Beruflich Dokumente
Kultur Dokumente
Declan P Bannon
Paisley Business School,
University of Paisley,
Paisley, PA1 2BE
0141-8483377
declan.bannon@paisley.ac.uk
Abstract
Marketing segmentation and targeting techniques are widely used in the political
arena. However the appropriateness, limitations and efficiency of marketing
segmentation have received little critical appraisal from the academic literature.
The objectives of this paper are firstly to explain the potential benefits and limitations
of the marketing segmentation process in the light of nearly 70 years of academic
literature. Secondly, to review the methods in which segments can be constructed.
Thirdly, to introduce a generic tool for targeting and to consider the process in the
context of political marketing.
A generic framework for evaluating and prioritising segments has been developed and
is described in detail along with criteria for application.
Introduction
The objectives of this paper are firstly to explain the potential benefits and limitations
of the marketing segmentation process in the light of nearly 70 years of academic
literature. Secondly, to review the ways in which segments can be constructed.
Thirdly, to introduce tools for targeting and positioning and to consider the process in
the context of political marketing.
Frederick first introduced the concept of segmentation in 1934 (Goller et al, 2002).
Over the last 70 years it has attracted considerable interest from both academics and
practitioners as the importance and benefits became apparent for consumer, b2b,
services, not for profit, social and societal marketing. Goller et al, (2002) classifies
the academic research of segmentation into 4 main areas:
1. the development of segmentation bases and models (Hummel, 1960; Haley, 1968;
Wind and Cardozo, 1974; Bonoma and Spapiro, 1983; Moriarty and Reibstein,
1986; File and Prince, 1996);
2. research methodologies (Webster, 1978; Silk and Kalwani, 1982; Flodhammar,
1988; Mitchell,1994);
3. the development and application of statistical analysis tools (Frank and Green,
1968; Green and Carmone, 1977; Rao and Winter, 1977; Acito and Jain, 1980;
Klastorin, 1983; Green and Krieger, 1991; Fish et al, 1995; Balakrishnan et al,
1996);
4. segmentation implementation (Beik and Busby, 1973; Mahajan and Jain, 1978; De
Kluyer and Whitlark, 1986; Piercy and Morgan, 1995).
Goller et al, (2002) contend that the above research areas have mainly been developed
in isolation of each other that has lead to a fragmented understanding of the process as
a whole. What at first appears to be a relatively straight forward process of
segmenting, targeting and positioning (STP), in reality becomes a highly complex
field of study.
In the early 1930's Joan Robinson and Edwin Chamberlain formulated the theory of
imperfect competition. This was driven by the dissatisfaction with classic economic
theory of the interaction of supply and demand. These theories provided the
necessary stepping stone to the concept of marketing segmentation. It was the
recognition of heterogeneity in the demand for goods and services that led to the
disaggregation of the traditional single demand schedule and the acceptance of a
fragmented demand schedule where sub-markets or segments exist. The distinction
between product differentiation and market segmentation is an important distinction
to note. Wendell Smith in 1956 noted that product differentiation is supply led i.e.
emanates from a production orientation whilst market segmentation is fundamentally
A1 A2 A1 A1 A1 A2
B1 C1 A2 A2 B1 C1
A1 B2 B1 B1 A1 B2
Disaggregates Aggregates
C1 B1 B2 C1 B1
A2 C2 C1 C1 A2 C2
C2
Economists Marketers Behaviourists
All markets are heterogeneous (Smith, 1956; Wind, 2000). The population is not
similar in terms of their desired outcomes, motives and behaviour. However
organisations may appear to offer one product or service to the whole population.
The concept of marketing segmentation is not new. Marketing segmentation has been
viewed since the 1960's as a critical process in successfully marketing. The marketing
segmentation research literature is plentiful and relatively in agreement as to the
processes involved. A segment is viewed as valid if it is measurable, accessible,
substantial, stable and unique (Baker, 2000). Approaches to segmentation research
have not changed significantly, despite a glut of academic papers on the segmentation
of heterogeneous markets (Wind, 2000).
The marketing segmentation process is not without its critics. There are several
obvious and practical issues with the process:
A market is not a mass of potential customers all with the same values, desires,
aspirations and ability to be a customer for any given organisation. However,
customers’ attitudes can be grouped into sub-groups or segments of the whole market.
Market segmentation can thus be viewed as the sub-dividing of a market into groups
with similar attributes. A market segment will be valid if a company decides it is
capable of delivering the specific requirements that match the success criteria for
marketing to that segment and that the segment is sufficiently large to be attractive.
