4.4 The English Channel and Demographics


4.4 The English Channel and Demographics

In the medieval period, the concept of demographics and market channels was unknown. It is easy to say the English Channel was a boundary that not only separated geography, but created a barrier between cultures. Geography and natural boundaries have been the primary element in developing and maintaining individual cultures, now expressed as nationalism. However, nationalism is often revered as stemming from an ancient association or binding of people to a specific land. It is actually a modern invention stemming from the 1800s. Prior to that period, the allegiance of an individual was to a sovereign lord, not to geography.

It is difficult for today’s marketing mavens to appreciate the simplicity and complexities of the medieval marketplace. However, the simplicity of those markets provides valuable lessons for today’s global business. Medieval society comprised several broad categories: royalty, gentry, clergy, military, merchant class, peasant class and administrative class. Each class was ultimately defined by birth. However, they all vied for the same goods and services, such as clothing, weapons, food and spices such as pepper. It was the rising demand for new sources of spices that led to an explosion of trade with many parts of the world and the eventual discovery of the American continent. Medieval merchants did not have the analytical sciences of market segmentation, customer behaviour and demographics. They merely identified that people needed or desired certain goods from nearby markets and distant lands and brokered the exchange between parties. This value proposition is strikingly similar to that of the modern dot-com companies; it is simple, concise and relatively uncomplicated. Technological innovations in transportation such as shipbuilding enabled these transactions to increase in volume, making necessary larger, more formalized organizational structures. In many cases merchants began financing their own expeditions and evolved into merchant bankers. Unlike their Internet-age counterparts, they were concerned with the preservation of resources and viewed growth as a series of opportunities independent of the entire enterprise. This pursuit of new market opportunities is centred on a timeless formula which sounds like our contemporary definition of a value proposition: people would pay a premium for goods which they cannot readily acquire locally.

However, the complexity of the medieval marketplace, which was a combination of religious custom and sovereign market rights or local guild controls, has now been replaced by technology, marketing, advertising, trade laws, licensing and legislation governing merchantability of products and taxation. The medieval catalyst for establishing and maintaining a market was, in most cases, religion, a cycle of fairs and festivals that is absent from contemporary western market capitalism. Not surprisingly, the religious influence and cultural aspects of markets and commerce is often overlooked by western multinational corporations expanding into areas less influenced by western capitalism. Global products need to incorporate regional idiosyncrasies that reflect the tastes of indigenous peoples into not just products, services and brands, but into their application of technology.

Technology plays a critical role in the ability to enhance a value proposition. Individual types of technologies such as wireless devices, biometric sensors and even the Internet need to be applied to a company’s value proposition in accordance with the social adoption of each device by market sub-segments. However, companies often take concepts to their extremes, and many firms are needlessly creating more micro-market sub-segmentation than is actually necessary, which can result in customer alienation. As Wiersema puts it:

Mere variety and multiple choices make choosing the right solution the customer’s job. And that’s a job they may not be prepared to handle.[128]

Therefore, organizations participating in a globally aware market space must strike a balance between providing customers with an ever-increasing range of products and organizing offerings into logical associations such as products that facilitate a customer’s lifestyle. In any case, product offerings targeted to a specific market sub-segment must present a clear and discernable value proposition, regardless of the technology used to deliver it. Technology should be viewed as the mechanism for product delivery and value realization.

Market Segmentation

Sales and marketing departments are realizing the value of information technologies as they apply powerful database engines to analyse customer transactions. This analysis centres on discovering the essence of customer behaviour in order to understand how a product’s value is perceived during the buying process. This information is used to develop profiles of customer behaviours which indicate the type of individuals that are prospective new customers and identifies products that are likely to be purchased by existing customers.

One method used is that of market segmentation, the division of a market and its customers into homogeneous groups. Each segment reflects a group of characteristics separating one set of individuals from another. An individual’s likes, dislikes and purchase behaviour can be used in a model of future behaviour, resulting in isolating specific buying trends. This approach to customer analysis was first used in the 1950s. Now technology enables the examination of customer behaviour with increasing levels of data granularity. This type of analysis becomes increasingly important when organizations are moving to a mass-customization marketplace. The value proposition for market segmentation and its related technologies is that:

  • It can identify the needs of smaller groups of customers with similar characteristics sharing a common behaviour

  • It identifies customers not receiving services or ‘market niches’, providing an opportunity to develop a new product or service

  • It can correlate product data to identify low-volume buyers and customers who are unintentionally ignored

  • It enables companies to classify segments by value, profitability and other criteria that can be matched to marketing campaigns, promotions and other distribution activities

  • Simply, it avoids sending inappropriate information to certain groups of consumers.

Market segmentation was once limited to organizations with large budgets. Technology gives even the smallest company some level of market segmentation capability. How markets are segmented is a matter of the complexity of the product and the depth of the market offering, which varies from company to company and product to product. The most popular methods of segmentation are: demographic (age, income, education level, gender, occupation); geographic (location, population density); psychographic (personality traits, lifestyle, hobbies and attitudes) or behavioural (brand attraction, benefits sought, amount of usage and number of purchases). When combined with product types and the levels of customer engagement, these provide a powerful toolkit for pinpointing future customer activity.

[128]F. Wiersema, Customer Intimacy: Pick Your Partners, Shape Your Culture, Win Together (London: HarperCollins, 1997) p. 29.




Thinking Beyond Technology. Creating New Value in Business
Thinking Beyond Technology: Creating New Value in Business
ISBN: 1403902550
EAN: 2147483647
Year: 2002
Pages: 77

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