When multiple market segments are combined and targeted together through a single marketing strategy, we refer to it as Aggregation Marketing.
We segment markets so that we can build products and services to satisfy the precise needs of each market segment and craft messages and marketing strategies to maximize customer conversion in each segment. We do this through Differentiated Marketing.
But sometimes, it makes sense to use Aggregation Marketing and combine various market segments into a few or even just a single target segment.
An extreme form of Aggregation Marketing is Mass Marketing or Undifferentiated Marketing where the entire customer base is grouped into a single market segment and where all differences between customers are ignored. So, Aggregation Marketing can be seen as a subset of Undifferentiated Marketing.
What is Aggregation Marketing?
Aggregation Marketing is a marketing strategy where several market segments are combined by ignoring their differences and instead focusing on their commonality.
During Aggregation Marketing we target a characteristic that is common across the different segments that are being aggregated. The common characteristic could be age, gender, buying behavior, purchasing power or some other need or requirement that cuts across all segments.
An example of Aggregation Marketing is using Intermarket Segmentation. In Intermarket Segmentation a new combined segment is created where customers with similar needs across geographic markets are aggregated together. This combined new segment is then targeted with an Aggregation Marketing strategy.
Another example of Aggregation Marketing uses Occasion Segmentation. In Occasion Segmentation customers who would usually fall into different market segments are combined and marketed to together, based their buying needs linked to that occasion.
For example, just before Mother’s Day, companies will market to all people who could be interested in getting a gift for their mother or a mother figure.
In most other circumstances, these people would probably be categorized into different market segments.
But just before Mother’s Day they are all looking for the same thing – a gift for their mother – and so we can put them into a single segment and market to them all together just for that occasion.
Benefits of Aggregation Marketing
More Efficient Marketing Strategies
Aggregation Marketing results in fewer market segments to target making it easier to create and execute marketing programs.
This makes Aggregation Marketing more efficient and cost-effective than Differentiated Marketing.
Another significant benefit of Aggregation Marketing is that Aggregated segments are larger than the individual market segments they have been aggregated from.
This means Aggregation Marketing can produce higher returns on marketing investments, resulting in more revenue per dollar spent on advertising or media buying.
Simplified Brand Management
A brand is easier to manage across a single market segment rather than in parallel across multiple market segments.
When a brand is used in Aggregation Marketing, it can be applied consistently across all customer touchpoints. This makes the branding process simpler and more effective.
Lower Costs, Higher Profits
Since Marketing Strategies, Brand Management and Product Development are combined across several segments, duplication of costs is minimized. This reduces the overall cost of marketing, production and customer management, which in turn can mean higher profits.
Examples of Aggregation Marketing
Gasoline
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Gasoline is marketed in the same way to all customers, who are grouped into a single segment “automobile drivers”. Customers of gasoline will have many varying characteristics including age, gender, disposable income, buying behavior, etc. But they will all need gasoline for their vehicles and so their need and their decision-making process are fairly identical.
This is why a single marketing strategy using Aggregation Marketing can work just fine for this segment of customers.
Sugar
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When most of us buy sugar, we buy just that – sugar. When we add sugar to coffee … we add just that – sugar. Most of us would care about the brand of coffee we’re having but probably not care about the brand of sugar that we’re adding to the coffee.
Because, after all, for most of us sugar is sugar. Right?
Sugar is a commodity that is marketed across a single customer segment. Different types of customers will buy sugar in the exact same way, and it will always fulfill the same need in all customers.
This is why an Aggregated Marketing strategy can work for a commodity product like Sugar where brand recognition almost doesn’t matter.
Summary
In Aggregation Marketing several market segments are combined into a few or even a single segment by ignoring what makes each segment unique and instead focusing on what’s common between them.
Aggregation Marketing works well when the market is segmented along non-traditional lines like with Occasion Segmentation and Intermarket Segmentation.
The benefits of Aggregation Marketing include improved efficiencies in marketing, simplified brand management, lowering of costs and a potential increase in profitability.
Aggregation Marketing is a common strategy for generic products or commodity products like gasoline, sugar, salt, etc.
