Organizations communicate core messages (position themselves) to different types of audiences (target groups) that they select out of a list of possible audience segments or profiles, defined according to a number of segmentation criteria. On the basis of this segmentation, audience profile selection, and positioning decision, organizations will define communication objectives and messages and build a communication plan.
The communication of organizations is targeted at different types of audiences. Marketing communication is all commercially relevant communication directed at customers and potential customers with the intention of selling products in the short or long term. This type of communication can be directed at individual end consumers (“business-to-consumer communication”), but also at other companies or organizations (“business-to-business communication”). Corporate communication is all communication by organizations the objective of which is to establish and/or maintain a good corporate identity, corporate image, and reputation, and build good will with various stakeholders or publics. Stakeholders are (groups of) individuals or organizations that are important for the organization in that they can affect or are affected by the achievement of an organization’s goals and purposes.
Segmentation of Business-to-Consumer Advertising Audiences
In Table 1 a framework and examples of variables used to segment consumer markets are presented. Objective criteria can be measured straightforwardly. Inferred variables have
Table 1 Consumer market segmentation criteria
to be defined before people can be classified into groups. General criteria hold in all behavioral circumstances. For instance, a person is always male or female, no matter what buying situation she or he is in. On the basis of behavioral criteria, (potential) consumers can belong to different segments, depending on the product or buying situation concerned. For instance, a person can be a loyal buyer or a heavy user of a brand of beer, but an infrequent and brand-switching consumer of a brand of milk.
Markets can be divided into geographical segments such as continents, countries, regions, neighborhoods or cultures. Consumer needs, wants, and reactions to marketing efforts often differ between these geographical or cultural segments, and therefore may require a different communication approach. For instance, Stella, a Belgian beer, is considered an ordinary lager in most continental European markets, but is perceived as a luxury beer in the UK.
Demographic segmentation divides the market on the basis of sex, age, income, race, education, and profession. For instance, Axe deodorant targets young men, promising increased sex appeal in its communication campaigns, and BMW launched the Compact series for smaller budgets. Consumer markets can also be targeted on the basis of household life-cycle criteria such as marital and occupational status and the age of children. People are single, marry, get a job, have young children or adolescents, marry again or become single again, and retire. In each of these stages needs and wants are different, and communication strategies will have to be adapted to these different situations. For instance, couples with young children are interesting markets for toys and diapers, while retired couples may be into buying new furniture or may decide to travel extensively.
Social stratification is a permanent and ordered division of society based on criteria such as education, profession, income, and status. People in different social classes may have different needs and react differently to marketing communication stimuli. For instance, middleclass consumers may be convinced by buying arguments related to “showing off their wealth,” while members of the upper classes may rather want to consume in a “low-profile” way.
Lifestyle measurement is based on the activities, interests, and opinions of consumers. Activities include how people spend their money and time, i.e., work, leisure, product use, shopping behavior, etc. Interests can be in fashion, housing, food, cars, culture, and so on. Opinions are attitudes, preferences, and ideas on general subjects such as politics or economics, or on oneself and one’s family. Different lifestyle groups may be interested in different products and activities, and are susceptible to different arguments in marketing communication.
Personality traits are relatively stable characteristics of individuals that guide their specific behavior. For instance, a person can be extravert or introvert, sensation-seeking or not, high or low affect intense, or have a low or high need for knowledge. Extravert individuals buy different types of perfume than introvert people; affect intense consumers react more positively to emotional advertising; and people high in need for knowledge like more information-dense communication. Although psychographic criteria may be more relevant than demographic or geographic ones, they are usually more difficult to measure and to use as segmentation criteria.
Organizations can divide their consumers with reference to product- or brand-related aspects. Consumers can be segmented on the basis of the occasion on which they use a product or brand. For instance, a brand of orange juice can be targeted at a segment of consumers drinking it at breakfast, but also at target groups that use it in cocktails in the evening. Customers can be loyal to one single brand, loyal to a set of brands, or brand switchers. Switchers will be more easily convinced by incentives such as sales promotions, while those loyal to one brand may be more sensitive to image advertising or loyalty promotions. Consumers can also be heavy, moderate, or light users or buyers of a product. Heavy users are important for companies because they constitute the stable basis of their business. Individuals can also be segmented on the basis of their usage status: nonuser, potential user, first-time user, regular user, or ex-user. Nonusers will never buy the product (for instance, people without little children will not buy diapers). Companies should avoid communicating with them. Potential users should be persuaded to try the product, first-time users to become loyal, and regular users to stay loyal.
Especially for direct marketing purposes (direct mailing, telemarketing, etc.), customers can also be divided on the basis of their buying history, i.e., the recency and frequency of their purchases and the amounts they have spent buying products from the company. On the basis of each of these criteria or combinations of characteristics, the mailing frequency and/or the type of message or offer can be adapted.
