Unit 9. Marketing Communications

Key words: market segments, demography, demographic segmentation, age-sex pyramid, personal disposable income, socio-economic groups, lifestyle segmentation, conscience spenders, informative advertising, persuasive advertising, advertising media, public relations (PR), sales promotions, direct marketing, product life-cycle, extension strategies, diversification, product portfolio

9.1. Targeting an Audience

Market segmentation

Although people talk about a market as if it were one large group of similar consumers, any market is in fact made up of a number of smaller groups of buyers called market segments.

A market segment consists of a group of consumers with certain common characteristics, for example, sex, age, or lifestyle. Knowledge of these characteristics can be used by firms to predict consumer response to marketing activities, namely new or improved products, changed pricing strategies, distribution or promotion methods.

Increasing competition between firms in some industrial sectors and between products, especially from a growing number of overseas firms, has made mass marketing more difficult. As a result, firms are increasingly aiming their products and advertising at smaller market segments.

There are a number of ways of dividing up a market into segments:

• demographic: by age, sex, socio-economic group, income;

• geographic: by country, region, urban, rural;

• lifestyle: by purchasing habits, ethical values, religion, political views.

Having identified different market segments, producers can use their knowledge to aim their products and marketing activities at these different groups, known as target audiences.

Demographic segmentation

Demography is the study of population. There are various features of the population which can be used to group consumers into different market segments. These may be age, sex, income, socio-economic status, and geographical location:

Age. Markets can be divided into groups of consumers by age. For example, the package holiday industry has designed special holidays and promotional strategies aimed at the 18-30 age group, parents with young children and the over-50s.

Sex. Men and women have different buying habits and tend to be attracted by different kinds of promotions and marketing activities. For example, a recent study found that, when shopping, men were more likely to pick up and consider products coloured either blue or green, while women were more likely to look at products packaged in lighter shades, particularly pink.

Income. Personal disposable income refers to the amount of income a person has to spend or save after income tax and National Insurance have been deducted. Different lifestyles and products are enjoyed by people with different levels of disposable income. For example, a Jaguar car, a holiday in the West Indies, and a luxury house are items that are more likely to be bought by people on high incomes. Even within a particular brand there may be differences in the characteristics of consumers who may buy. For example, a top-of-the-range Ford Mondeo car will be more expensive than the basic model and will tend to be bought by a different market segment.

Socio-economic status tends to be an indicator of both education and income, and is often used instead of these criteria to segment the market. Research has shown that consumer habits do vary by social class. For example, different classes have quite different media preferences. Upper-class people show preferences for magazines and newspapers, while lower social classes show a preference for television. Even in their TV viewing habits, classes show different preferences, with upper classes favouring news and drama programs and lower classes preferring soap operas and quiz shows.

There is also some research evidence to suggest that people with more education are more likely to buy cheaper own-label products rather than expensive brand labels. The suggestion is that more educated people are more willing to risk such products because they are less influenced by the heavy advertising that goes with the popular brand names.

Researchers typically use six main categories of social class or socio-economic groups (SEGs) to segment the population:

A – Upper middle class – higher managers, administrators or professionals

B – Middle class – intermediate managers, administrators or professionals

C1 – Lower middle class – supervisory or clerical and junior managers, administrators or professionals

C2 – Skilled working class – skilled manual labourers

D – Working class – semi-skilled and unskilled manual workers

E – Very low income earners – unemployed, pensioners, casual workers

Geographical segmentation

Incomes, buying habits, and consumption patterns vary across regions of the country, and segmentation by region is a useful means of identifying target audiences. Consumers within different regions can have very different levels of purchasing power, depending on regional levels of unemployment and the kinds of jobs available. Using this knowledge of broad geographical patterns, market analysts can identify market segments in particular regions and create tailor-made marketing and advertising promotions to stimulate sales.

TV regions are often used as a way of identifying regional boundaries and of creating regional segments. Television advertisements can then be designed to appeal to particular regional markets.

Lifestyle segmentation

In recent years researchers have found that there is a less reliable link between social-economic status and buying habits. For example, a builder may drive an expensive sports car while a barrister may drive a Mini.

Lifestyle segmentation involves identifying how groups of people choose to express their personality. Using market research into consumer lifestyles, firms build up profiles which provide information about potential customers. These profiles provide information on day-to-day habits, age, religion, aspirations, leisure pursuits, politics, and many other features of customers. Firms can use this information to develop promotional strategies aimed at different target audiences.

Conscience spending

Increasingly consumer spending decisions are linked to the moral views of consumers. Nowhere is this more evident than in the market for ‘green’ or environment friendly products. For example, sales of roll-on and pump-action deodorant have increased in recent years, while sales of spray cans have fallen due to wider awareness of the effects of chemicals released into the atmosphere.

This growing ‘conscience’ market segment has been carefully targeted by firms, and appropriate marketing and advertising campaigns have been designed to encourage people to purchase. For example, The Body Shop has built a large chain of stores around Britain by providing a range of cosmetic products which are advertised as untested on animals.