Markets and Market Segmentation

A market is defined as a set of actual and potential buyers of a product or service (Kotler and Armstrong, 2014). The market includes anyone who wants or needs your product and has the ability to buy. Markets are identified by measureable characteristics of their members. Not all consumers of a product class (music) are potential buyers of your product offering (alternative rock). The basic goal of market segmentation, the subdividing of a market, is to determine the target market for your specific product.

Marketers segment markets for several reasons:

1. It enables marketers to identify groups of consumers with similar needs and interests and get to know the characteristics and buying behavior of the group members.
2. It provides marketers with information to help design custom marketing mixes to speak to the particular market segment.
3. It is consistent with the marketing concept of satisfying customer wants and needs.

On the most basic level, music markets can be segmented into three sections: 1) current fans, 2) potential fans, and 3) those people who are not now, nor ever likely to be, fans. Perhaps this third group includes people who do not particularly care for the genre that your artist represents. It may include people who do not consume music, people who are unwilling or unable to pay for music, or those without access to become consumers. For example, if I don’t have a computer or Internet access I am not part of iTune’s target market. Businesses focus on the first two groups.

Market Segmentation

Because most markets are so complex and composed of people with different needs, wants and preferences, markets are typically subdivided so that promotional efforts can be customized—tailored to fit the particular submarket. For most products, the total potential market is too diverse or heterogeneous to be treated as a single market. To solve this problem, markets are divided into smaller, more homogeneous sub-markets. Market segmentation is defined as the “process of dividing a the market according to similarities that exist among the various subgroups within the market. The similarities may be common characteristics or common needs and desires” (Dictionary of Marketing Terms, 2000). The members of the resulting segments are similar with respect to characteristics that are most vital to the marketing efforts. This segmentation may be made based on demographics, behavior, geography, psychographics, or some combination of two or more of these characteristics.

The process of segmenting markets is done in stages. In the first step, segmentation variables are selected and the market is separated along those partitions. The most appropriate variables for segmentation will vary from product to product. The appropriateness of each segmentation factor is determined by its relevance to the situation. After this is determined and the market is segmented, each segment is then profiled to determine its distinctive demographic and behavioral characteristics. Then the segment is analyzed to determine its potential for sales. If the segment meets the criteria for successful segmentation (below), the company’s target markets are chosen from among the segments determined at this stage. If the segments do not meet the criteria the process can be repeated looking at different segmentation variables.

Take, for example, the market for radio listeners. Wikipedia lists over 60 music formats for radio. The 2010 Broadcast and Cable Yearbook listed over 90 (“2010 Broadcast Yearbook”). No single radio station could possibly serve all of the diverse musical tastes in the country. Instead, station owners, like Citadel Broadcast Corp. and iHeartMedia, Inc., segment the local market based on musical preference and offer multiple stations, each with a format corresponding to the musical tastes of a subset of the local market.

In order to be successful, segmentation must meet these criteria:

• Substantiality—the segments must be large enough to justify the costs of marketing to that particular segment. Costs are measured by how much is spent to reach each member of the market and the conversion rate—the percent of those you reach who follow through on the purchase.
• Measurable—marketers must be able to conduct an analysis of the segment and develop an understanding of their characteristics. Historically, marketing decisions were made based on knowledge gained from analyzing the segment using surveys and other traditional research methods. Today, the Internet allows for data mining and behavioral targeting, creating market segments based on what Internet users purchase online and what types of sites they visit. For example, based on searches of weather reports and restaurant listings online, a search engine company can determine where someone lives. And based on searches they have conducted on the Web and what keywords they have used in those searches, the company can determine what products that person might be interested in receiving information about (Jesdanun, 2007).
• Accessible—the segment must be reachable through existing channels of communication and distribution. The Internet has opened up accessibility to all marketers to reach members of their target market—as long as they are Internet users. It has also lowered the costs to reach target members, lowering the barriers to entry and allowing small, undercapitalized companies to compete with major players.
• Responsiveness—the segment must have the potential to respond to the marketing efforts in a positive way, by purchasing the product. The use of Apple Pay, PayPal, Braintree, and gift cards sold through a multitude of outlets has opened up new payment methods, allowing businesses to expand their customer base to Internet shoppers who don’t have access to credit cards (pre-teens) or may be reluctant to give out their credit card numbers online (the elderly).
• Unique—the segments must be unique enough to justify separate offerings, whether the uniqueness calls for variety in product features or simply variety in marketing efforts. Media fragmentation has allowed for more tightly defined market segments. The explosion of specialty magazines, TV channels and websites, along with the ease of searching the Internet, has allowed marketers to more tightly target their messages to different audiences.

