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Micromarketing

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Micromarketing

Suppose you just opened a handmade knitting store and want to run an ad campaign on Facebook to reach more people. Would you A) set the range to cover as many people as possible, or B) limit the range to a specific location, age group, and income status? If you choose B, congrats! You've just adopted a micro marketing strategy for your ad campaign. To learn what benefits a micro marketing campaign can bring business read on to the end of this explanation.

Micromarketing Definition

As shown in Figure 1, we can group market segmentation into four levels:

  • Mass marketing

  • Segment marketing

  • Niche marketing

  • Micromarketing

The number of customers decreases from bottom to top while marketing strategies become more specific and personalized.

Since micromarketing is located at the top, it serves the smallest possible customer segment in the market. The opposite of this strategy would be mass marketing which aims to serve as many people as possible.

Micromarketing is a marketing strategy to reach a highly targeted audience.

Micromarketing comes with many benefits. The most important ones include reducing marketing costs and customizing offers to meet the audience's exact needs. Both are vital to business success, even for those that are small or just starting.

Micromarketing Examples

Now that you know what micromarketing is and why it is essential, let's have a look at an example:

Scrimba — Front-end developer course

To say the market for web development courses is big is an understatement. As software development is the most sought-after career, the number of coding classes is also numerous. Type in the keyword "coding course" on YouTube, and you'll find millions of videos.

To break into this crowded market, Scrimba adopted a micromarketing strategy. Instead of targeting all aspiring developers, the business narrows its audience to front-end developers.

For those of you who might not know, there are three main types of software developers: front-end (those dealing with the front-yard of the page), back-end (those who specialize in the back, taking care of things like databases, programs, etc.) and full-stack (well, as you might have guessed, they can work in both front and back-end).

Accordingly, Scrimba builds online courses that help students master front-end skills such as HTML, CSS, and JavaScript. They can choose to take individual courses or sign up for a 6-month Front End Development Career Path from knowing no code to becoming a coding hero.

The courses are a huge success. Many students who finish the course have landed jobs in prestigious companies. Scrimba has now surpassed 1 million subscribers and continues to grow strong.

Lesson learned: When the market you break in is extensive, find a specific customer need that you can offer and do it well.

Micromarketing Strategy

A micromarketing strategy is not so different from other marketing strategies. The key is to develop an effective marketing mix strategy (product, price, promotion, place). However, there are two distinct differences:

  1. Customized marketing,

  2. Market segmentation.

Micromarketing: Customised marketing

Micromarketing is the opposite of macro marketing. Instead of reaching as many people as possible with a generic offer, micromarketing tailors the product and marketing strategy to match the need of a specific group.

For example, the sports giant Red Bull targets young people and sports enthusiasts who constantly need energy. To market to this group, the company sponsors events that these people will most likely go to, from car racing to rock climbing.

Micromarketing: Market segmentation

While the "micro" indicates small, micromarketing does not mean serving fewer people. A large corporation can adopt micromarketing by segmenting its customers into smaller groups. The segmentation can be geographic, psychological, or demographic.

Starbucks is a global brand that has a presence in over 100 countries. But instead of serving everyone the same drink, Starbucks allows its partners to adapt their menu items to match local tastes and preferences. For example, in Japan, there is matcha (Japanese traditional green tea) added to the menu. At the same time, in a Mexican coffee shop, you can find Ponche Navideño (Christmas Punch), a beverage served at family gatherings.1

Walking into a Starbucks store, you'll be surprised by the diversity of its customers. There are people above the age of 40 who purchase the drink to socialize with their friends. The younger demographics (18-24 years old) are more likely to grab the drink and go. Some busy people will go for the drive-thru option (ordering drinks from their car) if there is one. Different age groups like different things. Starbucks knows this and customizes its experience for each demographic.

Types of Micromarketing

There are many types of micro marketing. Here are the most common ones:

  1. Loyalty-based — market to people who are fans of an established brand. For example, selling Beatles mugs and T-shirts to Beatles lovers.

  2. Local-based — market to people who live in a specific area—for example, second-hand clothing shops in a local neighborhood.

  3. Relationship-based — market to those you know, such as your colleagues, family members, friends, existing customers, etc.

  4. Job-title-based — market to people who work in a particular field, e.g. marketing specialists, music teachers, etc.

  5. Industry-based — market to a specific industry, e.g. tech, education, non-profit, etc.

  6. Customer-based — target the customers' exact needs or solve a pain point—for example, teaching people how to sew handmade gifts.

  7. Customer recovery — win back customers with special deals and offers.

  8. Price-sensitivity — make an affordable but quality alternative to a popular product.

Micromarketing Advantages and Disadvantages

Like any other marketing strategy, micromarketing has both advantages and disadvantages. The main benefits of micromarketing include cheap cost and more robust connections, whereas its limitations lie in customer acquisition and scale restrictions.

Let's take a closer look.

Micromarketing Advantages

Micromarketing is suitable for small or startup companies that do not have a large customer base or a well-established reputation. Two key benefits come with this strategy: lower costs and a deeper connection with customers.

Lower marketing costs

Marketing costs money. Whether you are to advertise on TV, newspaper, Youtube, Google, or social media pages, an ad display comes with a fee. The fee can be large or small depending on the channel you advertise and the level of customer interest.

Take an example of Google paid ads (paying to get your sites to rank higher for specific keywords). How much you will pay depends on how popular the keywords are or how much traffic you get per month. For example, one keyword might cost only 15 cents per click, but a popular keyword will be priced at $1 per click. If you are not specific with your ads, you might pay a hefty fee for gaining no sales.

