Augmented reality

10/01/2013

a) Research "augmented reality" on the Internet. Discuss the most appropriate variables for segmenting the consumer market for products based on this technology. Explain why those variables are appropriate.

„Augmented reality“ is the combination of real-world environments and computer-generated graphics. As example the blended 1^st down line in football broadcasts. Another example for the everyday use of „augmented reality“ are navigation devices. Information can be displayed on a cars windshield showing the driver destination directions and other information.

The consumer market is segmented by four major variables. They are geographic, demographic, psychographic, and behavioral.

Dividing the market for „augmented reality“ in geographical segments is not a very good option. For instance the climate does not have any influence on the buying behavior for technological goods. Whether the climate is northern or southern, people want to see the 1^st down line when they watch football. Differences can be made in the density. The demand in the suburbs is different to the demand in rural parts of the country.

Psychographic and behavioral segmentation are also not very appropriate. The social class is a point to consider because the working class and lower classes do not spend their money on luxury goods. But the personality on the other side does not influence the buying decision. Behavioral attributes like occasions, benefits, or user status are also not appropriate by segmenting the market for “augmented reality” technology.

“The major driving forces of augmented reality technology and virtual reality are the advancement and in computer technology and internet connectivity¹“. Internet connectivity developed very fast over the past years but still service is not everywhere available. This is one reason for the difference between rural and urban, but it also proves that “augmented reality” is an expensive technology. This leads to the fourth segmentation: demographic aspects. Income, age, occupation, education, and especially generation are very good factors to segment the market for “augmented reality”. Generation and age go along; the younger generations like the Millennial are used and attracted by new developments in technology, because they grew up with the computer- and internet-technology. Also income is a factor to consider. The higher the income the more people spend for luxury goods. For instance the “SixthSense“ technology. “SixthSense will augment whatever he looks at; for example, if he picks up a can of soup in a grocery store, SixthSense can find and project onto the soup information about its ingredients, price, nutritional value, and even customer reviews²”. The “SixthSense” technology costs around $350. A family with a low income can not afford to spend money on such a technology. This is a reason to segment the market in demographic segments.

In conclusion the demographic segmentation of the customer market is the most appropriate. Especially to focus on income and generation are key factors for a successful segmentation of the market for “augmented reality” technology.

b) How would you market the Google Glass device in a 30-second commercial to consumers based on one of the segmenting variables you identified in the previous question?

The result of question one is to segment the market for “augmented reality” technology in demographic segments. The Google Glass device “is a camera, display, touchpad, battery and microphone built into spectacle frames so that you can perch a display in your field of vision, film, take pictures, search and translate on the go³“.

The target group regarding the results of question one is the Millennial generation with an income that can afford around $1,500⁴ for the glasses. But also a focus on the psychographic segment is appropriate to find those customer with an outgoing personality. The Google Glass, simply an update to the GoPro head camera, is made for people to solve the challenges of everyday easier.⁵

I would market the Google Glass device in a 30-second commercial as a combination of the GoPro camera and everyone’s smart phone. Nearly everybody of the Millennial generation has a smart phone. The advantage of the Google Glass compared to the common smart phone is that you do not have to pull it out of the pocket. The Glass is always right available and the hands stay free. I would focus on the above mentioned navigation options and also the easy help in every situation for instance in supermarkets.

To sum it up, I would promote the Google Glass to the young Millennial generation as an update of the GoPro with smart technology known from the smart phones.

a) What segmentation variables are marketers using in this example?

Fashion houses such as Versace and Gucci expand their business by targeting new customers. Not only the adults but also babies and children get their own everyday wear. The difference between the fashion houses wear and the standard wear is primarily the price. At H&M a jacket for a young kid costs about $30⁶, the Burberry is $335. This difference in price leads to different consumers markets. The segmentation used by the marketeers from the fashion houses is, regarding the different consumers also, different than to the segmentation variables used by H&M etc.. First the customers of the fashion houses need to be able to afford $1,000 for a kid's outfit. This leads to the segmentation variable Demographic, more precise income and goes along with the occupation. Just the highest income and the jobs that create this income are interesting for the fashion house's marketeers. The fashion for kids implies that the family size is usually 3-4, the family life cycle contains married with children or single parents, and the age of the focused customers is at least 25. 25 because the average age of a mother at first birth is 25⁷. Older generations are also an appropriate target because of their potential to be grandparents and their bigger share of the wealth. Nationality, race, and religion are not appropriate segmentation variables because the demand of luxury goods depends on monetary influences. Shown by the Arabian visitors of Munich who spend a lot of money in fashion houses.⁸

Another used segment is the psychographic variable. The social classes which buys high-priced fashion are the lower and upper uppers. It goes in the same direction as income and occupation.

Furthermore the behavioral variable is used by the fashion house marketeers. They want to make the kids and their cloth match to the parents. This means their marketing addresses regular user (user status). The parents already wear the brand, now the parents are also supposed to buy collars etc. for their kids. Another aspect the marketeers use is the loyalty status. The parents are ought to buy their kids the matching collar from the same brand as their own collar. The marketeers want to create a strong or even absolute customer loyalty.

In conclusion the fashion house's marketeers use demographic, psychographic, and behavioral segmentation variables. Major subcategories are income, user status, family life cycle, and age.

b) Is it appropriate that marketers focus on such a young market with high-priced clothing?
To answer that question I first want to clarify what the word ethics mean: “The basic concepts and fundamental principles of decent human conduct. It includes study of universal values such as the essential equality of all men and women, human or natural rights, obedience to the law of land, concern for health and safety and, increasingly, also for the natural environment. See also morality.“⁹ So morality is: “Conformance to a recognized code, doctrine, or system of rules of what is right or wrong and to behave accordingly. No system of morality is accepted as universal, and the answers to the question "What is morality?" differ sharply from place to place, group to group, and time to time. For some it means conscious and deliberate effort in guiding one's conduct by reason based on fairness and religious beliefs. For others it is, in the words of the UK mathematician and philosopher Alfred North Whitehead (1861-1947), "... what the majority then and there happen to like, and immorality is what they dislike."¹⁰” So in conclusion there is no defined ethic behavior, but this does not mean it is appropriate to focus on a young market.

The fashion houses want to sell more clothes so their marketeers found a new market; kids and children. Selling goods to children and kids is, in my opinion, not an appropriate or ethically correct behavior. The children and kids can not make balanced decisions, they easy fall for commercials and other incentives. For instance they can not differentiate between cartoons or advertisement.¹¹ On the other side in this certain example, the children and kids are not buying the cloth, their parents do. They are the decision making persons in the buying process, the children are at the most an influencing factor. With the increasing age of the children this factor also increases, but in my eyes an eight-years-old can not influence the decision to buy or not buy a $300 collar enough to call the focusing of the marketeers inappropriate.