The increasingly fragmented nature of mass media, and the evermore diverse viewing habits of most consumers have made marketing more complicated for most industries. Firms often feel forced to turn to experts in an effort to understand how to allocate market spending more effectively. Major improvements in both the quality and quantity of information about consumer habits, together with the rapid growth of targeted media vehicles, have provided firms with the means to target specific groups within a given market more precisely.
But these new capacities present new questions. How much should companies budget for marketing to specific consumer niches? Will more precise targeting mean higher or lower overall advertising expenditures? What steps should companies take to avoid overloading potential clients with excess information? What are the relevant ethical issues involved in more effective marketing communications?
Associate Professor of Marketing David Soberman analyses the various issues involved in the current world of sophisticated media, and suggests approaches that might be adopted by firms to ensure that resources devoted to media marketing produce results. His working paper opens with a discussion on how many firms are currently coping with increased media fragmentation and the explosion of options available to them.
Soberman considers the reasons why in many instances, the commercial providers of media information may be natural monopolies, due mainly to database sizes and the costs of storing and processing contained information. He goes on to explain why non-traditional suppliers of marketing information are now often the most valuable sources for managers.
Moreover, he illustrates how firms can reduce price competition through employing targeted advertising. Using the two main players in the American light beer sector as examples, the author illustrates certain advantages of targeting heavier advertising to consumers who are more strongly disposed to buying a specific product, rather than to those with less provable brand loyalty. This has the effect of reducing price competition for two reasons.
The paper reveals how certain marketing initiatives, such as internet distribution, better after-sales service or added product features generally provide only temporary advantages. On the other hand, the targeting of media spending to create product differentiation can result in a win-win scenario for all competitors. The author describes why one of the natural consequences of targeted media is for less media expenditure to be wasted, since firms can simply not advertise to consumers who have little likely interest in their offerings. And the limited knowledge that consumers may have about competitors' products has obvious advantages, particularly for product pricing.
Soberman also explains why the often very considerable sums that companies pay for media exclusivity can benefit all brands in that category, and why elaborate media packages should be scrutinised by marketers to determine the extent of their added value. The paper concludes with an analysis of two areas where firms should exercise caution in utilising the new media channels available to them. These involve potential privacy violations through unsolicited exchanges or misuses of data, and other possible ethical breaches, such as taking advantage of vulnerable consumers through unscrupulous targeting policies.
Journal of Brand Management, August 2005