Market Segments

There is more than one way to segment markets, so marketers look for segmentation strategies that will maximize potential income. This is done by successfully targeting each market segment with a uniquely tailored plan—one that addresses the particular needs of the segment. Markets are most commonly segmented based upon a combination of geographic, demographic, and personality or psychographic variables, and actual purchase behavior. The bases for determining geographic and demographic characteristics are quite standardized in the field of marketing because they are easily measurable. Psychographics, lifestyle, personality, behavioristic, and purchase characteristics are not as standardized, and the categorization of these variables differs from textbook to textbook. Psychographics includes personality, beliefs, social class, and sometimes lifestyle. Behavioristic includes both attitudes toward the product and actual purchase behavior.

Traditionally, marketing has relied on demographic, geographic or psychographic variables, either alone or in combination (using some demographics combined with some psychographics). Driven in large part by the ease of collecting online behavior (shopping) data, market segmentation has evolved to include more purchase behavior. Behavioral segmentation is a more effective way to segment markets because it is more closely aligned with the propensity to consume the product of interest.

Geographic Segmentation

Geographic segmentation involves dividing the market into different geographical units such as cities, states, or regions. Markets may also be segmented based upon population density (e.g., urban, suburban, or rural) or even weather. Location may be used as a proxy for differences in income, culture, social values, and types of media outlets or other consumer factors (Evans and Berman, 1992). Companies like Claritas (owned by the Nielsen Co.) combine demographic, behavioral, and geographic data into behaviorally distinct segments within zip codes. These geo-demographic profiles, called PRIZM, include media consumption. While detailed descriptions are expensive, anyone can access brief profile descriptions on their web-site: www.prizm.com. Media research companies such as Nielsen Audio use geographic units called the area of dominant influence (ADI) or designated market area (DMA). DMA is defined by Nielsen as an exclusive geographic area of counties in which the home market television stations hold a dominance of total hours viewed. The American Marketing Association describes both ADI and DMA as the geographic area surrounding a city in which the broadcasting stations based in that city account for a greater share of the listening or viewing households than do broadcasting stations based in other nearby cities (American Marketing Association, 2014). Following is an index chart for contemporary hit radio (CHR) listening by geographic region.

This chart shows the American national listenership to CHR radio by geographic region. With the national index, or average, being 100, it is easy to see which regions of the country tend to prefer CHR and which ones do not listen to the format as much as the average.

Figure 3.1 Audience share by region—CHR

Source: Nielsen Audio

When the marketer of recorded music and live performances uses geographic segmentation in this manner, it can help justify the use of resources in support of the marketing plan. Marketing strategies are then easily tailored to particular geographic segments. For example, the label may use geographic segmentation to determine in which cities tour support money would be most effective.

Demographic Segmentation

Demographics are basic measurable characteristics of individual consumers and groups such as age, gender, ethnic background, education, income, occupation, and marital status. Demographics are the most popular method for segmenting markets because the information is easier and cheaper to measure than more complex segmentation variables, such as personality or consumer behavior. Fortunately, groups of people with similar demographics tend to have similar needs and interests that are distinct from other demographic segments.

Age is probably the demographic most associated with changing needs and interests. Consumers can be divided into age categories such as children, teens, young adults, adults, and older adults. The segment of “tweens” (preadolescents between the ages of 8 and 13) has been added to the mix because of their enormous spending power. In the U.S., tweens are expected to number 23 million by 2020 (Jayson, 2009). This age group accounts for $43 billion in disposable income, over half have a Face-book account and 78% have a cell phone. The typical tween spends 8 to 12 hours per day consuming media of one form or another and more than half of the girls age 10 to 12 want to be famous (Younger, 2014).