Markets can often be segmented on the basis of specific benefits that consumers prefer or are looking for. For instance, people may look for a dishwashing liquid that performs well, is mild, or is cheap. Consumers that buy toothpaste may base their choice mainly on its price, medical characteristics, aesthetic properties, or taste. For each benefit segment an appropriate product and a specific communication campaign may be developed.
Hierarchy-of-effects models assume that consumers go through different stages in a welldefined sequence in responding to marketing communication, namely a cognitive (think), affective (feel), and behavioral (do) stage. Consumers can be segmented on the basis of which stage they are in at a certain moment in time, and different messages will have to be conveyed to different hierarchy-of-effect stage segments. One of the oldest frameworks is the AIDA model (attention, interest, desire, action). Communication targeted at potential consumers should grab their attention. People who are attentive should be made interested in the product. Interested people have to be persuaded to desire the product, and finally people who desire the product should be urged to buy it. Depending upon the stage people are in, messages and persuasion strategies have to be adapted. Other well-known hierarchy-ofeffects models are the AIETA or adoption model (awareness, interest, evaluation, trial, adoption) and the Lavidge and Steiner model (awareness, knowledge, liking, preference, conviction, purchase).
On the basis of individual and relevant segmentation variables, segmentation profiles are defined that are combinations of these criteria. For instance, a segment may be defined as “all middle-class men between 20 and 30 years old that are heavy users of our product and price-sensitive.” Companies will define several of these profiles and select a number of them as target groups for their marketing communication campaigns.
Segmentation of Business-to-Business Advertising Audiences
Organizations do not only sell to individual end consumers. Often marketing communication is directed at organizations or companies. Target segments can be based on the type of organization, organizational characteristics, buying roles of individuals within that organization, and the purchase situation (Table 2).
Table 2 Business market segmentation criteria
Resellers or distributors buy products to market them to the next intermediary in the distribution chain or to the final customer. For instance, supermarkets buy food products from Nestlé and Coca-Cola, and sell them to end consumers. Users are industrial companies or organizations that buy products or services to support or enable the production process or the activities of the company in general (machinery, copiers, paper, cleaning products, etc.). Original equipment manufacturers (OEMs) buy industrial goods and incorporate them in their own products. For instance, Monroe sells shock absorbers to car manufacturers who build them into their cars. Government organizations can be resellers, users, or OEMs of products. They buy paper, computers, and cleaning products for their daily operations, but also bricks and road construction materials to build into their infrastructure, and theatre plays to resell to the visitors of their cultural centers. Government buying procedures are characterized by complex decision-making and legal constraints. Therefore, they are often treated as separate target groups that require a specific communication approach.
Companies and organizations can differ in terms of size, industry, location, level of technology and sophistication, etc., and may therefore constitute fundamentally different market segments that require different communication campaigns. For instance, communicating with a small company in a traditional industry to sell computer equipment will be radically different from approaching a large IT company.
In business buying situations a buying center or decision-making unit (DMU) is often comprised of several members who play different roles in the buying process. They constitute different segments that may require different communication segments and approaches. For instance, information gatherers in manufacturing management may need different types of information and different arguments to be persuaded than top management decision-makers or users in a research and development department. It is important to differentiate the message according to the different information needs of DMU segments.
Finally, the purchase situation is also important. In a new task, the DMU will often be large and engineering and research and development will be key functions. In modified rebuy situations, the DMU is medium-sized and comprises production and top managers. In straight rebuy situations, the DMU is often small and comprised of purchasing managers.
Segmentation of Stakeholders
Corporate communication is aimed at correctly communicating the corporate identity and strategy and at developing and maintaining a good image, reputation, and good will with various stakeholders or publics. Most organizations have multiple stakeholders, such as shareholders, employees, labor unions, governments, suppliers, distributors, banks, pressure groups, competitors, media, and so forth. Corporate communication campaigns aimed at these stakeholders should use various tools, such as public relations, corporate advertising, annual reports, press releases, and internal communication tools (e.g., newsletters, presentations, mailings, bulletin boards) to convey the appropriate message to these various publics.
Market segments have to be measurable: it should be possible to gather information about segmentation criteria and about the size, composition, and purchase behavior of each segment. Target groups have to be substantial enough to warrant separate and profitable marketing campaigns to be developed particularly for that segment. Segments have to be attainable, i.e., accessible and actionable. It should be possible to identify segment members and target the marketing communication campaign at them separately. Finally, market segmentation should lead to more homogeneous sub-groups in that the members of one group should react similarly to marketing stimuli and differ in their reactions to these stimuli from the members of other segments. For instance, there is no point in defining men and women as different segments if they react similarly to advertising and sales promotions.
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