Marketing Segmentation and Political Marketing

Marketing Segmentation and Political Marketing

Declan P Bannon Paisley Business School,

University of Paisley, Paisley, PA1 2BE

0141-8483377 [email protected]

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. Despite the consistency of academic approaches to marketing segmentation and acceptance (at least in theory) by organisations of the value of marketing segmentation, too many organisations are not segmenting their markets effectively. Organisations are not basing their strategies on research based marketing segmentation and there is a need to adopt a more professional and considered approach (Wind, 2000). It is argued that marketing segmentation could be viewed as anti-marketing in that it is not treating the customer as a unique individual but as a standardised unit within a segment. There is a tendency to assume that segmentation is ipso facto a good activity and the potential benefits derived are rarely challenged. Such blind obedience to the marketing segmentation process is naïve, misleading and could potentially be an expensive mistake (Cui & Choudray, 2002). A generic framework for evaluating and prioritising segments has been developed and is described in detail along with criteria for application. Key Words: Political Marketing, Marketing Segmentation, Targeting, Positioning. 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. Marketing is both a philosophy and a function. As a philosophy, marketing pursues knowledge, understanding of exchanges and the process of enhancing value. There is no general theory of Marketing (Gronroos, 1994). There are 12 different schools of marketing and 21 schools of post-modern marketing thought (Sheth, 1988; Brown

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1998). As a function within organisations, marketing's scope and boundaries should encompass 4 specific areas: 1. The understanding of customer and potential customer values 2. The creation of products and services that customers value 3. To communication with specific segments the values they wish to exchange 4. Ensure delivery of value to the organisation and customers As a management function, marketing is a process of decision making that entails 5 areas of focus: • Segmentation market • Target marketing • Positioning • Market planning (Doyle, 2000) • Implementation

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


of a marketing orientation driven by an understanding and knowledge of the customer. Each individual customer, from a consumer buying behaviour perspective, is unique. Each consumer construct's their own unique social reality and consumer requirements. However from a practical and resource perspective, rarely can organisations customise to the nth degree. Marketing segmentation can be viewed as a compromise and meaningful position between two extremes that are generally unpractical positions (Baker, 2000:262). This not to say, as Figure 1 seems to imply, that disaggregation and aggregation will produce the same market segments. Perfectly Homogeneous Market Segments Completely

Market Heterogeneous Markets

Disaggregates Aggregates Economists Marketers Behaviourists Figure 1 Disaggregation versus Marketing Segmentation Source: Adapted from Enis (1977) The precise definition of a market is elusive, because all product-market boundaries are arbitrary (Day et al, 1979; Baker, 2000:261). Historically a market was a place to sell and buy goods. However the term has come to be used as a generic term for a large geographic area, the relationship between the demand and supply of a specific product or the activities surrounding the process of selling. For the purpose of this paper the term market is used to reflect the interactions between an organisation, it's existing and potential customers and it's competitors. 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).

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Despite the consistency of academic approaches to marketing segmentation and acceptance (at least in theory) by organisations of the value of marketing segmentation, too many organisations are not segmenting their markets effectively. Organisations are not basing their strategies on research based marketing segmentation and there is a need to adopt a more professional and considered approach (Wind, 2000). Benefits and Limitations of Marketing Segmentation The benefits of marketing segmentation are sometimes assumed or understated, however, the process supports the development of competitive advantage in 10 ways: 1. provides a basis and rationale for the selection of target markets 2. encourages the development of products and services that match the success

criteria of a segment. These products and services must be are viewed as providing more added value than competitors offerings

3. allows the tailoring of communications and channels of distribution to customer needs. Hopefully, providing higher customer satisfaction leading to loyalty and repurchase

4. helps marketers identify opportunities and threats 5. encourages competitor analysis 6. efficient allocation of resources to segments were the returns will be differentially

higher i.e. the get more bangs for your bucks; Pareto's 80-20 law 7. focuses an organisations attention on chosen segments, allowing a greater

understanding of these markets and customers 8. a more in depth understanding of selected segments should lead to the

development of different plans for each (or a small number) of the market segments

9. market segments were the organisation is unlikely to be competitive can be identified and thus avoid wasting resources targeting them. This also provides an opportunity to analyse the attributes of competitors products and services

10. marketing segmentation can provide a basis for smaller or new organisations to establish themselves in a market with minimal outlay of resources in a shorter period of time i.e. niche marketing or concentrated target marketing

