What is 'Micromarketing'

Micromarketing is a marketing strategy in which advertising efforts are focused on a small group of highly-targeted consumers. Micromarketing requires a company to narrowly define a particular audience by a particular characteristic, such as ZIP code or job title, and tailor campaigns for that particular segment. It can be a more expensive technique due to customization and lack of an economy of scale.

BREAKING DOWN 'Micromarketing'

Marketing is a crucial element for businesses operating in a competitive environment. Marketing is a strategy used by companies to increase their brand awareness, sales, and more importantly, profits. The long-term viability of any business depends on how successful its marketing campaign is. Whether a company offers only one product or multiple products, it has to identify its target market in order to run an effective marketing campaign. In the past, companies usually ran mass marketing campaigns through TV or radio ads in the hopes that it got the attention of the consumers in its target markets. Today, businesses are able to offer more personalized marketing schemes to each individual in its target pool, as opposed to a large group of its target audience at once. This strategy is referred to as micromarketing.

Micromarketing grew to prominence in the 1990s, as personal computers allowed easier segmentation and dissemination of information to customers. As technology becomes more advanced, delivering highly customized products to individual segments of a population becomes easier to implement. Micromarketing strategy is commonly used by large firms that create specific segments within their customer base or by small companies with limited resources that prefer to match consumers with highly targeted products, promotions, and prices by personalizing their marketing methods.  

The increase in emergent innovation, such as big data, is heavily relied on by micromarketers to capture data from mobile communication devices and e-commerce platforms. The captured data is sorted according to demographics, geographics (IP address), site or brand preference, spending habits, etc. to track the type of products that a consumer views or purchases, allowing a website to match related products to digital consumers. By running a tailored marketing program to a well-defined segment of consumers, micromarketing intends to entice the target audience to take an action, such as making a purchase of a good or service. In effect, the end-goal of micromarketing is to match products to a consumer’s tracked preferences in order to generate profit for a business from customer satisfaction.

There are different approaches to micromarketing. For example, a business may decide to run a micromarketing program by offering promotions specifically to its loyal customer base; matching special offers to unhappy or lost consumers; tailoring products to consumers with unique needs; marketing goods and services to residents in a particular town or region; offering products to targeted consumers with specific job titles or career designations e.g. MD, CFA, M.Eng, JD, etc.; etc.

The challenge with micromarketing is its high cost of implementation and lack of an economy of scale. Companies using this marketing strategy typically spend more per target consumer, and customizing multiple advertisements to many small groups of consumers is more expensive than creating a few marketing ads targeted at a mass audience. Also, micromarketing can also be expensive to run due to the inability to scale up in size.

Micromarketing is different from macromarketing which seeks to target the maximum possible consumer base of a company product or service. With macromarketing, a business attempts to measure how wide a scale its target market for a good or service is, and proceeds to work on how its products can be made available to this group of consumers.

Examples of companies that have run successful marketing campaigns are Procter & Gamble (P&G) and Uber. P&G ran a separate marketing budget to target African American women when it introduced its Pantene Relaxed and Natural shampoo and conditioner product line. By using big data from social media platforms, Uber was able to understand the specific transportation problems in each city it was expanding to. The resulting effect was the growth of the company’s client base through tailored promotions and referral benefits.