Marketing Segmentation
• identify bases for segmenting the market
• develop profiles of resulting segments
Market Targeting
• develop measures of segment attractiveness
• select the market segments
Market Positioning
• develop positioning for each target segment
• develop marketing plans for each segment
Implementation
• development of marketing plans to implement marketing segmentation
• evaluate the benefits derived from the activities and refine the process
TYPES OF SEGMENTATION
Clustering (post hoc) segmentation designs the segments using relevant criteria
induced from research in the market being segmented. In certain cases a mixture of a
priori and clustering approaches my improve the criteria selected (Baker, 2000; Green
et al 1998; Myers, 1996; Smith & Hirst, 2001; Wind, 1978).
Cluster analysis is potentially a very useful technique, however it can prove difficult
in its application (Everitt, 1974).
Ideally, clusters should be self-evident simply by reviewing the data set and
distinguishing natural groupings within it. However the logic and robustness of the
criteria selected can be subjective and thus potentially misleading. The need for
refinement of segments has led to the development of 5 types of clustering technique
as identified by Everitt (1974):
1. hierarchical
2. optimisation partitioning
3. density or mode seeking
4. clumping
5. others
Hierarchical clustering techniques are agglomerative (collect into a mass) and are
divisive in nature. The former is typical of the approach of behaviourist who would
seek to cluster individuals based on an understanding of each individual. Economists
would use a divisive approach to segmenting the undifferentiated demand schedule.
Partitioning techniques differ from hierarchical in that they allow for adjustment of
the original clusters, created on the basis of a predetermined criterion. This
techniques allows the fine tuning of a priori cluster segments until an optimum
segment is achieved.
Density techniques attempt to differentiate between clusters of high and low density
based on meaningful parameters of differentiation.
The others category covers a multitude of techniques that do not comfortably fit with
the previous 4 categories e.g. Q factor analysis, latent structures (Everitt, 1974).
To a large extent the plethora of factors used to define market segments reflects the
difficulty of putting the normative theory of marketing segmentation into practice. The
normative theory as proposed by Smith (1956) is proactive in that one should use
knowledge of consumer characteristics to develop a marketing strategy. Whereas
most marketing managers who use segmentation studies do so reactively in that they
seek to determine the response of different marketing segments to their marketing
strategies…a purist would argue that the managerial approach is more akin to
product differentiation than a normative approach to marketing segmentation (Baker,
2000:263).
There are potentially an infinitive number of ways to segment markets. Wind (1978)
argues that the theory of marketing segmentation implies that there is a single best
way of segmenting a market. Any attempt at using a single basis for segmentation for
all marketing decisions may result in inappropriate outputs and wasted resources.
Geographic Segmentation
As the name suggests this is the segmenting a geographic landmass into sub-sets. The
vast majority of organisations use this type of segmentation usually without
consciously knowing that is what they are doing. The basis or validity of this method
is that people with similar socio-economic, cultural and lifestyle characteristics tend
to congregate in the same geographic location. As a consequence the postcode of an
individual can reveal characteristics that differentiate that person. Geographic
segmentation is easy to define, measurable and information is readily accessible.
Geo-demographic Segmentation
Market Targeting
The advantage of such a grid is that it forces the consideration of what marketing
activities or stimuli are likely to produce a response. Kotler (1997) calls this
actionability of a segment i.e. ability of an organisation to implement strategies to
serve the segment. A segment may indeed be attractive but if the organisation cannot
create a stimulus to produce a response then the resources are wasted.
Measuring the response to individual stimulus can be difficult if near impossible since
cause and effect relationships occur in a complex, multi-variant market environment.
Attractiveness of segment
1. products or services can be customised (or can be created) to meet the specific
requirements of the segment
2. specifically designed communications can be created to illicit a response
3. research can be conducted to explore which stimuli will have greatest impact
4. experiments can be carried out to evaluate response
5. distribution channels can be tailored to a segment's needs
The factors that cannot be easily identified or factored in are competitor activities. A
segment may also be attractive to one or more competitors. The effect of multiple
targeted campaigns may reduce or neutralise any potential favourable output.
However this in itself may be a favourable result, particularly in terms of game
theory. Responsiveness to stimuli is a subjective a priori estimation of the effects of
stimuli, even if research is conducted. Relative perceived responsiveness to stimuli
(RPRS) may be a better description of the responsiveness criteria i.e. the stimuli most
likely to gain a response relative to alternatives. Various authors in political
marketing have used the expression persuadable voter (Baines et al, 1999; Bradshaw,
1995; Shea, 1996), however a persuadable segment is impossible to objectively
determine and RPRS is an acknowledgement of that.
