How have digital technologies disrupted traditional approaches to market segmentation in the creative and media industries?

University Degree Business and Administrative studies

Contents

Introduction………………………………………………………………………p. 3

Traditional Segmentation…………………………………………………………p. 4

Postmodern Theories of Identity..…………………………………………..…….p. 6

Market of One……………...……………………..…………………………...…..p. 7

Tribal Marketing...………………………………………………………..……….p. 9

Push & Pull Marketing...……………………………………………………..…..p. 10

Segmenting Markets in the Creative and Media Industries……………………….p. 12

References……………………………………………………………………….p. 15

Introduction

The aim of this essay is to identify ways in which digital technologies such as the Internet and on-demand TV have changed the approaches to market segmentation in the creative and media industries. This essay will examine the traditional ways of segmentation as opposed to postmodern theories of identity and new ways of segmenting customers. Namely, the concepts of individual marketing and tribal marketing are discussed thereafter. These concepts are intrinsic to segmentation using digital technologies. Also, a closer look will be taken at the ‘push’ and ‘pull’ marketing concepts and their feasibility and effects, and finally, the different ways in which marketers can target their segments in the creative and media industries using digital media are analysed.

Traditional Segmentation

Traditional market segmentation…

…“is designed to make more efficient use of marketing resources by tailoring messages, offers, and customer relationship management [CRM] initiatives to customers who will be most responsive. This is far preferable to treating all customers the same way and investing resources equally across customers without regard to the anticipated return” (Wyner, 2004).

When segmenting, marketers normally look at demographic criteria like age, income bracket, nationality, geographic location and so on. In the case of the creative industries, however, one should take a different angle. Khalil (2000) describes the goods of creative industries as ‘symbolic’ goods, in other words intangible. Thus, segmenting consumers in this industry according to demographics, which are more geared towards consumer goods, would be ignoring the intangibility of most creative goods. Although a consumer can own the physical products of the creative industries in the form of a DVD, book or even a painting; ultimately, it is how this good makes the consumer feel. Does it fulfil any of their (higher) individual needs? Does it touch any of their emotions?

Maslow’s (1943) hierarchy of needs, although questioned in more recent studies, could suggest that ‘symbolic’ (Khalil, 2000) goods, would fulfil some of the ‘higher’ needs such as creativity and problem solving. Whereas ordinary goods or ‘substantive’ (Khalil, 2000) goods would only fulfil the ‘lower’ needs such as food and health. Therefore, in order to successfully segment consumers in the cultural industries, marketers need to take a different approach from marketing in other industries and look into consumers’ identity in more depth and beyond the obvious facts of demographics.

Postmodern Theories of Identity

Cova (1996) describes postmodernity as a time of “severe social dissolution and extreme individualism”, where society exists as a “network of societal micro-groups in which people share strong emotional links, a common subculture and a vision of life”.

“Postmodern marketing responds to the complexity of individuals’ personal identity becoming more customized and individualized and more ‘subjective’ by segmenting consumers in one of two ways” (Bilton, 2007:140), which are described in more detail later on. Both involve a close look at the consumers’ identity. Either a focus on the individual identity of each single consumer is used (‘market of one’) or consumers are segmented according to a ‘tribalisation’ of identity. In both cases the identity of the consumer should be important to modern marketers. At times, it seems consumers’ identity is a result of higher aspirations identifying them with the product and not only a result of pure enjoyment of music for example. Thus, kids may listen to rap music because they aspire to be rappers or adults might watch films about doctors because they wanted to be a doctor.

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Market of One

A concept described by Bilton (2007:140) is to “give up on any predictable pattern of collective identity and focus on the individual”. He states that through digital technologies individual preferences can be gathered and it is possible to concentrate on the customer as a ‘market of one’.

A ‘market of one’ facilitates CRM “using technology to mine personal data and build a predictive portrait of the individual customer” (Bilton, 2007:140). Individual segmentation and CRM go hand in hand, especially with the help of digital technologies.

CRM involves “establishing a long-term relationship with each ...

