Importance of Customer Behaviour in Business

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Executive Summary

Marketing segmentation remains one of the most important tools for marketing managers across the planet. It is majorly used by industries to select the most promising population. In essence, companies seek to identify smaller groups of customers to target with their marketing practices. On the other hand, the persona-based approach achieves a more customer-centric classification representing individuals sharing common goals, behaviour and needs. The validity of traditional marketing segmentation is, therefore, subject to the extent to which it can address various marketing aspects better than the persona-based methods.

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The report discusses the traditional and modern segmentation and targeting and argues why earlier mechanisms are ineffective today. The traditional and modern segmentation and targeting section determine whether the traditional tactics are still applicable today considering that the persona-based approaches are deemed to offer greater efficiency. The arguments will be based on what each of these methods offers the business. The second section proposes marketing tactics for the selected personas. The company in question is Beiersdorf Global AG, which manufactures skincare products. It is a global firm meaning traditional market segmentation may become inappropriate. Each of the personas selected is examined in terms of which tactics best applies to them. The two major tactics which are discussed are relationship and brand marketing.

The last section of this report presents a reflection, which examines the key lessons from the exercises, while the conclusion provides a summary of the report. Using Kolb’s model, this section discusses the lessons from this module, which has offered me massive opportunities for personal and professional development. The module has been described as having useful insight for my career development, personal lifestyle and consumer choices.

Introduction

Segmentation is one of the most significant concepts in marketing. Literature has revealed the importance of dividing markets into smaller sections that can be served better (Kara, 2016). Market segmentation has a long history since it was first introduced in 1956 by Adam Smith (Bruwer and Li, 2017; Murray, Agard, and Barajas, 2017). The scholarly efforts, according to Maráková et al. (2018) and Dolincar, Grünb, and Leischc (2016), have focused on understanding consumer behaviour in different industries to determine products and services to be offered. Market segmentation, as will be discussed in this report, divides customers based on these behaviours. The report discusses the validity of traditional marketing segmentation and targeting in an era where modern practices include the development of personas for individual clients. Additionally, a recommendation for marketing tactics for a few personas is presented alongside a personal reflection.

Traditional and Modern Segmentation and Targeting

The validity of traditional marketing segmentation can be examined in terms of its value to modern businesses. It is a question of whether modern practices such as the development of personas in marketing can completely replace traditional segmentation approaches. An understanding of these two approaches will help reveal the validity of traditional marketing segmentation. According to Dolnicar and Leisch (2017, p. 423), market segmentation is majorly used by industries to select the most promising population. In essence, companies seek to identify smaller groups of customers to target with their marketing practices. These researchers argue that the traditional criteria may come at risk as a firm must select segments of high quality. Such a feat becomes increasingly difficult as markets for goods and services become more complex.

The importance of marketing segmentation to modern managers cannot be overlooked. Researchers such as Murray, Agard, and Barajas (2017, p. 7) and Rigby and Bilodeau (2015, p. 251) explain that marketing segmentation remains one of the most important tools for marketing managers across the planet. However, there is no notion of traditional marketing segmentation, and it can only be assumed that the concept has evolved with time to include new approach to the function. According to Calvet et al (2016, p. 95), the traditional segmentation entailed identifying or creating a set of descriptive variables such as age, sex, location, size, and industry among others. A company that mass-produces products will need to achieve a certain level of standardization. Attracting thousands and potentially millions of customers will make it impossible to pick out individual interests and preferences and to tailor products for each customer. In such a scenario, market segmentation becomes a means of generalizing a group of buyers into a single segment and offering them a product that they can all enjoy with minimum to no differentiation.

Even though market segments are developed comprising consumers with similar needs and interest, research has established that no single segment is homogenous. It is therefore almost impossible to satisfy the needs of all consumers in a segment with a single marketing strategy because the individual preferences, behaviours, and responses to marketing efforts differ significantly (Kara, 2016, p. 873). The challenge for marketing managers is to make sure that these differences can be appropriately addressed and each buyer is satisfied by the marketing exercises. At this point, it can be seen that traditional segmentation, despite being a critical tool for management, leaves gaps. New alternatives or improvements are recommended, in which case new practices such as the persona approach can ultimately replace traditional marketing segmentation.

