Reflective Essays
Document 1 (A Potentially useful technique of Segmenting and Targeting older Consumers)
Introduction
The work by Ahmad 2003, “a potentially useful technique of segmenting and targeting older consumers,” assesses the traditional approaches of consumer segmentation which prioritise on the employment of personal characteristics. The author also proceeds to offer discussions on the “theory of benefit market segmentation and examine its utility.” (Ahmad, 2003). He illustrates how to benefit segmentation may be practically deployed in segmenting aged clients when it comes to grocery shopping. Ahmad’s work aims to recommend the employment of the benefit segmentation approach in targeting and segmenting aged consumers in the United Kingdom (Ahmad, 2003). The reflection analysis will particularly prioritise on the segmentation technique. My views and thoughts regarding segmentation have slightly changed after going through Ahmad’s work. Before coming across the study, much interest was drawn towards class, status, education and income. Little priority went to age segmentation which is highly paramount when it comes to marketing.
Segmentation
The number of aged individuals in the UK is gradually increasing. For individuals aged 50 years and above, they were anticipated to increase by 3%, that is, from 20 million to 22 million between 2001 and 2011 (Ahmad, 2003). The proportion is also estimated to go up to 25 million by the year 2021, which is 37% of the entire UK population. It is worth noting that despite the UK population having an increased aging population, the older people still offer new market opportunities (Ahmad, 2003). Studies on aged populations have prioritised on health care delivery and social policies. However, shifts in population demographics for the aging population have prompted researchers “to take a greater interest in studying older people, particularly from the marketing perspective,” thus enumerating on the essence of segmentation.
Segmentation refers to subdividing a heterogeneous market into smaller proportions based on different attributes, preferences and consumer desires (Ahmad, 2003). Market segmentation involves the division of the market into different purchaser groups with distinct characteristics, needs and behaviours inducing the production of separate market mixes and products. Market segmentation ensures that clients with similar characteristics get to share on common attitudes, needs and wants (Ahmad, 2003). Clients in a specific segment are anticipated to act predictably to a given stimulus, for instance, price discounts.
Psychographic data has mainly been employed when it comes to segregating consumers based on lifestyle and lifecycle groups. For instance, two fifty-year-olds residing in the same neighbourhood and have an annual income of 50,000 can be highly distinct. One might be conservative and homely choosing to take home-cooked meals and spend time with his family. The other might be highly outgoing with a high priority of visiting restaurants and a poor opinion on the sanctity of marriage (Ahmad, 2003). Employing psychographic data in such a case will foster segregation.
As stated earlier, the employment of psychographic data has enabled researchers to segregate clients into several lifestyle and lifecycle groups. Some of the lifecycle reported by Ahmad in his work include “the full nest (1), full nest (2), empty nest (1), empty nest (2) and sole survivor.” (Ahmad,2003). Lifestyle classification, on the other hand, is quite distinct and quite complex to apply and comprehend. To achieve lifestyle classification, researchers have to initiate empirical studies on clients and garner psychographic data. They must proceed to make inferences on consumption and purchasing behaviour of the consumers basing on shared personal variables such as lifestyle score patterns (Ahmad, 2003). For example, married persons prefer spending much more time with their families and thus fully equip their kitchen, purchase entertainment products and enjoy home-cooked foods.
From Ahmad’s works, I grasped that psychographic data is highly paramount when it comes to segmenting the market. However, despite its capacity to remain stable over a long period, information relative to an individual’s opinions and interests on given issues tends to shift over a given period. Psychographic data also does not have a “strong explanatory power.” For example, common personality variables are only able to enumerate a lower rate of behavioural differences, such as brand choices.
Groceries serve as the prime basic needs for humans. In the United Kingdom, the largest expenditure of 65.70 for individuals aged 50 and above comprises of non-alcoholic drinks and food. Grocery retailing, according to Ahmad (2013), serves as the subject of numerous researches with its significance on the aged population being highly debated. Comprehending on the advantages affixed to UKs aged population seeking from grocery shopping would be paramount in availing a deeper comprehension on the determinants of the aged population purchasing behaviours (Ahmad, 2003). The knowledge would avail marketing ideas for a grocery shop and supermarket managers. I have observed a similar trend in my neighborhood which comprises mainly of individuals aged between 30 and 40. A big proportion of the grocery outlets apart from stocking groceries have been selling alcoholic beverages to meet the needs of the larger population. Employing such demographic variables has largely fostered sales and met customer preferences.
