Quiz 5: Segmentation and Targeting in Imc

Business

Importance of Behavioral Segmentation Behavioral segmentation is identifying and developing profile of consumers based on their past buying behavior. It is assumed that previous buyers have experienced the product or services marketer want to sell and they will be interested in buying it again. Based on such assumptions, offers related to discounts, coupons or free samples are send to selected consumers. Information about such customers is obtained from optical scanning machines or some other database management of stores. Behavioral segmentation is more prevalent in business-to-business (B2B) marketing because it has easy access to information about past buying behavior of consumers. Behavioral segmentation is difficult in the following situations: a. In innovative and new products. b. When scanning machine or database is not available. Demographic segmentation is segmenting the market based on demographical factors such as age, race, religion, income, education and family size. It is more useful in new product or services. When sellers wants to offer something new or would like to expand the business it becomes important to segment the market based on demographic prospective of consumers. It facilitate in increasing the size of market to promote the products or services. Behavioral segmentation information is more diagnostic of future behavior than demographic information in situations where marketers are offering something new in addition to existing products or services to encourage customer to purchase more. For example, offering food coupon of popular coffee house to customers spending more than $500 on certain food items in a month. The aim of behavioral segmentation is to improve the loyalty of customers towards the brand. In contrast, demographic and psychographic segmentation deals with new in addition to existing consumers. Offering discounts or coupons to existing consumers or consumers who has experienced the product or services before, can give an outline on their future buying behavior. They may be motivated to buy more based on such offers. While in other segmentation methods promotional efforts may not ensure whether consumers will buy the product.

Online Behavioral Targeting It has been a long time since the marketers used to go to market physically and observe the behavior of consumers, their attitude towards product or collect information on contact details of people buying product of services marketers is interested in. In the age of technology, most of marketing activities including segmentation, targeting and positioning are performed online. There are online methods whereby advertisers can obtain information about users searching for certain sites. This helps them to send ads to people who are looking for information about certain product or services. For example, the information about people searching for online financial accounting courses can be track by websites and enable the colleges offering such courses to serve targeted ads. Users can see ads on side bars of their G search engine on online financial courses and may get surprised how this advertisement came without searching it again. These web based services that access the search data of internet users are creating privacy issues these days. And hence people do not feel confident on information loaded on their search engine without their permission. Although, many legislative actions have been taken to protect privacy, users do not find it safe to relay on search engines. Online behavioral targeting works best when perform in consumers' controlled form. For example, consumers find it useful as long as ads come when they search for it. The moment it create virus issues or popup whenever any other web page is open, it becomes aggravating and can affect brand image adversely.

Online Behavioral Targeting: A Potential Invasion of Privacy Online behavioral targeting system monitors visitor responses to site content and learn what is most likely to generate a desired conversion event. Technological advancements on one side have brought an easy ability to serve customers in marketing world but on other side is also a risk of invading privacy. Web surfers are increasingly more likely to be served with ads for products that are most relevant to their interests. These facilities to advertisers bring a cost for user when they have access to online search behavior without users' knowledge. Smart phones, laptops and other communication based electronics are bought with intend to have personalized space of their database and search information. If unknown agencies get information about what user access on websites, then personalized space may get affected. They find it invasion of privacy and does not like advertisers sending ads on their search interests. The purpose of targeting is to get a section of customers whom marketing efforts will be put on. Online behavioral targeting is one of such efforts. If such an effort affect the customers' attitude towards mode of reaching them, their interest in even getting awareness about the product or service will go down and hence, brand image may get affected adversely. Therefore, online behavioral targeting system should be used very carefully that it does not invade privacy of users for effective utilization of online system of targeting.