One advantage to demographic variables is that they are readily available through large, national, epidemiological surveys. Product Differentiation and Market Segmentation as Alternative Marketing Strategies Author (s): Wendell R. Smith Source: Journal of Marketing, Vol. In this chapter, health campaigns are broadly defined as communication strategies intentionally designed to encourage people to engage in the actions that prevent illness and injury and promote wellbeing. Of all aspects of audience segmentation, the methods, procedures, and consequences for labeling and describing groups have received the least attention. [59], Behavioural segmentation divides consumers into groups according to their observed behaviours. Although this does not address whether segments are discovered or made by researchers, it is important for researchers to be systematic and explicit about their decisions, including noting what was not included in the analysis and its limitations. PDF Demographic Strategy of Market Segmentation A major step in the segmentation process is the selection of a suitable base. Audience segmentation involves dividing a larger population that need to be reached into groups that exhibit similar patterns of responses across a complex set of variables, and differences from other groups on those same variables (Grunig, 1989; Slater, 1996). How responsive are members of the market segment to the marketing program? The responses provided by a sample are useful for audience segmentation and related campaign design to the extent to which the sample represents the variation within the population. Furthermore, some proximal predictors of behavior transcend demographic boundaries (Maibach et al., 1996). For example, in the health industry, planners often segment broad markets according to 'health consciousness' and identify low, moderate, and highly health-conscious segments. Do buyers have bargaining power in the market? Benefit Segmentation: A Decision-Oriented Research Tool - JSTOR Demographic variables, in this example, are distal predictors related to the health behavior through more proximal predictors of behavior (e.g., motivations and constraints). Different persuasive strategies may be needed to achieve maintenance, behavior initiation, and cessation; different theories of persuasion are more effective at forming, changing, or strengthening beliefs. In the digital age, vast amounts of behavioral data are available on consumers, from a record of previous purchases to online profiles on social media sites. Yet it wasn't until Wind's (1978) review of the state of market segmentation that the topic went to the top of the agenda of researchers and practitioners. Ennis, "Market Segmentation: A Review". It is also a fundamental mechanism of audience-oriented health communication (Maibach, Maxfield, Ladin, & Slater, 1996). Is the segment stable over time? election of Wendell Smith to its Presidency for 1958-1959. Even goods such as salt and sugar, which were once treated as commodities, are now highly differentiated. [64] The benefits-sought by purchasers enables the market to be divided into segments with distinct needs, perceived value, benefits sought, or advantage that accrues from the purchase of a product or service. For example, imagine that a state health department has the goal of immunizing 95% of children aged 5 and younger who reside in their jurisdiction. Before finalizing a segmentation solution, it can help to use a variety of sampling strategies and test whether the segments replicate. The next frontiers for audience segmentation arise with the massive amounts of intensive, longitudinal data available on peoples behaviors and the rise in consumer savvy about personalized campaigns. One benefit to LCA is that it allows researchers to test whether other variables, such as beliefs or demographics, predict the odds of membership in one audience segment relative to another (i.e., reference class; Collins & Lanza, 2010). During the research and analysis that forms the central part of segmentation and targeting, the marketer will have gained insights into what motivates consumers to purchase a product or brand. LCAs primary aim is not to identify a persons group membership. Hoek, J., Gendall, P. and Esslemont, D., Market segmentation: A search for the Holy Grail?. [9] From the 1880s, German toy manufacturers were producing models of tin toys for specific geographic markets; London omnibuses and ambulances destined for the British market; French postal delivery vans for Continental Europe and American locomotives intended for sale in America. The sample does not need to focus on a geographic boundary (e.g., American adults); it can be focus on any target for intervention, such as patients in a medical practice or visitors to a science museum. However, data collection is expensive for individual firms. Product Differentiation and Market Segmentation as Alternative Here are 5 Official Sources of Free Data That Can Help", "Big Data: 33 Brilliant and Ad Free Data Sources for 2016", https://en.wikipedia.org/w/index.php?title=Market_segmentation&oldid=1152455258, Creative Commons Attribution-ShareAlike License 3.0, Niche marketing: focus efforts on a small, tightly defined target market, Multiple niches: focus efforts on 2 or more, tightly defined targets, One-to-one marketing: customize the offer for each customer. When the segments have been determined and separate offers developed for each of the core segments, the marketer's next task is to design a marketing program (also known as the marketing mix) that will resonate with the target market or markets. Instead, LCA is used to identify coherent subgroups based on the measured indices and to describe a groups profile based on their responses to the measured indices and to determine how much of the population is likely to fall within each group. For example, a marketer might want to learn more about the motivations and demographics of light and moderate users in an effort to understand what tactics could be used to increase usage rates. Abstract. Segmentation : une approche mthodologique - JSTOR Two common approaches for defining groups are demographic separation and empirical clustering. An alternative strategy is to segment the audience based on shared, targeted behaviors, in this case, stewardship intentions (e.g., Smith et al., 2015). Is the market segment substantial enough to be profitable? Not everyone favors audience segmentation. The predictors can be used to refine which strategies to incorporate in messages delivered to segment 1 but not segment 2. To increase market share by product differentiation, Smith argued that marketers should categorize diverse consumer populations into homogenous, mutually exclusive subgroups based on shared qualities, such as product needs, and then design campaigns to best match a particular segment with the goal of influencing their purchasing behavior. Culture is a major dimension of consumer behaviour and can be used to enhance customer insight and as a component of predictive models. From a pragmatic perspective, Maibach et al. Hybrid segmentation is a family of approaches that specifically addresses this issue by combining two or more variable bases into a single segmentation. In addition, the goodness of fit indices may not converge on the same model, and researchers will need to choose a model based on qualities of different indices (see Collins & Lanza, 2010 for a review). The statistical procedures include k-means clustering (Hartigan & Wong, 1979; Moutinho, 2011), Q methodology (McKeown & Thomas, 2013), and latent class analysis (LCA; Collins & Lanza, 2010). Market segmentation assumes that different market segments require different marketing programs that is, different offers, prices, promotions, distribution, or some combination of marketing variables. In contrast, post-hoc segmentation makes no assumptions about the optimal theoretical framework. In the study of public opinion, Dewey (1927) introduced the notions of publics as subgroups who shared similar values or interests about a given issue. Wendell R. Smith is generally credited with being the first to introduce the concept of market segmentation into the marketing literature in 1956 with the publication of his article, "Product Differentiation and Market Segmentation as Alternative Marketing Strategies. and Roberts, M.L., "Towards an Optimal Market Target: A Strategy for Market Segmentation", Ahmad, R., "Benefit Segmentation: A potentially useful technique of segmenting and targeting older consumers,", Loker, L.E. For example, demographics may represent or create shared life circumstances that lead to shared motivations to enact or constraints on enacting a health behavior. Market Segmentation - Are You Optimizing It? - The Artist Evolution As stated earlier, no two people are exactly the same. As a result of his terminology, Smith positioned market segmentation and product differentiation as alterna- tives rather than complements. The segmentation, targeting, positioning (STP) marketing model