A market might be described as a place or arena in which there is potential for exchange of goods and services. Such an arena facilitates the transaction of buying and selling, and its participants are termed suppliers and consumers. The sellers are in possession of goods or services (supply), while the consumers are in possession of a willingness and ability to offer acceptable compensation in exchange for the goods (demand). Though the marketing of goods on a massive scale has thrived for a number of decades, the several factors have recently been contributing to its decline. In its place have arisen such concepts as market segmentation, market fragmentation, and mass customisation. These approaches have taken advantage of the fact that individual desires are diverse, a truth that held little importance from the perspective of mass production and mass marketing. Yet, the marketing of goods to the masses, though on the decline, has not been completely eradicated. This has been due to several reasons connected with its alternatives as well as with reasons connected with mass marketing itself.
The rise of the mass market
Mass marketing developed out of the phenomenon called the Industrial Revolution and a school of thought propounded by Adam Smith known as the specialisation and fragmentation of labour (Lau, 1995, p. 18). With this new era came the ability to channel a maximum amount of effort and energy toward the manufacture of machinery, and many of the heavy machines built were aimed at further production. Manufacturers discovered the ability to produce goods on a numerically massive scale and consequently at much lower costs. The nature of this type of production, involving large scale repetitive and uninterrupted operations, dictated the standardisation of products. During the early years of mass production and marketing, the appeal of these products to the market rested mainly in the availability to the masses of things once considered luxuries. The finest example of this is given by the Ford Motor Company, which introduced the assembly line and made low-priced automobiles available to thousands of American families (1995).
Marketing such homogeneous products subsequently led to the treatment of the buyers as a though they too were made up of identical parts, having homogeneous tastes and needs. Indeed, mass marketing has the advantage of minimizing the amount of planning that goes into a marketing campaign. One has the information that one needs to plan such a campaign simply by identifying the attributes of the product at hand and advertising those.
Mass Marketing, however, has eventually run into troubles that mainly derive from the fact that markets have proven not to be as homogeneous as had been assumed. This became evident once competition began entering the mass-production field, since “when the competitive environment starts to change rapidly and unpredictably, the traditional means of gaining competitive advantage through economies of scale are no longer sufficient” (Lau, 1995, p. 18). In the early 1980’s, General Motors ran into trouble when it made a heavy investment in equipment for mass production and overproduced homogeneous vehicles at a time when people were ready for variety (Lau, 1995). It has since been realised that markets are made up of an overwhelming number of individuals, which may be divided in several ways to create different sub-groups or types.
The succession of market segmentation: the break-up of the mass market
With the realisation that the market was indeed heterogeneous came the revolutionary idea of approaching marketing from the perspective of the consumer rather than from the supply side (Tynan and Drayton, 1987). From this concept was the idea of market segmentation developed, through which an attempt is made to tame the massive market by identifying groups of consumers that have attributes in common and toward which marketing strategies might be geared. The idea was to seek to satisfy the customers’ needs through product development and marketing rather than merely operating under the prompting of the profit motive (though it has been found that market segmentation did itself have the capability of boosting profits). These attempts found several ways to segment the market, and each new segment underscored the process of the dissolution of the mass market. Out of these many segments, certain categories or segmentation bases have been defined: geographical, demographical, psychological, psychographical, and behavioural. The product itself has often also been a means of classifying the market groups, but the salience of these particular groups has been one of the main contributors to the decline of mass marketing (306).
The taxonomy of market segmentation
Market segments must be accessible, substantial and measurable (Walters, 1997). Perhaps the first of all segments was defined geographically, as this tends to occur naturally because of the limitations of resources and the physical inaccessibility of retailers beyond a certain distance. Generally, the smaller the manufacturer, the smaller the geographical market for the particular product. Such geographical segmentation may be made on a national, regional or local scale (Tynan and Drayton, 1987). Cultures that prevail in certain locales allow marketers to tap into the needs and desires of these groups. It has been noted, for example, that beverage and vegetable consumption in Scotland is lower than the other members of the United Kingdom (House Food Consumption and Expenditure 1981, qtd. in Tynan and Drayton, 1987). Richard Webber’s classification of neighbourhoods grew out of this idea of geographic differentiation, and this has become a powerful tool for breaking down the mass market and assessing it in parts based on location (1987).
Demographic segmentation occurs with the filtering of the market based on such parameters as age, sex, education, socio-economics, income, occupation, etc. These variables have been noted as the most popular of those used for sifting the market (Kotler, 1984 qtd in Tynan and Drayton, 1987). In fact, so popular is this mode of segmentation that marketers routinely gather such data even when other bases will be used for segmentation.
