Micromarketing

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This article is about the marketing strategy. For the unattended vending concept, see Micromarket.

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]

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.[8]

"Global ad spending is predicted to reach $662.73 billion by 2018. Unfortunately, a lot of those dollars will go to waste."[9] 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.[10] 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."[11]

See also[edit]

References[edit]

  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. ^ Weitz, Barton and Robin Wensley. Handbook of Marketing, SAGE 2002.
  9. ^ "How 'Micro Marketing' Can Create Macro Results for Your Brand". Entrepreneur. Retrieved 2015-10-28. 
  10. ^ Kochanov, Ilya. "Facebook Will Use Profiles To Target Ads, Predict Future". TechCrunch. Retrieved 2015-11-03. 
  11. ^ Vara, Vauhini. "Facebook Gets Personal With Ad Targeting Plan". Wall Street Journal. ISSN 0099-9660. Retrieved 2015-11-03.