Undifferentiated Targeting
• Identifies common needs of consumers
• Appeals to broadest number of buyers
• Treats the market as a homogeneous entity
Uses:
• mass communication techniques
• mass distribution
• narrow product range or limited number of key messages
• attempts to create brand images
• large barriers to market entry are created and maintained
Differentiated Targeting
• Focuses on specific needs of distinct customer groups (market segmentation) or
product differentiation (disaggregation )
• Utilises accurate segmentation data in creating products and values for customers
or modifies the products
• Operates in one or more segments of a market
• Costs are increased due to research, product modification, production costs,
administration, distribution, promotions, consultants fees etc
Concentrated Targeting
• Company resources are directed towards one or few chosen market segments
• The company attempts to acquire a large share of a given market segment
Advantages:
• Specific knowledge of markets
• Usually high profit margins or particularly responsive segment
Market Positioning
The key is to only offer additional benefits that are truly valued by the target
audience. Too many companies take the easy option and reduce their price or in the
case of politics, promise the undeliverable. This in turn may have a negative effect
since customers' perception of quality is associated with price. Election promises
create a level of expectation that will lead to disappointment if not delivered.
1. clarity of the positioning idea in terms of what the competitive advantage is and
clarity of understanding of this position in the minds of customers
2. consistency of position is important for customers to know where they stand with
a company i.e. a consistent and sustained approach is required long term
3. credibility of positioning. If a company claims to offer high quality products then
the customer must agree that the quality of the products is indeed high. What the
customer perceives is absolute. Alternatively, if the customer thinks medium
quality goods are high quality then they will value them as high quality
4. competitiveness: products must if they are to achieve a competitive advantage,
actually offer value that competing products do not
5. communicable: the message about the position must be able to be communicated
to the target audience. As such the message should be simple, attractive and
easily encoded and decoded. The impact of a political leaflet is questionable,
particularly in the heat of a campaign when many of the electorate are engulfed by
paper. An example of good simple communication was the Green Party's slogan
of the Scottish parliamentary elections 2003, 2nd Vote Green. This was a
reference to the PR regional vote that was widely regarded (wrongly) as a second
preference vote. The message was successful and the Greens won 8 MSP places.
Other political parties attempted to communicate to their supporters that they had
3 separate votes (Scottish Parliament FPTP, Scottish parliament regional list and
local government vote) and should use all three votes for them. However this
Product Positioning
Competitor analysis and customer profiling is the key to successful positioning. This
can be objectively and operationally difficult. The starting point is to establish the
criteria that customers use when objectively or subjectively evaluating different
product offerings. Critical Buying Factors (CBF's) are those key features that provide
essential benefits to the customer i.e. the key factors that effect the buying decision.
This is a practical tool for the formation of segments and evaluating an organisation's
products in the current competitive environment. Where an organisation's product
scores poorly, the following options are available:
• sub-divide the chosen market segment into a subset of customers where your
product rates higher
• develop a higher rating in one or more of the critical buying factors
• withdraw from market segments
• develop new critical buying factors
Implementation
All members of the electorate are not equally likely to vote for a party engaged in
mass marketing. Voters do have loyalties, relationships, dislikes and are not empty
vessels into which mass marketing flows and creates a response. Certainly marketing
The majority of political parties campaigning efforts are undifferentiated e.g. TV,
press, radio, posters and leaflets. Manifestos (not that they are read by the electorate
but are usually abridged by the media) appear to be an attempt at product
differentiation, the setting out of one’s stall. However at national and constituency
level targeting is evident. Probably the most obvious evidence of segmentation is the
targeting of constituencies. This is achieved usually by identifying marginal
constituencies. Clearly this is behavioral segmentation i.e. the previous behaviour of
the electorate drives the choice of constituency. This is encouraged by the first past
the post (FPTP) political system i.e. maximisation of seats won not votes. Resources
are allocated towards the targeted marginal constituencies. An examination of
marginal constituencies in May 2003 Scottish Parliamentary election seems to
indicate electoral turnouts are slightly higher in most marginal constituencies possibly
as a consequence of these additional campaigning activities. However the additional
turnout may be due to the recognition of the electorate that every vote will count. This
uncertainty regarding cause and effect calls into question the parties effectiveness and
efficiency of resources used. The targeting of marginal seats may be viewed as mass
marketing on a targeted basis as oppose to proper market segmentation i.e.
segmentation of the electorate as a whole population.
In general, the evidence is that little true targeting takes place relative to mass
marketing. That is not to say that efforts are not made to identify supporters. Local
campaigning becomes important in marginal seats (Baines et al, 1999). Central
resources are targeted towards marginal constituencies as local campaigns are
restricted in spending by law and restricted by there ability to raise funds (spend is
restricted to under £10,000).
GOTV (get out the vote) activities are becoming more sophisticated:
• targeted time of communication that suits the individual
• leaflets, text messages, e-mails, phone calls, doorstep reminder etc
• activities can be targeted more towards supporters known sometimes not to vote.
This is achieved by cross referencing databases of supporters with the official
marked-up register of those who participated in previous elections.