Micro marketing aims to narrow your market so that you know exactly who to target and market your products to more effectively. When micromarketing is done right, it costs the business a small marketing fee with high returns on investment.

You are a coffee shop owner and want to get more customers to your store. You decide to do a small advertising campaign on Facebook. Who should you target with your ad? If you target everyone in the country, you might go bankrupt within a week since many people who see your ads are too far away to visit your store. Now, if you limit the ad display to only people within 1 mile from you, chances are more people will show up. You are near them. You sell excellent coffee. Why not?

Deeper connection with customers

Customer relationships are based on trust. Trust depends on how well you deliver what you promise. Even for a large brand, this is hard if you don't divide their customers into segments and tailor their products to each customer group's needs.

This is something you see every day when you go online. Take Netflix, for example. Did you know that the movie cover you see on Netflix changes depending on your interest? Well, it does. Upon collecting your data on watching history, location, and language, you optimize content to match your preference better.2

Companies use technology a lot to personalize content. But in many cases, micro marketing can be done without technology at all. For example, you can look for problems your close friends and family face and develop a product to solve them. After that, you can share the product with more friends; if they find it useful, they will introduce it to others and bring you more customers.

This is a simplified example. But you get the idea. The more specific you are with the offer, the better your chance of winning people's preferences and making sales.

Micromarketing Disadvantages

Some of the disadvantages of micromarketing are as follows:

More time-consuming

Micromarketing takes a lot more time to implement than mass marketing. Marketers need to collect customer details (demographics, location, interests, hobbies, career status), interview many people to learn about their pain points and desires, and develop a product that solves a problem that has not been worked on yet.

High cost of customer acquisition

Micromarketing is cheap but not free. The cost includes the money and effort the marketer has to pour into customer acquisition. Since the niche is small, including hard-to-find customers, it would need more effort to convert interested people into buying customers.

Risk of choosing the wrong target group

There's also the risk of choosing the wrong group. This happens mainly because incomplete market research wastes lots of company resources.

Micromarketing - Key takeaways

  • Micromarketing is the marketing strategy to reach a highly targeted audience.
  • The main goal of micro marketing is to match the right product with the right customers while reducing marketing costs.
  • Two essential features of micromarketing are market segmentation and customization.
  • Micromarketing can be local-based, loyalty-based, relationship-based, job-title-based, industry-based, customer-based, customer recovery, or price-sensitivity.
  • When done right, micro marketing can help the company lower its marketing costs and deepen connections with customers.
  • However, this strategy can initially consume a fair amount of time and money.

References

  1. Lianna Tedesco, Starbucks Menus Look Totally Different Around The World, Here Are Some Drinks We'd Travel For, https://www.thetravel.com/what-does-starbucks-look-like-around-the-world/, 2021.
  2. Gbenga Ojo-Aromokudu, How does Netflix personalise your experience?, 2020.

Frequently Asked Questions about Micromarketing

Micromarketing means targeting a very small and highly specific customer target in the market. It is the opposite to macromarketing or mass marketing which targets as many people as possible. 

Micromarketing's ethical issues arise from its use of personalised content in the promotion and advertising campaigns. Most people may feel uncomfortable when the advertisers know how they think and act. 

Retailers can use micromarketing to segment their customers (break a large customer base into smaller sub-groups) to offer them specific deals. There are many ways to segment customers: location-based, job-title-based, industry-based, customer recovery, price sensitivity, etc. The main reason for using micromarketing in retailing is to personalise content for higher customer satisfaction. It also reduces marketing costs and efforts. 

While both micromarketing and niche marketing target a small group of customers, micromarketing takes a further step by targeting a specific group within a niche market. 

Targeting the market by micro marketing can be based on the customers' location, loyalty, job title, or the industry and network they belong in. Companies can also target customers based on price sensitivity and buyer journey.  

Final Micromarketing Quiz

Question

Micromarketing is the marketing strategy to reach ________________. 

Show answer

Answer

a highly targeted audience

Show question

Question

Two main benefits of micromarketing are _____________ and ___________

Show answer

Answer

  • reducing marketing costs
  • customising offers to meet the audience's exact needs

Show question

Question

Market segmentation in micromarketing can be _____________.

Show answer

Answer

geographic, psychological or demographic

Show question

Question

Which type of micromarketing markets to people who live in a specific area?

Show answer

Answer

Local-based micromarketing

Show question

Question

Targeting the customers' exact needs or solving a pain point refers to which aspect of micromarketing?

Show answer

Answer

Customer-based / Customer-driven

Show question

Question

Micromarketing has a low cost of cost of customer acquisition.

Show answer

Answer

True

Show question

Question

What is not a benefit of micromarketing?

Show answer

Answer

Risk of choosing the wrong target group

Show question

Question

The opposite of micromarketing is ___________.

Show answer

Answer

mass marketing

Show question

Question

Micro marketing aims to narrow your market so that you know exactly who to target and market your products more effectively.

Show answer

Answer

True

Show question

Question

Micromarketing is located at the bottom of the market segmentation pyramid. 

Show answer

Answer

True

Show question

Question

Name the four levels of the market segmentation pyramid. 

Show answer

Answer

Mass marketing

Niche marketing

Segment marketing

Micro marketing

Show question

Question

Micromarketing targets the smallest divisible market segment. 

Show answer

Answer

True

Show question

Question

Only small businesses can adopt micromarketing. 

Show answer

Answer

True

Show question

Question

How can large corporations adopt micromarketing?

Show answer

Answer

By segmenting their customers into different groups and targeting them specifically. 

Show question

Question

Loyalty-based marketing means targeting people who are loyal fans of a brand. 

Show answer

Answer

True

Show question

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