These benefits will appeal to organisations as an efficient method of delivering products and services. The marketing segmentation process is not without its critics. There are several obvious and practical issues with the process: 1. suitability of the marketplace to apply the marketing segmentation process. Over

emphasis on segmentation techniques can neglect the market itself and the competitive position of an organisation within it (Bliss, 1980). Disaggregation (product differentiation) versus aggregation (marketing segmentation)

2. cost benefit analysis 3. the practicality and feasibility of marketing segmentation for SME's or NFP

organisations 4. acceptability to target some segments and ignore others e.g. provision of public

services that should be available to all


5. legal and ethical issues e.g. data protection act; the targeting of children; the targeting of patients by pharmaceutical companies

6. validity and reliability of criteria for segmentation 7. depth of segmentation i.e. at what stage do you decide to cease segmenting.

Resnik et al (1979) argue that too much segmentation looses some of the benefits and cost advantages of market segmentation. They argue that some organisations need to have larger segments and they refer to this as counter-segmentation

8. research methods utilised; availability and collectability of relevant timely data; appropriate interpretation of data

9. stability of segments produced 10. ability and flexibility of organisations to tailor products and services to any

identified segment 11. expertise within organisations to professionally conduct a marketing segmentation

process. Alternatively, the lack of in depth industry knowledge of an external consultant to conduct a meaningful marketing segmentation. Sometimes an intuitive segmentation may be sufficient

12. evaluation of targeting activities can be difficult It could be argued that marketing segmentation is anti-marketing in that it is not treating the customer as a unique individual but a standardised unit within a segment. There is a tendency to assume that segmentation is ipso facto a good activity and the supposed benefits are rarely challenged. Such blind obedience to the marketing segmentation process is naïve, misleading and could potentially be an expensive mistake (Cui & Choudray, 2002). Marketing segmentation is only a viable activity if a product market already exists. In the case of new innovations, one can only speculate as to whom the early adopters might be. In this case product differentiation drives the targeting effort. The ability to customise product offerings either through computer aided design or computer aided manufacture has called into question the need for marketing segmentation. Ford Europe has the potential to create 2 million different models by allowing customers to order to their own specification. Overall, there seems to be more benefits than disadvantages to marketing segmentation since it can be implemented to a varying degree of refinement and sophistication (Baker, 2000:263). In certain circumstances it is inappropriate to attempt to segment the market: 1. the market is too small 2. the vast majority of the market are users or potential users 3. a major brand is established and mass marketing is the preferred forms of

communication and distribution to support brand development i.e. undifferentiated targeting

4. the product needs to appeal to the market as a whole for reasons of growth 5. customers exchange in sufficient numbers as to sustain the organisation e.g. the

NHS and patients. However it could be argued that screening programmes are a medical version of market segmentation. Identifying the need, treating the patient and generating new business

6. the costs of the segmentation process outweigh the potential benefits


THE MARKETING SEGMENTATION 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. The major stages of the process are: 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 The segmentation of a market requires criteria or variables that can meaningfully differentiate elements in the population. There are two approaches for segmenting markets, a priori and clustering. a priori segmentation design utilises management knowledge of a market to select criteria or variables that can be used to sub-divide a population. These variables can be product based or customer characteristics. Marketers usually do this instinctively Some examples: older people are more likely to vote, so the criteria chosen may be age; former mining towns predominately vote Labour, so the criteria is geographic distribution; previous Tory voters are more likely to vote Tory, so the criteria is prior behaviour. In other words the criteria is deduced prior to segmentation using knowledge of cause and effect. There are 7 stages to a priori segmentation: 1. selection of the a priori basis of segmentation 2. selection of a set of segment descriptors 3. sample design 4. data collection


5. formation of the segments on a sorting of respondents into categories 6. establishment of the profile of the segments using multiple discriminant analysis,

multiple regression analysis or some other appropriate analytical procedure 7. develop specific marketing strategies for each segment (Wind, 1978). 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). Ball (1971) identifies 7 possible uses for clustering techniques: 1. finding a true typology 2. model fitting 3. prediction based on groups 4. hypothesis testing 5. data exploration 6. hypothesis generating 7. data reduction 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. Clumping identifies overlapping clusters as desirable segments for targeting. 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).