Gender is also a popular variable for segmentation, as the preferences and needs of males are perceived as differing from those of females. Differential needs based upon gender are obvious for product categories such as clothing, cosmetics, hairdressing, and even magazines. But even in the area of music preferences, differences in taste exist for males and females. Nielsen Audio reports that males are more likely to listen to alternative, rock or news/talk radio, while women prefer top 40, country, adult contemporary, and contemporary Christian radio (Arbitron Radio Today, 2010).

Income segmentation is popular among certain product categories, such as automobiles, clothing, cosmetics, and travel, but is not as useful in the recording industry. Educational level is sometimes used to segment markets. Well-educated consumers are likely to spend more time researching purchases and are more willing to experiment with new brands and products (Kotler, 1980).

Figure 3.2 Gender Comparison for Radio Formats

Source: Nielsen Audio

Multivariable Segmentation

The process of combining two or more demographic or other variables to further segment the market has proven effective in accurately targeting consumers. By considering age, gender and income together, marketers can better tailor the marketing messages to reach each group. For example, older males may prefer news/talk radio, whereas younger males prefer alternative rock radio.

Psychographic Segmentation

Psychographic segmentation involves dividing consumers into groups based upon lifestyles, personality, opinions, motives, or interests. Psycho-graphic segmentation is designed to provide additional information about what goes on in consumers’ minds. While demographics may paint a picture of what consumers are like, psychographics adds vivid detail, enabling marketers to shape very specific marketing messages to appeal to the target market.

By understanding the motive for making purchases, marketers can emphasize the product attributes that attract buyers. For example, if consumers are driven by price, pricing factors such as coupons can be emphasized. If another segment is driven by convenience, this issue can be addressed through widespread product distribution. Lifestyle segmentation divides consumers into groups according to the way they spend their time and the relative importance of things in their life. Imagine that your primary residence, your home, is on a piece of lakefront property. How would your life be different? You would likely have a boat tied to a dock and all of this would be a short walk out your back door. You could be on the water in the middle of the lake in minutes, as opposed to having to hook the boat trailer up to the car and drive across town, wait for your turn at the boat launch and then park the SUV before you could be in the boat on the lake. And if you lived on the waterfront, your house is much more likely to have a nautical theme to it. If you played organized team sports as a child your family probably built a lifestyle around traveling to practices, games, and tournaments that influenced much of your weekend activities and drove purchase and consumption behavior—ice chests, lawn chairs, suntan lotions, ballpark food, and hotels all become part of the lifestyle, at least during the season. Even the family’s choice of cars was probably influenced by your participation in team sports!

Psychographics are more difficult to measure and require constant updating to stay abreast of changes in the marketplace. One system that uses psychographics to identify market segments is the VALS™ segmentation framework, developed by the Stanford Research Institute. Originally, the segmentation was based on values (V) and lifestyles (LS), thus the acronym VALS, which is still used for branding purposes. But the version of VALS in current use segments consumer markets on the basis of selected psychological traits.

The VALS™ system places consumers into three self-orientation categories and four levels of resources and innovations. The resulting eight segments provide insight into consumers based on motivations, beliefs, lifestyles, and resources. For example, thinkers are conservative and motivated by ideals; experiencers are young and enthusiastic and motivated by self-expression, excitement, and innovation. More information on the VALS segments is available at http://www.strategicbusinessinsights.com/vals/.

Figure 3.3 Values and Lifestyle Segments

Source: SRI Consulting Business Intelligence

The Quest for Cool

Marketers use a variety of research techniques to spot lifestyle trends as they develop, so that their products will be in the marketplace ahead of the demand and the competition. Known in vernacular terms as “cool hunting” or the “quest for cool,” these marketers are hired by well-known brands to track and understand youth culture. Then the principles of diffusion theory are applied to target opinion leaders in the hopes of penetrating the market (Grossman, August 31, 2003). Cool hunting involves observing alpha consumers (cool people) talking, eating, dressing, or shopping and then predicting what the rest of the market will be doing a year from now. One such company, Look-Look (2004), uses a variety of research techniques including surveys, field observations, ethnographies, mall intercepts and focus groups. They document their findings with photographs and video recordings and report their conclusions to a variety of major companies who are targeting the youth market (pbs.org 2015).