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Market of One

CRM involves “establishing a long-term relationship with each individual customer” giving companies “the potential of commodifying a person’s entire lifetime of experiences” (Rifkin, 2000). A “topic common among CRM practitioners is the use of ‘lifetime value’ (LTV) models, especially for customer marketing segmentation” (Dorrington and Goodwin, 2002). The expression LTV is used to …

…“emphasize the advantages of shifting from a product-oriented to an access-oriented environment, where negotiating discrete market transactions is less important than securing and commodifying lifetime relationships with clients. Determining a person’s LTV is made possible with the new information and telecommunications technologies of the network economy. Electronic feedback loops and barcodes allow companies to receive continuously updated information on clients’ purchases, giving them detailed profiles on customers’ lifestyles” (Rifkin, 2000).

Segmentation (in the creative and media industries), it seems, has come to the point where “everything is made to order and information is extremely personalized. You go from a large to a small to a smaller group, ultimately to the individual” (Negroponte, 1995:164). In the creative and media industries this is mainly possible since the entry of digital technologies. An example of a software tool enabling marketers to target Internet users at a personal level is Personicx Onliners. The software is…

…“a Web-based tool from consumer data provider Acxiom. Personicx Onliners segments Web users by their level of Internet adoption, usage and life stage. The ability to group individuals by Internet behaviour makes Personicx Onliners the most sophisticated segmentation tool on the Internet market available, claims Acxiom” (Howell, 2005).

The ‘market of one’ approach, however, may not be successful with consumers who interpret customisation and focus on customer service as a breach of privacy or a nuisance.

Segmentation in postmodern marketing has partly changed from targeting an anonymous market made up of homogeneous segments to targeting individual segments of one consumer. The main goal of relationship marketing here is to “build and maintain a relationship with the consumer as an individual”. If splitting the market up into homogeneous segments is no longer feasible, the consumer has to be targeted individually with the help of computerised information systems. This also allows for the possibility of forming tribes and for the segmentation of consumers according to these groups (Cova, 1996).

Tribal Marketing

Tribal marketing is a trend opposed to the ‘market of one’ or one-to-one marketing, which Cova (1996) actually criticises. Individualistic marketing approaches, as he states, are lacking shared emotions with the customer, “confusing proximity with intimacy and base everything on customer service”. As well as ignoring the trend that more people seem to want to have a personalised link in terms of emotion instead of just having individualised service with customisable functions.

Cova and Cova (2002) compare traditional segmentation, “which until recently was thought to provide reliable consumer profiles to the marketer”, with tribal marketing:

A tribe is defined as a network of heterogeneous persons –in terms of age, sex, income, etc. – who are linked by a shared passion or emotion; a tribe is capable of collective action, its members are not simple consumers, they are also advocates;
A segment is defined as a group of homogeneous persons –they share the same characteristics- who are not connected to each other; a segment is not capable of collective action, its members are simple consumers.

Bilton (2007:140) describes the notion of ‘tribalisation’ of identity as “individuals rejecting familiar patterns of identity, only to regroup into new ‘tribes’ based around shared rituals and icons created through consumption”. In contrast to the individuality of the ‘market of one’, ‘tribalisation’ is often based on shared media consumption.

Push & Pull Marketing

The traditional way of providing media is also known as the ‘push’ model, which involves “suppliers generating events and actively passing them to an event channel. In this model, consumers wait for events to arrive from the channel” (IONA Technologies Plc, 2001). For example the traditional way of watching TV where a general audience simply views whichever program is being broadcasted at a given time on a given channel.

‘Pull’ marketing on the contrary tries to generate interest for the product from the customers, getting them to ask for the product. For instance ‘BMW Films’ (Kaikati and Kaikati, 2004) which are short downloadable films made by BMW with well known entertainment celebrities featuring BMW cars.