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Comparing traditional marketing segmentation and marketing and persona-based approaches reveals that the newer approaches are more effective and could invalidate the traditional approaches. The term persona has been used extensively in literary work to imply a fictitious character vividly described allowing spectators familiarize with the stereotypical personages (Eldeeb and Mohamed, 2020, p. 3; Dion and Arnould, 2015, p. 123; Miaskiewicz and Luxmoore, 2017, p. 357). Other disciplines have adopted the concept, for example, speech act theory, psychology, rhetoric, communication, advertising, consumer culture, and semiotics among others (Dion and Arnould, 2015, p. 123). In marketing, the term has been used to imply fictitious characters portraying a targeted group of customers. Such a broad definition may appear similar to traditional segmentation which defined customers based on demographic and other characteristics. However, persona-based approach achieves a more customer-centric classification representing individuals sharing common goals, behaviour and needs (Eldeeb and Mohamed, 2020, p. 3). Each industry applies this concept differently but each of them serves to indicate a more effective approach to customer targeting.

Persona-based approaches are increasingly becoming popular across various industries. Examples include healthcare (Vosbergen et al., 2015, p. 101), education (Canham and Mahmood, 2019, p. 468), and software design (Marshal et al., 2015, p. 357) among others. The growing preference of person-based approaches over the traditional marketing approaches is evidence that traditional approaches are becoming obsolete. The solutions offered personas in marketing are not available in traditional segmentation. According to Murray, Agard, and Barajas (2017, p. 233), traditional segmentation relies on the descriptive variable, which when absent, traditional approaches fail to work. Personas may also require the use of individual data but there is no need for such generalizations required for traditional approaches to work.

The effectiveness of the persona-based approach is highlighted as its ability for consumer-centric targeting. It can also be argued that this approach makes markets more homogenous than traditional targeting does. This is because once a persona has been developed, all buyers falling under the characteristics of the fictitious character form a market segment that can be effectively targeted. Greater levels of homogeneity increase the efficiency of marketing activities. The technological developments have made it possible to achieve customer segmentation using personal creation. According to An et al (2018, p. 1), the social media and other online platforms, as well as online data analytics, are critical sources of data that can separate the general customer population into groups with specific sets of attributes. Traditionally, personas were developed through qualitative methods such as survey and focus groups (Jansen, Jung, and Salminen, 2019, p. 2). The most important point to note is that persona-based approaches never lack the necessary data and make markets easier to target. Even though traditional market segmentation remains a useful tool today, its validity is greatly jeopardized by the emergence of more efficient tools.

Proposed Marketing Tactics

Beiersdorf Global AG is a company which manufactures skincare products. It is a global firm meaning traditional market segmentation may become inappropriate. It served Africa, Europe, Asia, the Americas, and Australia where sales have been shown to improve in recent months (Beiersdorf, 2020). Each of the tactics selected will be matched to the four personas developed earlier. These customer personas have been developed using Beiersdorf’s current products where each customer is linked with the selected products.

Brand Marketing

Beiersdorf can adopt one of the most useful marketing tactics, brand marketing, for some of the personas described. Beiersdorf can use this tactic to promote both the products themselves and the overall brand of the company. The goal is to link the identity, values, and personality of the company with the communications sent to the clients. Brand marketing tactic works best for the personas of Andrew Colt and Khadija Ibrahim. Using brand marketing, the persona of Andrew Colt can best be convinced to purchase skincare products that align with his perception of self. The theory of planned behaviour can be used to determine a person’s intention to act (Han and Stoel, 2016, p. 1). Colt is a customer who will always purchase products. Therefore, rather than trying to sell the products to this persona, Beiersdorf should sell the brand itself. If Colt can associate the company’s brands with his self-perception, then he will always go for the company’s products. In this case, the company offers several commodities and Colt can select from any one of them that works best for him.

Additionally, the marketing messages targeting this persona need to be positive and customized to the desires of the potential client. People who like to work may need to be encouraged to work. The problems or challenges they face with their skins can be highlighted and the products tailored to offer solutions. These people care about their physical appearance and, therefore, Beiersdorf needs to express their support for such perceptions through marketing communication.