Since the early days of rock and roll, the music industry has attempted to reach trendsetters in the hope that they would positively influence sales of the acts they were marketing. Nowadays, not just record labels, but a wide variety of companies are targeting the urban hip-hop market (marketresesarch.com).

Personality Segmentation

Researchers at the University of Texas have found that personal music preferences can be linked to personality traits. P. J. Rentfrow and S. D. Gosling (2003) found that people’s music preferences typically classify them into one of four basic dimensions: 1) reflective and complex, 2) intense and rebellious, 3) upbeat and conventional, or 4) energetic and rhythmic. Preference for each of the following music dimensions is differentially related to one of these basic personality traits. While this information may seem obvious and not very useful, knowing the personality of your target market allows the marketer to make informed decisions about where and how to promote specific songs and artists. Should the promotion be more cerebral (jazz or blues) or appeal to the fans desire to fit in with the status quo (pop or country).

Genres	Personality
Classical, jazz, blues, folk	Reflective and complex
Alternative, rock, heavy metal	Intense and rebellious
Country, pop, religious, soundtracks	Upbeat and conventional
Rap/hip-hop, soul/funk, electronica/dance	Energetic and rhythmic

Behaviorial Segmentation

Behavioral segmentation is based on actual customer behavior toward products. Behavioral segmentation has the advantage of using variables that are closely related to the product and its attributes. Some of the more common behavioral segmentation variables are: product usage, benefits sought, user rate, brand loyalty, user status, readiness to buy, and purchase occasion. Let’s look at a couple of behavioral segmentation variables particularly relevant to the music industry

Product Usage Segmentation

Product usage involves dividing the market based on those who use a product, potential users of the product, and nonusers—those who have no usage or need for the product. How a product is used (and for what purposes) is also of importance. For example, Kodak found that disposable cameras were being placed on tables for wedding guests to help themselves to. As a result, Kodak modified the product by offering five-pack sets of cameras in festive packaging (Nickels and Wood, 1997). The recording industry has adapted to usage situations by repackaging music that is customized for usage occasion, such as wedding music compilations, party mixes, romantic mood music (complete with recipes for romantic dinners), and so forth. (See section on hedonic responses to music in chapter 2.)

Segmentation Based on Benefits Sought

It is said that people do not buy products, they buy benefits. They buy aspirin to alleviate pain or reduce the chances of a heart attack; toothpaste to whiten their teeth or prevent cavities; and music to elevate mood or create atmosphere. Benefit segmentation divides the market according to benefits sought by consumers. In the music market, some consumers shop for classical music because it drowns out distracting noise while they work or study. Others buy particular artists because they believe it will create the right atmosphere for a romantic evening.

Brand Loyalty

Brand loyalty is defined as the degree to which a consumer will repeatedly purchase a company’s product or service. As a segmentation variable, brand loyalty can be used to divide the market into those who are and those who are not brand loyal. Artists’ hardcore fans are brand loyal—they will buy most anything with the artist’s name attached to it, often with little consideration of any other factors. The ad agency Saatchi & Saatchi calls extreme brand loyalty “lovemarks.” Not surprisingly, the Beatles tops their list of the 50 top music and radio brands. A demonstration of the power of brand loyalty can be seen in the Voyager Company’s decision to make the Beatles “A Hard Day’s Night” the first full-length commercial movie to appear on CD. When the Voyager Company chose to release “A Hard Day’s Night” in May 1993, the number of U.S. households with computers had increased from 8.2% to just under 23%, but many of those computers still did not have CD-ROM drives (http://www.statista.com/). The Voyager Company chose “A Hard Day’s Night” in large part because they knew loyal Beatles fans would buy the discs even if they could not play it on their computers yet.