Sometimes a demographically motivated market segment emerges on its own before markets even suspect that it exists. Such a case has been documented by Mueller-Heumann, who noted that in recent years “a large international food company sold more baby food than babies could possible have consumed” (1992). It turned out that older persons had entered the market on the demand side because of the nutritional appeal and the low necessity for chewing through which manufacturers catered to the needs of babies and also (unwittingly) catered to the needs of the seniors. In this case, the market itself resisted the hold of mass marketing, which had sought to sell a less differentiated type of food to all adults, young or old. The market, therefore, effected its own demographic segmentation.
Psychological segmentation has been used in the prediction of consumer behaviour and response using such parameters as attitudes, personality and risk. The usefulness of this division proved limited, and psychographics as well as behavioural segmentation began to evolve out of it. This has splintered the mass market into smaller parts than has mere demographics. These types of market segmentation have to do with interests, activities, needs, opinions, in addition to the psychological traits of attitudes and personality, both within and among demographic groups. The behavioural aspect has to do with brand loyalty, user status, and user rate, yet all three types consider social as well as individual behaviours, and include such influential factors as environmental concerns and group pressure (Tynan and Drayton, 1987). The UK’s Target Group Index, for example, places women between the ages of 15 and 44 into six psychographic groups: self-aware, fashion directed, green goddesses, unconcerned, conscience stricken, and dowdies (Mueller-Heumann, 1992). These groupings have been exploited by a myriad of marketers that have done away with mass marketing. One of these is The Body Shop, which promotes itself as a company that is concerned about the environment. Its slogan is “the most honest cosmetics company in the world” (1992).
The use of the product itself as a tool for segmenting the market can be seen in many real products, such as Gerber Graduates targeted at toddlers and minivans targeted at the parents. In such marketing situations, the target market is fairly obvious. Akin to this are those products that cater to the illnesses. Some segmentation occurs naturally in this category, such as those catering to illnesses that usually occur together (Young, Ott, and Feigin, 1976). Examples of the exploitation of this market are Tylenol® Cold and Sinus and Nyquil®, which address the spectrum of symptoms associated with the common cold and flu. Other examples include Immodium AD, which focuses on symptoms connected with diarrhoea while its competitor Pepto Bismol caters to all common gastro-intestinal discomforts. These products themselves recognise the heterogeneous nature of the market and marketers respond to this by promoting it not to the masses but to those to whom it would naturally appeal.
Problems with market segmentation
Factors exist that have prevented the exploitation of market segmentation techniques in marketing strategies, and this has prevented the complete vanquishing of mass marketing. Barriers to segmentation can exist both within and outside of the company that attempts to market the goods. There are those who consider it to be what companies resort to when they have a weak brand (Fennell and Allenby, 2004). Whatever the reason, the result of these impediments is that a segmentation attempt often fails to provide the homogeneous group that is sought by marketers for which they are able to develop effective programs. Some barriers to market segmentation have been identified as infrastructural, process, and implementation barriers (Dibb and Simkin, 2001).
The infrastructure of an organisation can be defined as the structure and culture. It includes its bureaucracy and the lines of communication and through which authority and permission must pass or departments from which co-operation is necessary to get marketing done. The resources a company has available for use in market research may also inhibit the proper segmentation of the market. One way in which an organisation’s structure and culture might provide a barrier is through rigid senior partners who would not have the company change its image, and therefore they arrest the process of market segmentation (Dibb and Simkin, 2001). Other firms might put into place ineffectual market segmentation based on the ease of handling customers rather than on customer satisfaction. Such factors lead to the continuation of rather than a removal from the trend of mass marketing.
The process of segmentation also gives problems even after a company has become united in the effort toward it. The process involves segmentation, targeting, and positioning (STP), yet there has proven to be a surprising shortage of literature available for the guidance of managers through its steps (Dibb and Simkin, 2001). Therefore, many businesses have made only the most simple and superficial attempts at segmentation. This superficiality leads to the conclusion that immediately below the surface of many market segmentation strategies lies the substance of mass marketing. Another problem with the process is that data to be had from samples strictly applies only to the sample (Grapentine and Boomgaarden, 2003). These problems deter many from embarking on segmentation and serve to preserve elements of mass marketing.