Brand marketing adopted by Beiersdorf also works well for Khadija Ibrahim. Her personality of may also be wary of physical appearances because she works in a setting where appearances matter. The products used by Khadija are more cosmetic than functional. Additionally, it may be harder to confine to one product meaning Beiersdorf can try to offer multiple alternatives to the same product category. Khadija is a person who likes perfection and influences other people by setting certain standards. These characteristics make this persona perfect for a brand ambassador who can use her influence to attract other customers. A symbol of perfection is admirable and tying this trait to a company’s products is the right strategy. A social identity theory as described by Zeugner-Roth, Žabkar and Diamantopoulos (2015, p. 26) is the best model to apply to this persona. In addition to being able to influence her colleagues, belonging to a team or a social setting is important for Khadija. Therefore, the marketer needs to integrate products into the construction of social identity.

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Relationship Marketing

Beiersdorf can use relationship marketing to build close relationships with its consumers. Relationship Marketing is aimed at creating customer loyalty by providing the clients with information that directly suits their needs and by integrating open communications. This tactic works best for the personas of both Mia Jackson and Norman Herald. Mia Jackson is an easier customer to sell to because she is already familiar with Beiersdorf and its products. The theory of planned behaviour may also apply to this persona because her intentions can be pre-determined. However, the fact that she likes to try different products from the company means that she might be harder to keep. Relationship marketing is also the best tactic because it maintains the customer’s loyalty to the brand (Saeed, 2019). The marketer has to make an effort to keep this persona interested in the company’s products, even if it requires the firm to keep innovating to offer new products from time to time.

Norman, on the other hand, is perhaps the hardest persona for Beiersdorf to sell to because he is not overly concerned with the outlook. His dedication is the wellbeing of other people meaning his appearance is not a major worry for him. Therefore, it can be argued the products purchased by Norman will most likely be more functional than cosmetic. Beiersdorf needs to use brand marketing tactic to promote those products that meet the immediate needs of this buyer. A general targeting approach through generic messaging may work for Norman. The three generic strategies of Michael Porter, specifically focus strategy, can work best. This strategy means focusing on a narrow segment of the market, in this case, that market seeking functional products.

Reflection

Kolb’s reflective model comprises of a number of learning stages. These are experience, reflection, reframing, and reforming. The second stage entails reflective observation, which requires reviewing the experience. This section, therefore, intends to discuss the lessons from this module, which has offered me massive opportunities for personal and professional development. I have come to learn lessons that will be vital for my career and personal life. First, I have come to learn that marketing efforts are based on one major framework, that is, understanding consumer behavior. This exercise in itself has introduced me to the ideas of authors such as Maráková et al. (2018, p. 543) and Dolincar, Grünb, and Leischc (2016, p. 994) who explain that even the concept of market segmentation requires an understanding of how clients behave in certain situations. If I were to work as a marketer or other position that requires me to sell a product or brand to consumers, then the first thing I would do is to conduct market research to fully understand by targets. Additionally, I have come to learn that marketing functions such as segmentation not only allow firms to sell products and services but also to tailor marketing communication to the expectations of the clientele. Understandably, the first step to selling something is to make it known and to arouse interest in the product.

At a personal level, understanding that my behaviours determine how I purchase goods and services can help me make better buying decisions. An economic perspective, obtaining most value at minimum costs is a goal I can pursue. However, that should not compromise my daily life and sense of identity. The social identity perspective as discussed by Zeugner-Roth, Žabkar, and Diamantopoulos (2015, p. 26) dictates that belonging to a particular group may influence my lifestyle choices. However, I am often an individualistic person who seeks to obtain value for anything I consume.

In essence, the module helps me both as a consumer and as a marketer. In the two instances, the decision-making will be more astute and results improved. However, the area where the most value is derived from the module is regarding professional and career development. Essentially, a career can only be successful when a person applies the latest theories to practice. This module has presented critical lessons in persona-based approach to targeting ass a paradigm shift from traditional market segmentation. My generation is well-versed with social media, a platform that can help build the necessary personas. With other technological developments, specifically in software engineering, the relevant algorithms can easily be developed to carry out the task of developing customer personas.