User Status

User status defines the consumer’s relationship with the product and brand. It involves level of loyalty and propensity to become a repeat buyer. Stephan and Tannenholz (2002) identified six categories of consumers based on user status: sole users, semi-sole users, discount users, aware non-triers, trial/rejecters, and repertoire users.

User Status (Brand A)

Sole users are the most brand loyal and require the least amount of advertising and promotion.

Semi-sole users typically use brand A, but have an alternate selection if it is not available or if the alternate is promoted with a discount.

Discount users are the semi-sole users of competing brand B. They don’t buy brand A at full price, but perceive it well enough to buy it at a discount.

Aware non-triers are category users, but haven’t bought into brand A’s message.

Trial/rejecters bought brand A’s advertising message, but didn’t like the product.

Repertoire users perceive two or more brands to have superior attributes and will buy at full price. These are the primary brand switchers; therefore, the primary target for brand advertising.

Target Markets

Once market segments have been identified, the next step is choosing the segment or segments that will allow the organization to most effectively achieve its marketing goals—the target markets. Simply stated, a target market is a group of persons for whom a firm creates and maintains a product mix that specifically fits the needs and preferences of that group (Dictionary of Marketing Terms, 2000). With the target markets identified, the company begins the task of positioning the product offering, relative to the competition, in the minds of the consumers using the tools available to the market, primarily advertising.

Consumer behavior and Purchasing Decisions

According to the American Marketing Association, consumer behavior is defined as “the dynamic interaction of affect and cognition, behavior, and environmental events by which human beings conduct the exchange aspects of their lives” (2014). More simply put, consumer behavior is the buying habits and patterns of consumers in the acquisition and usage of goods and services. Entire courses on consumer behavior exist because it is one of the most interesting areas of marketing. Below we will discuss only a few key concepts in consumer behavior as they relate to music purchasing and consumption.

Needs and Motives

When a product is purchased, it is usually to fill some sort of need or desire. There is some discrepancy between the consumer’s actual state and their desired state—I want that! In response to a need, consumers are motivated to make purchases. Motives are internal factors that activate and direct behavior toward some goal. In the case of shopping, the consumer is motivated to satisfy the want or need, as outlined in chapter 2. Understanding motives is a critical step in creating effective marketing programs. Psychologist Abraham Maslow developed a systematic approach of looking at needs and motives.

Abraham Maslow (1943) states that there is a hierarchy of human needs. More advanced needs are not evident until basic needs are substantially met. Maslow arranges these needs into five categories of physiological, safety, love, esteem, and self-actualization. Marketers believe that it is important to understand where in the hierarchy the consumer is before designing an effective marketing program.

Figure 3.4 Maslow’s Hierarchy of Needs

Source: Abraham Maslow

Physiological needs are the basic survival needs that include air, food, water, and sleep. Until these needs are met, there is little or no interest in fulfilling higher needs. Survivors in the VALs system fit into this category. Safety needs deal with establishing a sense of security and may motivate consumers to seek political and religious solutions. Until these needs are substantially met, the need for love and belongingness are absent. Love, approval, and belongingness are the next level, along with feeling needed and a sense of camaraderie. Products oriented toward social events sometimes appeal to this need and this includes music, particularly live performances. Esteem needs drive people to seek validation and status. Self-actualization involves seeking knowledge, self-fulfillment, and spiritual attainment.

An individual may temporarily sacrifice a lower-level need to achieve a higher level need, like skipping a meal and donating the money to a worthy cause (like buying tickets for your favorite band’s show) or fasting for spiritual reasons, but in the long-term the lower level needs must be fulfilled to achieve the higher-level needs.

Nobody needs music in the Maslovian sense. We can live without it. We might not like it and certainly life is better with music, but we won’t die without it. The challenge to music marketers is to make consumers feel like they need music and specifically the music they are selling at the time.

