Question

Post about the ethics/desirability of tracking information about people to the extent that we can apply the "segment of one" marketing.

Answer 1

Marketers must leverage the power of insight-driven personalization and use a predictive or prescriptive approach to understand the needs and desires of customers. The end goal should be building a “segment of one” for the customer. ‘Segment of one’ marketing or smart segmentation is now possible because of the rise of sophisticated data-driven marketing over the last twenty years. There has been a proliferation of new channels that businesses are using to collect data across multiple touchpoints, giving them a previously unattainable level of insight into a customer’s behaviour, preferences and expectations.

Market segmentation is a crucial marketing strategy. Its aim is to identify and delineate market segments or “sets of buyers” which would then become targets for the company's marketing plans. The advantage to marketing management is that this technique divides total demand into relatively homogeneous segments which are identified by some common characteristics. These characteristics are relevant in explaining and in predicting the response of consumers, in a given segment, to marketing stimuli.

The market can be subdivided by geographic, demographic, psychological, psycho‐graphic or behavioural variables. The advantages and disadvantages of each of these types of segmentation variables are discussed in detail in this paper. Kotler (1984) has identified four requirements that a marketer can use in evaluating the desirability of potential market segments, namely measureability, accessibility, substantiality and actionability. Once a segment has been identified which meets these requirements, it is possible to develop a product or service which meets the unfulfilled needs of this segment. A marketing mix can then be devised to reach the segment identified economically and efficiently. A strategy of market segmentation attempts to regain some of the benefits of the closer association with customers which was the strength of traditional business operations.

Criticism of marketing focuses largely on two areas: its “excesses” and its “expertness.” “Excesses” are about purposefully shoddy and objectionable products, inadequate warranties, deceptive or objectionable advertising, misleading packaging, questionable selling practices, and emphasis on tawdry values. These are the basis of what’s broadly referred to as the “consumer movement,” or “consumerism.” “Expertness” refers to the special ways marketing thinks about and approaches consumers. Most people define consumer needs or wants in terms of products and their functional attributes—what a product does, how it performs, tastes, or looks. Marketers do the same, but much more. They think also of how products perform in terms of consumers’ psychological and psychosocial needs and wishes. These tend to be complex, subtle, and manipulatable. Individuals often don’t perceive any need for particular products until they have been persuasively exposed to the possibility of having them—and it is marketing experts who expertly do the persuading. When an expert takes on an amateur, especially when money is involved, the general feeling is that it’s unfair.

The true practitioner of the marketing concept is supposed to find out what consumers want or need and try to satisfy these needs—if that makes economic and strategic sense. Assuming for the moment that one wants to cater carefully to consumer wants and needs (and that’s not always a justified assumption—there are charlatans and sharpshooters everywhere, in all professions), if you think for a moment about the process of trying to practice the marketing concept carefully, you quickly see how things will necessarily go wrong. There is target identification—the specific groups in the population that the necessary marketing effort (usually called “program”) will go after—not just people with the indicated need but also people with the wish, will, and money to try to satisfy it. Marketers identify potential consumers along demographic and, especially in consumer goods, psychosocial terms. If, for example, there are 500,000 potential consumers of the product, the marketer wants to know specifically who they are—young or old, male or female, rich or poor, urban or rural, “with-it” or “square,” active or passive, confident or concerned. A basic thrust of behavioral research in marketing is to suggest that psychosocial factors are at least as important as demographic factors in defining a market segment. In other words, consumers who share a common set of attitudinal, perceptual, and sociological characteristics are more likely to share a particular set of needs than, say, consumers in the same age or income group. In the end, the marketer develops a program to coincide, to the greatest extent possible, with the attributes of the consumer target group. Unfortunately, the “greatest extent possible” is always full of disjunctions and static. Given the target group, marketers must make trade-offs regarding specific product features, packaging, personal selling, copy strategy, distribution channels, attendant services, price, advertising media, and much more. And while marketers typically view the “audience” for the selected program as a function of a media plan, audience also depends on the choice of channels of distribution. And depending on how much personal selling is used either directly or through the distribution channels, audience is a function of the “call instructions” given to the sales force.