It is usually quite difficult for any organisation to make large-scale changes to their market segmentation. Such constraints are often related to industrial structures. An example of this is the motor vehicle industry, which segments cars according to engine size. This might not be a very good way of subdividing customer groups, but many car companies have little choice in this, as car dealerships, which buy the vehicles in fleets, purchase according to these specifications (Dibb and Simkin, 2001).
Market fragmentation and mass customisation
Market fragmentation and mass customisation might in some cases be seen as an effort to modernise mass marketing. Several businesses today have continued in their desire to appeal to everyone, while still recognising the necessity of diversifying their product. This might be seen by some as the formation of a compromise between market segmentation and mass marketing. What this means for mass marketing, though, is that in order for it to remain at all viable, it must acknowledge the diversity or heterogeneity of the market. No longer can it attempt to market a homogeneous product to all.
Market fragmentation is found in the appeal of single producers to several market segments at once, yet they differentiate their product enough so that it might better appeal to each segment. Fragmentation follows generally similar trends, as does segmentation. There exists demographic as well as psychographic fragmentation. This special kind of market segmentation can be seen in the activities of such brands as Next, which has outlets that cater to different market segments. This company has other stores such as Next too, Next Classics, and Next for Men (Mueller-Heumann, 1992). A similar trend is found in Gap, Gap Kids, Baby Gap and Gap Body. Toyota practises fragmentation among the socio-economic/income demographic. The company produces the Lexus brand, which is directed at persons with a higher income than its regular Toyota brand (Dibb and Simkin, 2001). In doing this, these companies intend to reach a mass market by offering their products in several different ways.
Market customisation is a way in which companies can offer a wide variety of choices within a given category of products (Huffman and Kahn, 1998), or even individualised products to consumers (Agrawal, Kumaresh, and Mercer, 2001). This has been very difficult to do in the past, but with the advent of the information-technology age it has become increasingly easier. The computer companies Dell and Gateway were pioneers in the customisation of computers for customers. Dell has proven to be the more successful of the two, accessing information about consumers’ individual computer preferences and then building that computer once the finances have been passed over to them. They build to order, not to forecast, and therefore never end up with large warehouses of non-saleable goods (2001). Online clothing, cosmetics, and vitamin companies take advantage of this method of sale as well
On the other hand, mass customisation is not feasible in many market areas, and is only moderately possible in others. The market for cars does not employ mass customisation in general, but does offer a variant, which is termed Built to Order (BTO). BTO means that the company only builds the car once it has been ordered; however, the product “may or may not have to be customised” (Agrawal, Kumaresh, and Mercer, 2001). Such companies as Ciba-Geigy and Mercedes Benz have established in-house advertising in order to facilitate the diverse needs of their customers (Mueller-Heumann, 1992). It has been found that the feasibility to BTO depends on the willingness of customers to wait for their products to be made. In Europe, the BTO cars make up a larger percentage of all cars sold than in the United States, so that the U.S. represents a psycho-geographic barrier to the BTO-customisation of cars.
Other barriers to mass customisation exist which in a way favour the continuation of mass marketing, and they include the possible fluctuation of demand for products that are built to specification. Certain firms might find themselves having to pay unionised workers, though not enough work might exist for them at that particular time. Some production plants might not be able to carry out certain operations on just one product. Car plants, for example, have paint shops that do batches at a time in order to reduce cost as well as lower the amount of emissions that result from the flushing of paint guns. This poses a problems for retailers too, who might prefer to have a large stock rather than just a sign indicating the possibility of customisation (Agrawal, Kumaresh, and Mercer, 2001). These particular barriers are in favour of the perpetuation of mass marketing in a world where diversity is the overwhelming cry.
Mass production and marketing emerged as a useful tool for the equipping of the masses with inexpensive luxuries with the highest return for the manufacturers. With the improvement of technology and the advent of competition in many markets, customers are no longer satisfied with the homogeneous, mass-produced product. Marketers have therefore had to recognise the diversity of the market and attempt to segment it. They have done this by noting the different attributes of individuals and addressing the market based on groups formed by using these attributes as parameters. From this many categories of market segments have been formed, ranging from demographical to behavioural. Products have been developed in light of these segments, and this has brought about the break up of the mass market. Yet it has not died completely. Market segmentation has often proven difficult to effect, and other more diverse forms of mass marketing have emerged. Market fragmentation and mass customisation have provided ways in which manufactures can attempt to provide individualised versions of the same product to a heterogeneous and undifferentiated market. Through these developments, it has been demonstrated that though mass marketing has been on the decline, it has not yet completely disappeared.
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