Conclusion
Segmentation approaches are highly paramount when it comes to assessing different customer attributes, preferences and consumer desires. Market segmentation involves market sub-division into distinct purchaser groups with different characteristics, needs and behaviours which foster the creation of different products and mixes. Through segmentation, customers with shared characteristics get products or services with shared needs, attitudes and wants. This thus induces persons in a given segment to act in a predictable manner in the presence of certain stimulus. Grocery retailing serves as one of the prime cases featured in the UK for the ageing population. The largest expenditure proportion for persons aged above 50 comprises of groceries and nonalcoholic beverages amounting to 65.70. Understanding the population through segmentation highly counts in giving marketing managers ideas and also meeting the preferences of the populations.
Document 2 (Four C’s of Customer Loyalty)
Introduction
“The four C’s of customer loyalty” by Rowley (2005) aims to propose a grouping of customer loyalty forms to foster comprehension on loyalty. Relationship marketing changes priority “of the marketing exchange from transaction to relationships.” Relationship marketing agrees that customer base stability is a fundamental enterprise asset. The nature and essence of business value and relationship is built on the customer loyalty concept (Rowley, 2005). Some of the advantages featured in Rowley’s work include reduced client price sensitivity, lower expenditure in alluring new clients and bolstered entity profitability. The reflection assignment will shed light on the segmentation of loyals theme to help establish the linkage between loyalty and segmentation.
Segmentation of Loyals
As outlined by Rowley (2005), segmenting loyals is highly paramount when it comes to “developing an understanding of the nature of loyalty orientation and can inform appropriate marketing actions.” In loyalty segmentation, loyalty is determined by “the strength of the relationship between relative attitude and repeat patronage and that it has both attitudinal and behavioural elements.” Four conditions relative to loyalty were proposed by the author, that is, loyalty, spurious loyalty, no loyalty and latent loyalty.
Loyalty enumerates “a favorable correspondence between relative attitude and repeat patronage.” (Rowley, 2005). Latent loyalty is linked with “high relative attitude, but low repeat patronage,” spurious loyalty shows “a low relative attitude, with high repeat patronage” whereas no loyalty is linked with a “low relative attitude, combined with low repeat patronage.” (Rowley, 2005). Enterprises would wish to comprehend on which category each of their clients fit exhibiting a high repeat behaviour and relative attitude in respect to enterprise brands. The customers are further segmented thus differentiating clients based on attitude, behaviour and orientation. This induced the proposition of loyals into committed, convenience-seekers, contented and captives.
Reflection on Learning
Through Dick and Basu’s proposed model, I have grasped a deeper understanding by segmenting clients into committed, convenience-seekers, contented and captive’s categorisation. Captives are customers who continually utilise a product as they do not have another choice (Rowley, 2005). They have limited opportunities when it comes to shifting as they have a probability of encountering higher switching costs. Public sector marketisation has shifted some of the clients out of the captive category since there are variable options relative to the service providers. Such a case has been featured through change in the UK regulatory arrangements meant to foster competition in the telecommunication, utilities and transport industries. According to my thoughts, the captive scenario was highly featured in London with the main mode of transport being taxis before the induction of Uber.
Convenience seekers on the other hand highly dominated by convenience such as location and opening hours. Brand convenience may be fostered by reputation and packaging but the main driving factor is availability (Rowley, 2005). In my experience, some outlets have differentiated themselves from Supermarkets by incorporating convenience. Currently, most customers garner convenience by shopping in stores away from town; with ample parking spaces, open for longer hours with a shorter drive.
For the contented loyals, they “have a positive attitude to the brand, but are inertial in their behaviour” depicting that they stay as customers and restrain extending their involvement to brands through service subscription (Rowley, 2005). The committed clients are ones characterised by behaviour and attitude. They are highly reliable when it comes to making repeated purchases and engaging in positive and delightful “word-of-mouth” with other client.
Conclusion
From Rowley’s work, I have been able to grasp on the benefits of according segmentation to customer loyalty. Through segmentation, customers can be grouped into either committed, convenience-seekers, contented or captives. This has been highly prime in enabling businesses understand marketing strategies such as inducing convenience through more parking spaces and shorter drive-in distances from towns. Understanding customer loyalty highly counts in enabling businesses comprehend on client’s behaviour and the sources of their loyalty which bolsters performance.
References
Ahmad, R. (2003). Benefit segmentation: a potentially useful technique of segmenting and targeting older consumers. International Journal of Market Research, 45(3), 373-390.
Rowley, J. (2005). The four Cs of customer loyalty. Marketing intelligence & planning.