What Impact Does Culture Have on Market Strategy and Segmentation?
To fully appreciate the impact that culture has on marketing strategy and segmentation, it helps to understand how these three variables interconnect. Because marketing strategies target well-defined market segments, you can't have marketing strategies without market segments to target. Moreover, culture is a pervasive descriptor that helps to define market segments. Hence, culture is to market segments as market segments are to marketing strategies.
Small businesses rarely have the resources to effectively compete against major corporations in the general market. They usually prosper by identifying and targeting under-served market segments of the general market, where their goods or services match the needs and preferences of specific market segments. Market segmentation is the process of dividing the total or general market into well-defined market segments that share similar characteristics. Such characteristics, often called demand characteristics, have been found to shape shopping behavior in terms of needs, wants, preferences and expectations. Marketers usually employ four segmentation tools to create market segments: geographics, demographics, psychographics and behavior segmentation.
Most definitions of culture center on shared characteristics of a particular group attributed to factors that might include a common language, geography, religion, dietary preferences, lifestyles, music and art, education and national traditions. In effect, culture encompasses most everything that influences behavior, including how information is cognitively processed to make purchase decisions and the intuitive ideals that shape belief systems. In turn, these influence consumer behavior.
The pervasive influence of culture becomes apparent when applying the four basic tools of market segmentation to deconstruct the major influences that characterize market segments. Using geographic segmentation, for example, the cultural orientation of a central-city resident likely differs from a rural farm resident. Using demographic segmentation, the cultural orientation of a household with a $10 million annual income likely differs from a $30,000 a year household. Culture impacts psychographic analyses by helping to identify the emotional drivers that explain why market segments behave as they do and behavioral drivers, which help to explain the relationship that market segments have with product categories and brands within those categories.
Many marketing savants often define marketing strategies using abstract concepts such as "concentrating a company's scarce resources to maximize profit potential" while neglecting to include "target customers" or market segments in their definitions of marketing strategies. However, it's critical to identify the likely market for a product or service as the overarching first priority. Moreover, by definition a company must properly segment their audience and select a target market before a product or service can be finalized to address the specific needs of that segment.