes use of flexible computer-aided systems to produce custom products. Such systems combine the low unit costs of mass production processes with the flexibility of individual customization.

Mass marketing is a marketing strategy in which a firm decides to ignore market segment differences and appeal the whole market with one offer or one strategy, which supports the idea of broadcasting a message that will reach the largest number of people possible. Traditionally, mass marketing has focused on radio, television and newspapers as the media used to reach this broad audience. By reaching the largest audience possible, exposure to the product is maximized, and in theory this would directly correlate with a larger number of sales or buys into the product.

Database marketing is a form of direct marketing that uses databases of customers or potential customers to generate personalized communications in order to promote a product or service for marketing purposes. The method of communication can be any addressable medium, as in direct marketing.

In marketing, segmenting, targeting and positioning (STP) is a framework that implements market segmentation. Market segmentation is a process, in which groups of buyers within a market are divided and profiled according to a range of variables, which determine the market characteristics and tendencies. The S-T-P framework implements market segmentation in three steps:

A target audience is the intended audience or readership of a publication, advertisement, or other message catered specifically to said intended audience. In marketing and advertising, it is a particular group of consumer within the predetermined target market, identified as the targets or recipients for a particular advertisement or message. Businesses that have a wide target market will focus on a specific target audience for certain messages to send, such as The Body Shops Mother's Day advertisements, which were aimed at the children and spouses of women, rather than the whole market which would have included the women themselves. A target audience is formed from the same factors as a target market, but it is more specific, and is susceptible to influence from other factors. An example of this was the marketing of the USDA's food guide, which was intended to appeal to young people between the ages of 2 and 18.

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<span class="mw-page-title-main">Digital marketing</span> Marketing of products or services using digital technologies or digital tools

Digital marketing is the component of marketing that uses the Internet and online-based digital technologies such as desktop computers, mobile phones and other digital media and platforms to promote products and services. Its development during the 1990s and 2000s changed the way brands and businesses use technology for marketing. As digital platforms became increasingly incorporated into marketing plans and everyday life, and as people increasingly used digital devices instead of visiting physical shops, digital marketing campaigns have become prevalent, employing combinations of search engine optimization (SEO), search engine marketing (SEM), content marketing, influencer marketing, content automation, campaign marketing, data-driven marketing, e-commerce marketing, social media marketing, social media optimization, e-mail direct marketing, display advertising, e-books, and optical disks and games have become commonplace. Digital marketing extends to non-Internet channels that provide digital media, such as television, mobile phones, callbacks, and on-hold mobile ring tones. The extension to non-Internet channels differentiates digital marketing from online marketing.

In marketing, a microsegment is a more advanced form of market segmentation that groups a number of customers of the business into specific segments based on various factors including behavioral predictions. Once identified, microsegments can become the focus of personalized direct micromarketing campaigns, each campaign is meant to target and appeal to the specified tastes, needs, wants, and desires of the small groups and individuals that make up the microsegment. The goal of microsegments is to determine, which marketing actions will have the most impact on each set of customers.

A target market, also known as serviceable obtainable market (SOM), is a group of customers within a business's serviceable available market at which a business aims its marketing efforts and resources. A target market is a subset of the total market for a product or service.

<span class="mw-page-title-main">Targeted advertising</span> Form of advertising

Targeted advertising is a form of advertising, including online advertising, that is directed towards an audience with certain traits, based on the product or person the advertiser is promoting. These traits can either be demographic with a focus on race, economic status, sex, age, generation, level of education, income level, and employment, or psychographic focused on the consumer values, personality, attitude, opinion, lifestyle and interest. This focus can also entail behavioral variables, such as browser history, purchase history, and other recent online activities. The process of algorithm targeting eliminates waste.

'Shopper marketing' is "a discipline that focuses on the customer experience and the customer journey."It focuses on the consumer's path to purchasing a product, from first being aware of the product, to consideration and through to the purchase of it. It separates itself from retail marketing which focuses on engaging the customer in-store only.

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It is a marketing strategy defined area or subject in order to achieve (hit) a clearly defined objective or target. The idea is to fire once, identifying the best market area to enter and the marketing efforts on customers there, like aiming a rifle to hit the bull's red eye.

Psychographic segmentation has been used in marketing research as a form of market segmentation which divides consumers into sub-groups based on shared psychological characteristics, including subconscious or conscious beliefs, motivations, and priorities to explain and predict consumer behavior. Developed in the 1970s, it applies behavioral and social sciences to explore to understand consumers’ decision-making processes, consumer attitudes, values, personalities, lifestyles, and communication preferences. It complements demographic and socioeconomic segmentation, and enables marketers to target audiences with messaging to market brands, products or services. Some consider lifestyle segmentation to be interchangeable with psychographic segmentation, marketing experts argue that lifestyle relates specifically to overt behaviors while psychographics relate to consumers' cognitive style, which is based on their "patterns of thinking, feeling and perceiving".

References

  1. ↑ Whitehead, John. The Need to Rethink Analysis, Precision Marketing, 14 November 1988.
  2. ↑ Whitehead, John. Paying Attention to Detail, Marketing, 22 February 1990.
  3. ↑ NikeiD, http://www.nike.com/au/en_gb/c/nikeid; allows customers to create their own designs
  4. ↑ Shoes of Prey, https://www.shoesofprey.com; allows customers to design their own shoes
  5. ↑ Kara, A. and Kaynak, E. (1997). Markets of a Single Customer: Exploiting Conceptual Developments in Market Segmentation. European Journal of Marketing. 31. (11/12). pp. 873-885
  6. ↑ In his oft-cited work, New and Improved: The Story of Mass Marketing in America, Basic Books, N.Y. 1990 pp 4-12, Richard Tedlow outlines three stages: Fragmentation (pre 1880s) in which markets operated at a regional level; Unification or Mass Marketing (1880s-1920s); Segmentation (1920s-1980s)- marketing differentiation based on demographic, socio-economic and lifestyle factors. In a subsequent work, published three years later, the author added a fourth era, termed Hyper-segmentation (post 1980s); See Tedlow, R.A. and Jones, G., The Rise and Fall of Mass Marketing, Routledge, N.Y., 1993 Ch 2, the authors added as the fourth era
  7. ↑ Louvieris, P., Driver, J. 2001. New Frontiers in Cybersegmentation: Marketing Success in Cyberspace Depends in IP address. Qualitative Market Research. 4. (3). pp. 169-181.
  8. ↑ "Micromarketing".
  9. ↑ Weitz, Barton and Robin Wensley. Handbook of Marketing, SAGE 2002.
  10. ↑ "How 'Micro Marketing' Can Create Macro Results for Your Brand". Entrepreneur. 29 January 2015. Retrieved 28 October 2015.
  11. ↑ Kochanov, Ilya (23 August 2007). "Facebook Will Use Profiles To Target Ads, Predict Future". TechCrunch. Retrieved 3 November 2015.
  12. ↑ Vara, Vauhini. "Facebook Gets Personal With Ad Targeting Plan". The Wall Street Journal. ISSN   0099-9660 . Retrieved 3 November 2015.
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