Dear Class,
I thought I will take this opportunity to share some interesting facts about evolution of market segmentation. The evolution of segmentation followed few sequences and trial after trial by the car manufacturers in the US. Until 1960s, few firms practiced market segmentation philosophy. Their thinking has passed through three stages. In mass marketing, the seller mass produces, mass distributes, and mass promotes one product to entire market. At one time Coca Cola and Ford Motors produced only one drink for the whole market, hoping it would appeal to everyone. The argument favoring mass marketing is lower cost of production leads to lower prices and a notion that customer wants cheaper price. This strategy worked as long as the company had monopoly over the market. By 1960s and early 1970s, product variety marketing got momentum, when Chevrolet Motor in the US introduced several models and choice of colour for their car to customers in response to Ford Motor's one colour and one model strategy. Here, producers sale same product with different features. These products were designed to offer variety to buyers rather than appealing to different market segments. The argument for this strategy was that consumers have different tastes that change over time. Consumers seek variety and change. By 1980s, target marketing was proposed by leading marketers such as McCarthy, Kotler and Levitt- here the seller identifies different segments and tailor marketing mix programme to suit the needs and wants of those segments. Today marketers have moved away from shot gun approach (i.e. scattering their marketing effort) to rifle approach (i.e. focus on one buyer who have the greatest purchase interest.
Essentially each customer is a segment (Kotler and Keller, 2011) and is the case in B2B market where there are fewer but larger buyers. In consumer market, it is impossible to cater to each customer individually that's when Kotler wrote his thesis about segmentation. Market segmentation can be seen somewhere between two extreme. At one end is mass market and the other end is single customer.
As a result of increasing fragmentation of markets, target market is taking form of micromarketing where companies can tailor their marketing programmes to the needs of narrowly defined geographic, psychographic, or benefit segments. The ultimate form of target marketing is customised marketing in which companies adapts its product and marketing programme to the needs of a specific customers. Factors that fueled the move towards micromarketing and customised marketing is the presence of diverse ethnic group in markets; and improved information and marketing research technology also encourage micromarketing. For example, retail store scanner pinpoints exactly which specific segment are buying what. E.g. One Card. Customised marketing can take form of mass customisation. For example, customers can design their own running shoes at Nike's website. In Japan customers can design their own home, change room layout, ceilings, floors. Within 30days the family can move into its customised house.
Can you discuss the role of technology is mass customization? How technology can be used to serve target customer better?
Reference
Kotler, P. and Keller, C. ( 2011). A framework for marketing management, Prentice Hall: Boston.