Assignment:
Existentialism - a school of thought based on a conception of the absurdity of the universe
Market segmentation, as realized by today's marketers, was pioneered by Wendell Smith in 1959. Smith proposed market segmentation as an alternative to product differentiation. In 1978, Jerry Wine further supported Smith's theories, arguing that new segmentation bases, data analysis technologies, and market segmentation were necessary in strategic decision making. In 2009, the Journal of Marketing Management dedicated an entire issue to market segmentation, echoing the idea that the majority of marketing energy was being focused on what segmentations to use in direct consumer marketing rather than attention being provided on business-to-business marketing and business-to-business marketing services.
With the rise of relationship marketing and consumer relationship management (CRM) as a potential successor to traditional market segmentation, it has been noted that many CRM projects have failed because of an unsteady market segmentation foundation. In a 2005 Harvard Business Review study of 30,000 new products released in the United States, a reported 85% failed due to poor marketing segmentation. At the base of poor market segmentation is poor segmentation definition in the thinking that all similar people will behave in a similar manner. Provided examples include Boy George and the Archbishop of Canterbury both being segmented as 'AS' (Anglo-Saxon), but acting very differently. Another example is the common market segment of 18-24 year-old females. Not all women between these ages will respond the same to the same stimuli.
Despite the difference in market segmentations, every market can be defined as what is bought and used, and why it is bought and used in these ways. The supplier's role is to understand these behaviors and the rationale behind the behaviors, rather than impose customers into premeditated market segments. After seventy years of formal marketing, it has become apparent that market definition and market segmentation are the basis of successful marketing. How these traits are translated and applied to each situation determine the outcome of the venture.
Discussion questions
It is better marketing practice for companies to focus on product differentiation or marketing segmentation? Why?
Do you agree that market segmentation as practiced (socio-economic, demographic, geo-demographic, etc) is not the true basis for successful marketing? Is there a product you endorse that you are not the target market segment? What lead you to endorse this product?
Reference
McDonald, M. (2010). Existentialism--a school of thought based on a conception of the absurdity of the universe. International Journal Of Market Research, 52(4), 427-430. doi:10.2501/S1470785309201363.