High and Low-Involvement Decision Making

The construct of involvement usually refers to the amount of time and effort a consumer invests in the search, evaluation and decision process of consumer behavior. The level of involvement in the purchase depends on the economic and social risk of making the wrong decision. Consumers who search for information about products and brands in order to evaluate them thoroughly are engaging in high involvement decision making. They want to know as much as possible about all choices before making their decision.

A closely related concept is product involvement (Bloch and Richins, 1983). Product involvement may take the form of situational involvement, enduring involvement, or response involvement. Consumers that are product involved may be less involved with the purchase because they already know much of the information needed to make a decision. For example, if you are really into classical music, then you probably subscribe to several magazines on the subject, visit the important blogs and websites on a regular basis, and listen to the latest releases as soon as possible. When it comes time to buy, you already are up to date on the market and, therefore, don’t spend much time gathering information or weighing choices. Being product involved actually decreases the level of purchase involvement because the buyer already has most of the information required to make the decision.

In low involvement decision-making, the consumer perceives very little risk, low self-identification with the product and little or no personal relevance. Low involvement decision-making is often habitual, associated with inexpensive consumer package goods, (like chewing gum or soft drinks which are purchased routinely) and characterized by brand familiarity and loyalty.

Several factors can influence a consumer’s level of involvement in a purchase process:

1. Previous experience—If consumers have previous experience with the product or brand, they are more likely to have a low level of purchase involvement since they are already familiar with the advantages and disadvantages of selecting a particular product.
2. Interest—The more personal interest consumers have in the product, product class, or benefits associated with the product, the more likely they are to engage in high involvement behavior.
3. Perceived risk of negative consequences—If the stakes are high and the consequences of making the wrong decision are dire, consumers engage in high involvement behavior. Price is a variable associated with risk. High-priced purchases bear more risk. As price increases, so does the level of involvement.
4. Situation—Circumstance may play a role in temporarily raising the level of involvement for a particular product. A food or beverage purchase casually made under most circumstances may call for more scrutiny if guests are coming to dinner. A CD bought for personal use is a rather low involvement purchase; when given as a gift it has higher involvement because of the risk of a bad decision.
5. Social visibility: Involvement increases as the social visibility of a product increases. Designer clothing falls into this situation. Laundry appliances carry little social risk, although they may be considered a financial risk and, therefore, invoke a high-involvement decision process.

Decision-Making Process

The stages involved in the consumer’s decision-making process are described with the basic AIDA model: Awareness, Information search, Decision and Action (see chapter 2). This is part of the hierarchy of effects theory, which involves a series of steps by which consumers receive and use information in reaching decisions about what actions they will take (e.g., whether or not to buy a product).

A more elaborate model involves the following six steps:

1. Problem recognition—The consumer realizes that a purchase must be made. Perhaps a new need or want has emerged (I want that new song), or perhaps the consumer’s supply of a commonly used product has run low. For example, you have just learned that your favorite artist will be performing locally and you don’t have tickets.
2. Information search—The consumer will seek out information about the various options available for satisfying the want, need, or desire. In the concert example, you are now entering the phase of doing research: finding out how much you can afford to spend on tickets and what seats are available in your price range.
3. Alternative evaluation—The consumer will look for alternate options for the product under consideration. Should you buy tickets at all? Is there an even better concert coming to town that you should save your money for?
4. Purchase or acquisition—The consumer makes the purchase.
5. Use—The consumer uses the product (attends the show), thereby gaining personal experience.
6. Post-purchase evaluation—Experience with the product leads to evaluation to determine if the product meets expectations and should be purchased again next time the need arises. If you enjoy the show you may well buy tickets the next time the artist is in your area.

Cognitive vs. Emotional Decisions

Much research has been done in the field of advertising on the relative roles of affective (emotional) factors vs. cognitive factors in motivating consumers. Cognition-based attitudes are thoughts and beliefs about something—an “attitude object.” Affect-based attitudes are emotional reactions to the attitude object. Attitudes can have both of these components, and can be based more or less on either cognitions or affect. While there is probably an element of both in each purchase decision, the relative contribution of each, as well as the process involved, may differ depending upon the type of product and the level of involvement.