Conclusion

This report discusses the validity of traditional market segmentation considering the emergence of persona-based approaches. It has been argued that despite market segmentation remaining a critical tool for managers, the new approaches are proving more efficient and better suited for the tasks. Secondly, the report recommends marketing tactics for the four personas highlighted. It can be seen that each persona has different preferences and behaviours towards the same products. To sell to each of them, different tactics and strategies have to be used. Lastly, a personal reflection outlines personal and professional development facilitated by the module.

Reference List

An, J. et al.. (2018) ‘Customer segmentation using online platforms: isolating behavioral and demographic segments for persona creation via aggregated user data’, Social Network Analysis and Mining, 8(54), pp. 1-19.

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Beiersdorf outperforms declining skincare market in the first half of 2020 (2020).

Bruwer, J., and Li, E. (2017) ‘Domain-specific market segmentation using a latent class mixture modelling approach and wine-related lifestyle (WRL) algorithm’, European Journal of Marketing, 51(9/10), pp. 1552-1576.

Calvet, L. et al. (2016) ‘Combining statistical learning with metaheuristics for the Multi-Depot Vehicle Routing Problem with market segmentation’, Computers & Industrial Engineering, 94, pp. 93-104.

Canham, S., and Mahmood, A. (2019) ‘The use of personas in gerontological education’, Gerontology & Geriatrics Education, 40(4), pp. 468-479.

Dion, D., and Arnould, E. (2015) ‘Persona-fed brands: managing branded persons through persona’, Journal of Marketing Management, 32(1-2), pp. 121-148.

Dolincar, S., Grünb, B., and Leischc, F. (2016) ‘Increasing sample size compensates for data problems in segmentation studies’, Journal of Business Research, 69(2), pp. 992-999.

Dolnicar, S., and Leisch, F. (2017) ‘Using segment level stability to select target segments in data-driven market segmentation studies’, Marketing Letters, 28, pp. 423-436.

Eldeeb, G., and Mohamed, M. (2020) ‘Understanding the transit market: a persona-based approach for preferences quantification’, Sustainability, 12(9), pp. 1-20.

Han, T., and Stoel, L. (2016) ‘Explaining socially responsible consumer behavior: a meta‐analytic review of theory of planned behavior’, Journal of International Consumer Marketing, 29(2), pp. 1-13.

Jansen, B., Jung, S., and Salminen, J. (2019) ‘Creating manageable persona sets from large user populations’, Extended Abstracts of the 2019 CHI Conference, Glasgow, Scotland, 4–9 May.

Kara, A. (2016) ‘Markets of a single customer: exploiting conceptual developments in market segmentation’, European Journal of Marketing, 31(11), pp. 873-895. Web.

Maráková et al. (2018) ‘Visitor’s motivation for attending traditional cultural events as the basis for market segmentation: evidence from Slovakia’, Acta Universitatis Agriculturae et Silviculturae Mendelianae Acta Universitatis Agriculturae et Silviculturae Mendelianae, 66(2), pp. 543–551.

Marshal, R. et al. (2015) ‘Design and evaluation: end users, user datasets and personas’, Applied Ergonomics, 46, pp. 311-317.

Miaskiewicz, T., and Luxmoore, C. (2017) ‘The use of data-driven personas to facilitate organizational adoption – a case study’, The Design Journal, 20(3), pp. 357-374.

Murray, P., Agard, B., and Barajas, M. (2017) ‘Market segmentation through data mining: a method to extract behaviors from a noisy data set’, Computers & Industrial Engineering, 109, pp. 233-252.

Rigby, D., and Bilodeau, B. (2015) Management tools and trends 2015. Boston, MA: Bain & Company.

Saeed, Z. (2019) ‘A study of theories on consumer behavior’, Journal of computing and management studies, 3(1), pp. 1-28.

Vosbergen, S et al. (2015) ‘Using personas to tailor educational messages to the preferences of coronary heart disease patients’, Journal of Biomedical Informatics, 53, pp. 100-112.

Zeugner-Roth, K., Žabkar, V., and Diamantopoulos, A. (2015) ‘Consumer ethnocentrism, national identity, and consumer cosmopolitanism as drivers of consumer behavior: a social identity theory perspective’, Journal of International Marketing, 23(2), 25-54.

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