The fact that so many factors can be used to segment markets is problematic. There is no clear best method of cluster segmentation. 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. For a segment to warrant specific attention it must be:

• measurable • accessible • substantial • unique in its response • stable

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. Characteristics that may be of interest to marketers include:

• location and spread (density) • distribution channels • language • values • behaviour and motivation • culture and tradition • historical factors • climate • religion


Demographic Segmentation Demography is the study of populations. In demographic segmentation, a given market is sub-divided on the basis of demographic variables. Consumer preferences and usage rates are often associated with demographic variables such as:

• age • sex • socio-economic basis • lifestyle • family life cycle

The major criticism of this approach is that it is overly dependent on occupation as a criterion and this is less accurate as an indicator of social and economic behaviour. Geo-demographic Segmentation Geo-demographic segmentation utilises a mixture of both geographic and demographic variables. In so doing a segment can be refined and examined using 2 different segmentation classifications. Quinlan (1981) claims that ACORN (A classification of residential neighborhoods) appears to show a much greater discrimination than the occupation based scheme of social grading. It has the merit of being a multi-variate measure based on a single objective criterion. ACORN's unique advantage over other classifications is that its output is clusters of geographic sub-sets that can be easily mapped and communicated with. Yorke & Meehan (1986) endorse ACORN as an important and useful tool in political marketing as it aids and directs campaign activities. ACORN uses 40 variables, 15 social and economic, 12 related to age and household composite and 13 related to house type. Psychographic and Behavioural Segmentation Dissatisfaction with demographic segmentation has led to the development of psychographic and behavioural segmentation. Psychographic segmentation or lifestyle segmentation is more complex but also a more meaningful method of segmentation because it focuses on an individual’s actual behaviour and lifestyle rather than trying to infer that certain characteristics will lead to a particular behaviour. It concentrates on the benefits products and services bring, not on a functional level but in an emotional and lifestyle enhancing level. Psychographic segmentation identifies common values and segments customers according to their beliefs, attitudes, activities, interests and opinions. Political segmentation appears to suit psychological segmentation because we know that generally the electorate does have opinions, beliefs and attitudes towards political parties and candidates. Psychological profiles can be developed for segments based on lifestyle, social character and personality. The are 3 segment divisions of social character: 1. Traditional directed behaviour (a voter always votes this way) 2. Conformity with social or family groups (socialisation into supporting a party) 3. Individualist behaviour (instrumental consumer buying behaviour of choice of

party)


Behavioural Segmentation attempt to group individuals based on their actual actions: • End use - what is the product to be used for? • Benefits sought. • Usage rates - heavy, medium and light • Loyalty

Criteria for effective segmentation • distinctiveness • tangibility • accessibility • defensibility

Market Targeting Targeting must be consistent with an organisation's overall objectives. Assuming the segmentation of a market is satisfactorily completed, the next task is choosing the segments to be targeted. The number of segments chosen will be determined by the available resources available to implement the marketing activities effectively and efficiently. A key decision is finding the equilibrium between stretching resources to maximise the number of market segments targeted and ensuring adequate resources are available for effective implementation of marketing activities. There is also a final consideration of selecting segments that are generally overlooked and this introduces the complex question of segment responsiveness. Responsiveness is often overlooked because there is a lack of rigorous research into what stimuli will cause a favourable outcome. For example in the 1997 General Election, the Labour Party selected ninety seats and the Conservative Party about a hundred (Baines et al, 1999). Sometimes the division between the attractiveness of segments is clear and choice is relatively straight forward. In other cases the decision is more difficult because the relative attractiveness of the developed segments is similar. A system for prioritising segments is required. The Hierarchy of segments model (Figure 2) is a generic framework for evaluating and prioritising segments. There are 4 distinct segments: 1. Primary targets: Attractive segment(s) that are responsive to stimuli 2. Secondary targets: Less attractive segment(s) that are responsive to stimuli 3. Relationship building: Attractive segment(s) that are less responsive to stimuli 4. Wasteland segments: Unattractive and segment(s) that are unresponsive to stimuli 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. The attractiveness of a segment may be determined by some of the following 12 criteria: 1. a large market share of a segment is held e.g. high brand recognition


2. high potential for growth i.e. high relative returns or expected number of votes are potentially higher

3. the size of the segment i.e. large enough to be interesting or small enough to be managed

4. lack of competition and/or competitors are in a weak position to respond to the organisation's marketing

5. the organisation can differentiate products and services to match the segment's requirements e.g. local or single issues, high profile candidate, topical national issue

6. segment(s) penetration will help achieve the organisations objectives. These objectives may be brand building, greater awareness, additional profits, more customers, greater usage or larger share of the vote etc.