The model of the hierarchy of effects has been subsequently modified to include three constructs: cognition (awareness or learning), affect (feeling, interest, or desire), and conation (action or behavior)—CAB. The order in which these steps are taken is subject to the type of product and the level of involvement. According to Richard Vaughn, product category and level of involvement may determine the order of effects, as well as the strength of each effect (Vaughn, 1986). His model uses involvement (high/low) and think/feel (cognitive or affective components) as the two dimensions for classifying product categories and ordering these three steps.

To begin with, high-involvement situations suggest that the cognitive stage and the affective stage usually appear first, and these two stages are followed by the conation (behavioral) stage. In low-involvement situations, advertising may create awareness first, but attitudes or brand preferences are formed after product trial or experience. Thus, conation or action occurs before opinions are formed about the product. In other words, the thinking and feeling occur before the action in high-involvement situations, whereas opinions are formed only after trial of the product in low-involvement situations. Low involvement products are more subject to impulse purchases.

Figure 3.5 Hierarchy of Effects

Source: Foote, Cone and Belding

The resulting model is a four-quadrant grid with quadrant one (informative) containing high involvement cognitive products, quadrant two (affective) for high involvement emotional purchases, quadrant three (habitual) for low involvement rational purchases, and quadrant four (satisfaction) for low-involvement emotional purchases. Music purchases generally fall into the satisfaction quadrant, although as prices increase, so does the level of involvement. Some music purchases can be considered impulse buys, if correctly positioned at retail. Other purchases may require creating the emotional (affective) response in the customer. Since music by its very nature evokes emotional responses, exposure to the product is known to increase purchase rate.

Conclusion

This chapter has provided a brief introduction to some of the fundamental theories and concepts in consumer behavior and market segmentation. The music business is just like any other business when it comes to the basics of market segmentation and consumer behavior, but a deep understanding of these basic theories and constructs, and being able to apply them to your specific artist or album, will help separate you from everyone else in the business. The best music marketers will know their consumers as well as they know their artists.

Glossary

ADI—Area of Dominant Influence (see DMA).

Affect—A fairly general term for feelings, emotions, or moods.

Behavioral segmentation—Based on actual customer behavior toward products.

Cognition—All the mental activities associated with thinking, knowing, and remembering.

Conation—represents intention, behavior, and action.

Consumer behavior—The dynamic interaction of affect and cognition, behavior, and environmental events by which human beings conduct the exchange aspects of their lives.

Cookies—A small file sent by a server to a web browser and then sent back by the browser each time it accesses that server. The main purpose of cookies is to identify users and store information about them, including preferences specific to the website.

DMA—Designated Marketing Area. The geographic area surrounding a city in which the broadcasting stations based in that city account for a greater share of the listening or viewing households than do broadcasting stations based in other nearby cities.

Geographic segmentation—Dividing the market into different geographical units such as town, cities, states, regions and countries. Markets also may be segmented depending upon population density, such as urban, suburban, or rural.

Involvement—The amount of time and effort a consumer invests in the search, evaluation and decision process of consumer behavior.

Market—A set of all actual and potential buyers of a product. The market includes anyone who has an interest in the product and has the ability and willingness to buy.

Market segmentation—The process of dividing a large market into smaller segments of consumers that are similar in characteristics, behavior, wants or needs. The resulting segments are homogenous with respect to characteristics that are most vital to the marketing efforts.

Millennials—People born between the years 1982 and 1995. Also called the “Net Generation” because they grew up with the Internet.

Personal demographics—Basic measurable characteristics of individual consumers and groups such as age, gender, ethnic background, education, income, occupation, and marital status.

Psychographic segmentation—Dividing consumers into groups based upon lifestyles, personality, opinions, motives, or interests.

Target market—A set of buyers who share common needs or characteristics that the company decides to serve.

User status—The consumer’s relationship with the product and brand. It involves level of loyalty.

Web analytics—The use of data collected from a web site and its visitors to assess and improve the effectiveness of the website.

Web data mining—the process of analyzing navigation patterns and other behavior of user’s on the web in order to improve their navigation and interaction with the website.

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