Some digital technologies also known as ‘pull’ media, are more and more causing the ‘push’ model to fail. Emerging technologies such as TiVo and Sky+ allow ‘time-shifted’ viewing through hard disk VCRs which record a number of channels in a given time frame (limited by the hard disk space). This enables the user to view any program broadcasted on ‘live’ TV whenever they want and even pause it if they feel like it. Why would consumers want to watch the same channel throughout and evening, when they can program their TiVo to record their favourite programs from different channels at the same time? TiVo and the like have had a big impact on the BBC. Bilton (2008 a) argues that “the old public broadcaster’s programming tactic of ‘hammocking’ – placing a worthy but unexciting programme between two popular programmes in order to draw a larger audience” is no longer feasible. This lead the BBC to introduce a host of new channels available via their ‘Freeview’ box, which is comparable to TiVo.

A further advantage of digital technologies is the option of avoiding information overload. Commercials on digital TV can be simply filtered out by a digital VCR. Similarly on the Internet, pop-up blockers, email spam filters, ad- and spyware filters and antivirus programs help users avoid unsolicited information. Although some advertising banners on websites are unavoidable, most users have become wary of them and usually tune them out, focusing on the information they need. Equally, newspapers can now be read in a customised format online avoiding having to sift through the whole newspaper to find the sections relevant to the reader. Websites like Amazon.com can be customised according to the customer’s preferences and tailored suggestions of products which might be of interest to them are shown, based on cookies and previous purchases etc. This practice has its downsides albeit, as some users actually consider it a nuisance and many times interpret it as a way of promoting products in a stealth marketing type of way, rather than the firm trying to make the website more user-friendly.

Bilton (2007:146) talks about a major change - in “the potential of the Internet placing the consumer at the centre of the new information infrastructure, where they pull in ideas and products to fuel their own creativity instead of accepting the information ‘push’ from the mass media”.

With digital technologies entering the creative and media industries, segmentation is changing from a mass media led ‘push’ manner to a consumer led ‘pull’ manner. Consumers are now increasingly seen “as active collaborators in the creation of meaning and value. This consumer creativity is tolerated and encouraged by a media and entertainment industry which has grown adept at absorbing this creativity and selling it back to the consumer” (Bilton, 2007:146). The consumer is now many times seen as the new producer and co-creator of meaning and product (Bilton, 2008 b).

Segmenting Markets in the

Creative and Media Industries

In a pre-digital era TV stations, for instance, probably spent a good portion of their time splitting up their schedule into segments in order to determine which film or programme is broadcasted at which time slot, on which day of the week. Nowadays, this task itself could be taken care of by a computer, which also compares the viewer rates of previous episodes of a given programme to determine reruns for example.

As discussed earlier marketers can either target individuals or sub-cultures (tribes). Both approaches, more or less, have only become possible to their full extent after digital technologies became readily available to consumers and marketers alike. With digital technologies changing the way market segmentation is done in the creative industries, the previously described ‘push’ marketing is becoming increasingly unprofitable for marketers. In order to successfully target consumers in the creative industries more focus should be given to ‘pull’ marketing, bearing in mind though that ‘pull’ marketing “tends to work slowly and cumulatively” (Yudkin, 1998). Furthermore, consumers could consider it intrusive to their privacy.

Firms are already increasingly using the ‘pull’ model to target both individuals and tribes. Bilton (2008 b) lists different ways in which marketers in the creative industries can target individuals using digital technology. Individual personal profile building technologies such as Facebook, Myspace and Hi5 give away a lot of information on personal preferences of users. So-called ‘cookies’ save information about which websites a user visited, how often they visited the site, where they clicked etc. Amazon.com uses this technology to build the ‘My Amazon’ profile. In role-playing computer games like World of Warcraft or Second Life the consumer identity becomes part of the game through player profiles. In a manner similar to the recommendations given in ‘My Amazon’, online radio stations like Pandora and LastFM ‘pull’ users by asking them to enter artists or songs they like in a search window and then provide the listener with music from the same artist or genre. Through technologies like this the individual identities of consumers can be addressed.