7. ease of access e.g. information needed to identify members of a segment is available or easily obtained

8. existing relationships e.g. resources are allocated preferentially to a candidate or constituency (Baines et al, 1999)

9. ease of distribution e.g. e-mail lists are available, distribution of political literature is easier in urban rather than rural areas

10. resource availability e.g. active local branch, available funding, costs are not prohibitive

11. demographic or competitive environment changes creates an opportunity that is potentially attractive e.g. population growth, sitting candidate retires

12. cost benefit analysis is favourable Responsiveness SECONDARY PRIMARY to Stimuli TARGET TARGET WASTELAND LONG TERM RELATIONSHIP BUILDING

Attractiveness of segment Figure 2 Hierarchy of Segments Model Responsiveness to stimuli may be determined by some or all of the following 6 criteria or activities: 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


6. previous research or experience indicates a segment will respond favourably 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. For practitioners, the difficulty arises in selecting and weighing criteria of attractiveness and responsiveness. Obviously personal and political agendas will make this process less objective. There may be a reluctance to use outside assistance in this process as my fees are extortionate. Generic Targeting Strategies 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


• Specific and compelling communication is needed • Strong brand image acquired. Market Positioning The next stage in the process of developing an effective marketing strategy, is to clearly position products or services within the identified target market(s). Positioning refers to the place in the market that a company or product/service occupies relative to competitors (Hooley, 2000). The positioning should take full cognisance of the relative positioning and strength of competitors. Positioning is in the mind of the customer (Ries & Trout, 1981). Positioning can be a mixture of real benefits and the image created. Positioning is essentially benefit based. The values of the customers within any target market will be the basis of any product offering. The skill of the marketer is to provide additional added value over and above that offered by competitors. Product differentiation can be achieved by: 1. added features which customers value 2. highly valued level of service pre and post sale 3. valued image created by advertising and brand quality 4. product availability that differs from competitors’ 5. pricing at a level that is valued by customers. 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. There are 5 key factors for successful positioning: 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


message did not get across clearly as research conducted by the author confirms (Bannon, 2003b).

Product Positioning There are 4 stages in the positioning process: • conduct market research to identify key attributes for each segment • shortlist all competing products that offer those attributes • identify optimum levels for each attribute • prepare a perceptual map. 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. Stages in the competitor analysis are: 1. a range of CBF's are selected by a priori or clustering techniques 2. the CBFs are weighted by customers 3. a segment exists if a sufficient number of customers rate the CBFs the same 4. a segment must be large enough that it is economically viable to target 5. competing product's CBF's are rated 6. segments are targeted were the organisation's CBF's score highest 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 Implementation is the translation of the marketing segmentation study results into a working marketing strategy. Implementation is the process of developing marketing plans of activities for the targeted market segments. No rules can be offered to assure successful implementation and the academic literature on this is conspicuous by an absence. (Wind, 2000) suggests a few generalisations likely to increase successful implementation. 1. involve all relevant decision makers 2. segmentation characteristic should be as innovative as possible 3. the segments developed should provide guidelines for the generation of creative

execution


4. recognition that product management are not marketing orientated 5. the target audience should be involved in message design Hooley (2000) identifies 4 main strategy options: 1. reinforce existing position 2. incremental repositioning 3. radical (transformational) repositioning. The New Labour project was a classic

piece of repositioning a political party from left of centre Socialists to the right of centre. The Tory party would obviously wish to reposition but selecting the right ground that is unique may prove difficult.

4. competitor de-positioning. This is the process of eroding a competitors position of dominance.

Marketing Segmentation and Politics The applicability of marketing to politics is rarely challenged by political marketers even if some politicians and political scientists have reservations, are sceptical or down right hostile to it. It is assumed that the political arena can benefit from all the theories, tools and techniques of marketing. Again, the assumption is that marketing segmentation theory and techniques potentially can improve the performance of political organisations and lobby groups. There are four obvious positions to approach this dichotomy: 1. all members of the electorate are potential voters, therefore the electorate should

be treated as a homogeneous group where no targeting is required and undifferentiated (mass) marketing adopted. A party decides what it's ideology, principles and policies are. Political propaganda is used to advocate their political position and it's left to the electorate to decide.

2. political parties should product differentiate to appeal to the maximum number of voters in an imperfect market i.e. disaggregation approach is adopted.

3. market segmentation process will help achieve the objectives of the organisation and thus should be embraced fully.