There are 3 types of social product: the idea, the practice and the tangible object
(Kotler and Roberto 1989). The ‘social idea’ may be an attitude, belief or prejudice
regarding an issue. It may be consciously or sub-consciously held and may not
necessarily be something an individual or group is aware of. The second type of
social product is the area that is of most interest to political marketers because this is
the ‘social practice’ of acting out a belief e.g. the giving of blood or voting in a
particular way. The third type is the ‘tangible object’ the bag of blood or the vote
itself. Political Marketers are interested in achieving and maintaining the social
practice by gaining an insight into the practice and the creation or manipulation of
social ideas.
Social marketing’s roots are in social change strategies that traditionally employed
advertising for mass propaganda as the sole tool to achieving social change. Bias,
manipulation and the intention of influencing are all associated with propaganda and
political campaigning. So can political campaigning, social marketing and political
marketing be viewed as nothing more than political propaganda? Propaganda is most
certainly used in political campaigns. Propaganda also fits within the scope and
boundaries of definitions of marketing. However marketing does not fit within any
definition of propaganda. Marketing’s cornerstone is based on customer focus i.e. an
external focus from the organisation; propaganda is internally focused and self-
indulgent.
The key difference between social marketing and social propaganda is that marketing
is based on research designed to identify what a target group of potential customers
want. ‘In contrast, propaganda is didactic. The propagandist is less concerned to
moderate his/her message in the light of market research, he is convinced of the
essential rightness and is in fact an evangelist’ (O’Shaughnessy, 1996). Given the
evangelical nature of some politicians, political marketing looks to the outsider to be
nothing more than political propaganda; it is practised by evangelists not professional
marketers.
‘In practice there is a real gulf between groups which use marketing and those which
use propaganda – the distinction between these two words is underpinned by a
Market segmentation can be used to segment the population into social groups with
different socio-economic, socio-demographic, psychological profile (personal
characteristics, values, motivations) and behaviours that allow social marketers to
design a marketing plan for each segment. Table 1 is an example of such
segmentation based on previous voting behaviour.
Political parties know the desired tangible object and the social practice they want to
see i.e. voters, voting for them. The key to electoral success lies in the social idea that
leads to beliefs, attitudes and values that are adopted or retained. This in turn leads to
the establishment, altering or retention of a pattern of behaviour. This in reality is the
study of social psychology i.e. why people react in the way that they do. From the
Political Marketer’s perspective this relates to clear paths of marketing activity.
Firstly the building and maintaining of relationships with key target groups i.e.
activists and supporters. Secondly, the targeting of potential supporters. Within this
potential supporter group are non-voters, swing voters and undecided.
Non-voters are not necessarily the same group of the electorate from election to
election. Studies have shown that non-voters in one election can and do become
voters in the next election (Johnston & Pattie, 1997; Overbye, 1995; Bannon, 2003).
Habitual non-voters have been estimated to represent approximately 6% of the
electorate (Johnston & Pattie, 1997). This implies that 36% of the non-voters at the
2001 General Election do sometimes vote. As national turnout rates continue to
decline, attention is turning to the non-voter.
As a target group, the switcher or floater has attracted much attention. However, with
turnouts falling below 50% (Scottish Parliamentary elections 2003), the non-voting
supporter would appear to be a very attractive segment. The responsiveness to stimuli
of non-voters is the key question that needs addressed by parties i.e. each party has a
large number of supporters who do not vote. There is no requirement to persuade this
segment to support their party, just act on that support by voting. The vast majority of
the electorate are party affiliated (over 80%) and this has remained relatively stable
over the last twenty years. However, the strength of support has diminished greatly
(Bannon, 2003). There may be a causal relationship between strength of party
identification and turnout. If this is the case, then targeted activities to build the
strength of this affiliation is needed and a long-term strategic approach to relationship
marketing adopted.
Conclusions
It was the recognition of heterogeneity in the demand for goods and services that led
to the disaggregation of the traditional single demand schedule and the acceptance of
a fragmented demand schedule where sub-markets or segments exist.
All members of the electorate are not equally likely to vote for a party engaged in
mass marketing. Voters do have loyalty, relationships, dislikes and are not empty
vessels into which mass marketing flows and creates a response. Certainly marketing
segmentation should be as applicable in politics as consumer goods.
Market segmentation can be used to segment the population into social groups with
different socio-economic, socio-demographic, psychological profile (personal
characteristics, values, motivations) and behaviours that allow marketers to design a
The responsiveness to stimuli of non-voters is the key question that needs addressed
by parties i.e. each party has a large number of supporters who do not vote. There is
no requirement to persuade this segment to support their party, just act on that support
by voting. The vast majority of the electorate are party affiliated (over 80%) and this
has remained relatively stable over the last twenty years. However, the strength of
support has diminished greatly (Bannon, 2003). There may be a causal relationship
between strength of party identification and turnout. If this is the case, then targeted
activities to build the strength of this affiliation is needed and a long-term strategic
approach to relationship marketing adopted.
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