Reaching sub-cultures (tribes) of customers in the creative industries through ‘pull’ marketing using digital technologies is possible in a number of ways. For instance ethnographic market research like ‘cool hunting’ can be used, which follows the fundamental approach of tracking trendy people, called ‘coolfarmers’, via digital information networks where trendsetters can exchange ideas (Henricks, 2007). Bilton (2008 b) also lists viral marketing, affinity marketing and community engagement through fan sites, user groups and clubs as approaches of targeting tribes. Or for the latter as Bilton (2008 b) calls it “let them call the shots”. Further ‘digital’ ways of engaging with communities are blogs, article marketing (www.articlemarketer.com), online forums and podcasting (Cummings, 2007).

According to Tomlinson (1990:11) it doesn’t matter if one targets a mass market or a segmented one, it is still the “aura of the commodity which the consumer is offered and attracted to or seduced by. It is not what the object is or does, which gives it its attractiveness: rather it is what it signifies”. Ultimately, to successfully segment your market in the cultural industries you may have to make sure that your consumers identify themselves with your product because of what it means to them on an emotional base. While not forgetting that you also possibly will have to take into account the key variables to segmentation, described by Wyner (2005) as the research design being linked to the following practical implementation steps: current marketing asset evaluation, effective marketing-lever deployment, and ongoing application in the organization.

References

Bilton, C. (2007). ‘Management and Creativity: From Creative Industries to Creative Management’. Oxford: Blackwell Publishing.

Bilton, C. (2008 a). ‘BBC Television: a new vision for BBC3?’, Case Study, WBS.

Bilton, C. (2008 b). ‘Towards the market of one: bringing the audience back in’. Marketing and the Creative Industries – Week 5 (lecture slides). WBS.

Cova, B. (1996). ‘The Postmodern Explained To Managers: Implications For Marketing’. Business Horizons. 39(6), pp. 15-23.

Cova, B. and Cova, V. (2002). ‘Tribal Marketing: The Tribalisation of Society and its Impact on the Conduct of Marketing’. European Journal of Marketing. Version 2001. pp.1-27.

Cummings, B. (2007). ‘Pull Ahead Faster: 7 Simple (And Cheap) Ways To Market Your Small Business Online’. [Online]. (http://www.marketme.com/2007/12/08/pull-ahead-faster-7-simple-and-cheap-ways-to-market-your-small-business-online.html). marketme.com. (accessed 24.02.2008).

Dorrington, P. and Goodwin, J. (2002). ‘The role of lifetime value in customer relationship management’. Interactive Marketing. 4(1), pp. 7-18.

Henricks, M. (2007). ‘Ahead of the Curve’. Entrepreneur. 35(7), p.25.

Howell, N. (2005) ‘Acxiom Offers marketers a tool to target specific Internet users’. New Media Age. 18.08.2005, p.8.

IONA Technologies Plc. (2001). Orbix E2A Notification Service Guide. [Online].

(http://www.iona.com/support/docs/e2a/asp/5.0/corba/notification_cpp/html/). IONA. (accessed 20.02.2008).

Kaikati, A. M. and Kaikati, J. G. (2004). ‘Stealth Marketing: How To Reach Consumers Surreptitiously’. California Management Review, 46(4), pp. 6-22.

Khalil, E.L. (2000). ‚Symbolic Products: Prestige, Pride and Identity Goods’. Theory and Decision. 49, pp.53-77.

Maslow, A.H. (1943). ‘A Theory of Human Motivation’. Psychological Review. 50, pp. 370-396.

Negroponte, N. (1995). ‘Being Digital: Road map for survival on the information superhighway’. London: Hodder and Stoughton.

Rifkin, J. (2000). ‘The Age of Access’. Harmondsworth: Penguin.

Tomlinson, A. (1990). ‘Consumption, identity, and style: marketing, meanings, and the packaging of pleasure’. London: Routledge.

Wyner, G.A. (2004). ‘Pulling the Right Levers’. Marketing Management. 13(4), pp. 8-9.

Wyner, G.A. (2005). ‘Segmentation Value Chain’. Marketing Research. 17(4), pp. 6-7.

Yudkin, M. (1998). ‘The Power Of "Pull" Marketing’. [Online]. (http://www.pertinent.com/pertinfo/business/marcia1.html). Pertinent Information Ltd. (accessed: 24.02.2008).

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