4. a hybrid model of mass marketing, product differentiation and market segmentation that best suits the resources, capabilities and is acceptable to key stakeholder groups

Advantages of undifferentiated mass marketing in politics are: • identifies common needs of voters and appeals to broadest number of voters • no requirement to use resources in the marketing segmentation process and the

associated risk of ineffective implementation • evaluation of market segmentation is not required • uses mass communication and distribution techniques • narrow product range i.e. concentrates on a small number of issues • attempts to create brand images • large barriers to market entry are created and maintained 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


segmentation should be as applicable in politics as consumer goods. The difficulty arises in deciding: 1. the balance between mass marketing, product differentiation (disaggregation) and

market segmentation 2. resource effectiveness and efficiency 3. gathering relevant, timely, accurate research on the electorate 4. targeting segments that will respond to stimulus i.e. actionability (Kotler, 1997) 5. a message must be able to be communicated to the target audience 6. message issues: media, style and content 7. evaluating the impact of segmentation activities 8. branding issues: vision, values, essence and equity 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). Canvassing a targeted constituency is still regarded by most parties as a worthwhile activity. However, the extent, accuracy and appropriateness of canvassing as a method of identifying supporters is questionable. Most campaign managers will have reservations as to the reliability and validity of canvass returns. Canvass returns can become more accurate by simply not canvassing but engaging in (anonymous) voter identification. The electorate is not aware of which party is conducting the research and therefore the interviewee has no reason to deliberately mislead. Validation research of existing databases can be used to check on the accuracy of existing data. The exercise of identifying supporters is a resource intensive and pointless activity if parties consequently do nothing with the information. The activities generally


adopted are targeted communications, surveys of opinions, candidate visits, appeals for resources and reminders to vote. 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.

Psychographic segmentation is also used by targeting lifestyle either through leisure activities or occupation. Databases of communities of interest are built up by parties e.g. fishermen, teachers, nurses, community groups, religious groups, sports clubs, environmental groups, lobby groups etc. The party organisation can develop communications that are tailored to the interests of these groups. The communication is more likely to be received and decoded if the issues are of direct interest. 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


social/political cleavage between established organisations which are trying to change our believe systems and behaviours, and new rising pressure groups which prefer an assault on the consciousness to the gentler ethos of consumer persuasion’ (O’Shaughnessy, 1996). Social marketing seeks to use all marketing tools and practice to effect the desired social changes. Activities such as marketing research, market segmentation, sophisticated communication techniques, objective setting, database management, strategic and project planning are some of the standard tools employed. 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. Party strategists use policies, issues, emotional engagement, loyalty, style of presentation, campaign slogans and a variety of communications techniques. However it could be argued that this amounts to the disaggregation of the electorate leading to product differentiation not a large scale marketing segmentation process. 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.


Segment

Behaviour

Desired Outcome

Action Plan

Politicians

Political

Representative

Competent/non-accident prone/

re-electable

Strategic input and

implementation

Hyperactivist

Politically Active

Evangelist

Involvement in decision

making process

Activist

Positive Advocate

Loyalty

Maintain

Relationship

Supporter

Active

Vote/ member/

donor

Inform/ nurture/ develop

relationship

Potential Supporter/

Undecided

Passive

Vote

Persuade/ Communicate

Non -Voter

Inactive

Active

Communicate importance of being an active voter

Non- Supporter

Active Negatively

Inactivity/ inertia

(Egan, 1999)

Communicate/ ignore/

disillusion/ squeeze

Opposition

Negative advocate

Neutralise

Dis-information,

negative campaigning

Table 1 Political Marketing Segmentation by Social Group Behaviour Conclusions As a management function, marketing is a process of decision making that entails 5 areas of focus:

• Segmentation market • Target marketing • Positioning


• Market planning (Doyle, 2000) • Implementation

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. Despite the consistency of academic approaches to marketing segmentation and acceptance (at least in theory) by firms of the value of marketing segmentation, too many firms are not segmenting their markets effectively. Organisations are not basing their strategies on research based marketing segmentation and there is a need to adopt a more professional and considered approach (Wind, 2000). 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. For a segment to warrant specific attention it must be:

• measurable • accessible • substantial • unique in its response • stable

A system for prioritising segments is required. Figure 2 is a generic framework for evaluating and prioritising segments. 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, non-linear, market environment. There are 5 key factors for successful positioning:

• clarity • consistency • credibility • competitiveness. • communicable

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


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Marketing Segmentation and Political Marketing