A New Dimension of Segmentation – Customers’ “Influential Value”

By Xintong (Joy) Zhou

 

Media Generations Theory provides a new dimension of behaviors for marketers identifying and aggregating customers throughout the IMC process. According to Don E. Schultz, the first step of the 5-step integrated marketing communication process is customer identification from behavioral data. According to Martin Block and Schultz, people are shaped by the state of the media as it existed in their teen years, and each generation has different patterns of media consumption and usage. Network Theory also suggests a new perspective for the second step of the IMC process, valuation of customers/prospects. Whether they are evaluating frequency, recency, monetary value, or evaluating product use and product potential, what marketers usually estimate is the current and potential financial value of customers and prospects. But, Network Theory encourages marketers to look at them from a different lens; customers’ “influential value.”

 

Why the “influence” of customers could be a new dimension of segmentation

 

The reason is the power of Word of Mouth (WOM) or Word of Network (WON). According to Schultz WOM is the most influential media category across all generations. People in consumers’ social worlds play important roles in shaping preferences and consumption habits; they are seen as a trusted source of information and influence customers’ decision processes. Not only do customers provide value in their consumption behaviors, but they also carry many ties and have great influence on the nodes tied to them. Even if marketers do not directly target some media generations due to limited budget or resources, marketers still can influence them indirectly thanks to Word of Mouth/Word of Network of the most influential media generation, e.g. Millennials.

 

In addition, the most influential media generation not only influence others’ purchase decisions but also influence others’ media consumption. The success of WeChat is a great example of the power of network and influence. In China, the early users of WeChat were young people, but now it has cross-generational usage thanks to the WOM and education from millennials to older generations. Now, many of these “Internet immigrants” and “digital immigrants” are on WeChat.

 

In fact, though shaped by the state of the media in their teen years, people still may assimilate into non-native media, the types of media not around during their teen years. The degree of assimilation is a personal choice, but what do their choices depend on? Media and marketers should first figure out the unmet needs and pain points of customers. Customers choose a media platform because it satisfies a want or need, such as great content, or ability to do something that other platforms can’t. But if a media platform is too complicated and makes for a negative user experience, customers abandon it. So, media companies not only need to create attractive content and unique advantages for their platforms but also need to reduce the barriers customers face when adopting them. Marketers need to acknowledge these criteria when choosing to distribute content through paid media platforms and when creating their owned media platforms.

 

Addressable or mass media? It depends on your goal.

 

The scope and impact of customers’ networks are still limited, especially compared with mass media. In addition to retaining present customers, marketers must also acquire new customers, usually by effectively targeting certain segments. But targeting segments also means they could potentially be missing other profitable customers outside of their targeted groups. Mass media helps spread information beyond the confines of a certain group. Unless marketers are very sure that they only want to target a niche group and that group is seldom exposed to mass media, or they have very limited budget, they shouldn’t overlook the power of mass media.

 

Addressable media and mass media are both very important, and both have their pros and cons. Customized on a household or individual level, addressable media could deliver extremely relevant messages and deeply resonate with customers. But it’s a lot more work to deliver messages customized to every individual. In addition, the range of influence of customers’ networks and Word of Mouth may still be limited compared with mass media. The pros and cons of mass media are just the opposite. Though mass media may not be as personally relevant to an individual customer, it could influence far more nodes. Since each node has several ties to other nodes, and these nodes each have several ties to more nodes, the impact of networks and WOM could be huge if the content is good enough.

 

When choosing to distribute messages through mass or addressable media, marketers need to look to their goals. If the goal of a brand focuses on expanding the market and acquiring new customers, then the marketers of this brand should allocate more resources to mass media. The reasoning is simple – marketers have data on their current customers, but they may not have the data telling them where to best meet future customers.  On the contrary, if marketers focus on retaining current customers and strengthening the relationships with them, or have a clear goal to target a specific group, they should allocate more resources to addressable media. And to be more efficient, they could aggregate individuals and small groups into larger groups based on the similarities they care most about.

 

The only way to activate a network is with great content, and the focus should always be customers.

 

Whether focusing on addressable media or mass media, marketers should keep in mind that they should find or create great content that delivers value to customers. If marketers can create great content that is worth sharing, people will distribute it organically through WOM and on social media. It might even get picked up by mass media outlets, like The Great Schlep case or Always’ Like a Girl campaign.

 

Convergence has blurred the lines between types of media, meaning marketers can focus more on creating content and a valuable user experience over media distribution. Admittedly, marketers have to care about channels because they need to do media planning and allocation, but the starting point should never be channels. Instead, they should make media distribution decisions based on consumers: their behaviors, associated preferences, pain points, and needs. For efficiency and effectiveness, it’s better to aggregate consumers who share similarities that matter most to marketers into groups, rather than targeting on the individual level. When evaluating aggregated groups or considering which one to focus on, marketers should take the value of “influence” as an important criterion. Marketers should strive to determine the most influential group and leverage their networks. But no matter if they use addressable media or mass media, the value of the content still matters more than the method of distribution.

 

Works Cited

Schultz, D. E., & Block, M. P. (2009). Media Generations: Media Allocation in a Consumer-Controlled Marketplace. Worthington, OH: Prosper Business Development Corporation.

Schultz, D. E., & Schultz, H. F. (2003). IMC, the Next Generation: Five Steps for Delivering Value and Measuring Returns Using Marketing Communication. New York: McGraw-Hill Education.

 

Born in Nanjing, China, Xintong (Joy) completed her undergraduate study at Fudan University, Shanghai, with a degree in English. Currently studying in the Medill IMC program, she is interested in digital marketing and marketing analytics and aims to become a marketer who works on building data-driven strategies. LinkedIn

 

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