What’s all this marketing garbage

Well, seeing how I’m working on my MBA I thought I’d start sharing some of my works.  Let me know what you think.

Market Fragmentation vs Demographic Segmentation

In this week’s articles we are faced with the challenges of addressing a constantly changing market segment or segments.  The economic downturn has made the consumer a difficult mark to generalize and therefore companies must adjust their long-term strategies to capitalize on these moving targets.  Historically market segmentation has been a task in generalizing and aggregating like minded consumers into convenient buckets.  This allows marketers to craft a message directed at a cross-section of reasonably like minded individuals.  Up until recently this has been ample for getting the message out to prospective consumers, but times are changing.  With the onset of online and social media networks, consumer segmentation is no longer adequate, marketers must “fragment” and not just segment.

In the AE article “Wooing Luxury Customers” the author talks about three levels of fragmentation of the Luxury segment, the Ultra-High net worth, Wealth, and Aspirational.  All three of these are sub-segments of the luxury market.  This goes beyond the five types of demographics that are normally associated with Marketing: age, gender, income level, race, and ethnicity.[1] The goal with drilling down into each of these fragments is to better deliver an experience or perception of value specifically tailored to the target consumer.  In this case the luxury shopper is looking for something that delivers more than just a product they are looking for that experience, even when “money is tight[2].

In addition to further devolving market segments into smaller and more specific fragments, companies should look at new or newly evolving segments.  For example, the Born-Again Christians are a rapidly growing population that the AE article “The Halo Effect” discusses.  According to the article, as of February 2005, there were 72 million people that would consider themselves in this group[3].  Although there may be some stigmas and social dangers associating oneself with groups that can have a negative, or at least a polarizing, effect on others, there is no avoiding the fact that there are a lot of people who can be marketed to by focusing on these segments.  A key long-term strategy for companies should be to routinely visit or re-visit niche markets to understand if they are a growing segment that deserves some closer attention.

Age, or more specifically, the youth demographic is a challenge for marketers.  A long-term plan for marketers should most likely be, don’t have a long-term plan.  Rather marketers should stay on top of the latest trends and try as hard as they can to stay in the loop with the youth of today.  One huge advantage companies have today is online and social media.  The numbers quoted in the AE article “Youth Marketing, Galvanized” contrast MTV versus Facebook and MySpace unique visitors in one month in 2007[4].  This contrast shows a difference of 156 million, in favor of the online community.  Today’s youth is an ever-increasingly connected segment, when was the last time you saw a teen or tween without a cell phone either stuck to their ear or in between their texting thumbs?

The amount of media young people consume varies substantially by age, with those in the 11- to 14-year-old and 15- to 18-year-old groups exposed to the most media: up to nearly 12 hours (11:53) in a typical day, between 3½ and four hours more than 8- to 10-year-olds. The other very large demographic difference in media exposure is between White youth and Black or Hispanic youth. The latter two groups consume nearly 4½ hours more media a day (13:00 for Hispanics and 12:59 for Blacks, compared to 8:36 for Whites). Boys are exposed to almost an hour more of media each day than girls (11:12 vs. 10:17), with most of the difference coming from console video games (:56 vs. :14).[5]

Marketers must be able to adapt quickly and deliver their messages to this tech-savvy audience and understand that what’s cool today is uncool tomorrow.[6]

All in all, marketers should be taking advantage of new media and the ability to fragment their audiences down to the smallest factor and by doing so they will be able to deliver a specific message to their intended audience.  Use of new technological advances with geo-location tagging and location aware advertising will give companies a long”er”-term strategy that should allow them to keep ahead of the curve.  However, marketers must understand that rapid change is the new norm and legacy marketing strategies will only hinder their abilities to compete.


[1] http://en.wikipedia.org/wiki/Demographics#Demographic_profiles_in_marketing

[2] AE Article21, P 83

[3] AE Article 22, P 85

[4] AE Article 23, P 88

[5] Henry J. Kaiser Foundation Generation M² http://www.kff.org/entmedia/upload/8010.pdf

[6] AE Article 23, P 89.

AE Article = Article number in Marketing 09/10 Annual Editions by McGraw Hill

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