Aggregation is a marketing strategy created in order to increase the number of consumers in the organization’s base. It is designed to help consumers focus on universal needs. In other words, people who are interested in products of a particular market are similar in nature and behavior to each other, and therefore they are interested in similar products.
Aggregation is a strategy
To strengthen economic indicators, through aggregation they are combined into specific groups. It is believed that already aggregated indicators become synthetic, in other words, these are generalized measuring elements that combine many private characteristics for each indicator.
For example, if we consider the indicator of industrial production in the state, it will contain the sum of all manufactured goods in this area.
How is it made
For aggregation, the data are grouped, summarized, or other methods are used to reduce private meters, making them general indicators. That is, this action is the exact opposite of market segmentation, when it is considered as a single environment where the same marketing strategies are applicable. In other words, aggregation is a combination and consolidation of indicators, taking into account any signs and characteristics.
If we consider this process from a mathematical point of view, then it is represented by the transformation of the model, the reduction of its variables and restrictions. Thanks to its construction, it is possible to obtain a model that, in comparison with the initial one, will give a more approximate description of processes or objects. The essence of this process is the unification of elements of a homogeneous type into large ones.
Aggregation Methods
To carry out the process, it is necessary to group the elements by studying their average amount, apply various weighting factors to the model elements, or use similar techniques.
There is a term that describes a process that is completely opposite to what aggregation is - this is a disaggregation, or it is also called disaggregation. Some theorists believe that this process allows you to look at the phenomena of the economy from different angles. It means that aggregation is a transitional stage from a microeconomic to a macroeconomic view.
Why is it needed
In economics and mathematics, aggregation is necessary, since all existing models cannot contain data on really existing economic relations, resources and products. Considering in detail a large model containing tens of thousands of indicators, it can be seen that it is obtained through aggregation. That is, when managing the model, when the lowest indicators are transferred to the higher levels, they are aggregated, thereby reducing the number.
Lack of aggregation
But this has its minus, some of the information in the data reduction may disappear. This leads to the fact that the calculations do not provide accurate data, and only approximate values are output, which are calculated using the laws of statistics. Loss of information can occur when summarizing orders, for example, the product brand is a binder and it will not be displayed in the data.In this regard, before applying these calculations, it is worth assessing whether their reduction is so beneficial to lose this or that information.
Dynamic models
The most difficult thing is to carry out aggregation in the economy in dynamic models. The fact is that in such a situation, the ratio of elements changes from time to time, therefore, heterogeneity of the elements of the enlarged group occurs. Thus, an aggregation error occurs due to the fact that the results of the initial and aggregated tasks diverge. Attempts to reduce errors when aggregation is performed is a description of one of the main criteria used in practice. The theory of optimal aggregation was developed for him by famous scientists.
Intersectoral balance
This method of structuring elements is crucial for calculating the balance between different industries. That is, different types of production are combined in the industry, and the products they produce are interconnected into general types, so that later they can be used as indicators for calculating the balance.
By the way, usually clean industries are used for it, that is, those that produce the same products. Only the number that matches the circumstances and possibilities of mathematical calculation can be entered into the model. It is worth noting that the more indicators an intersectoral balance contains, the more detailed the results will be, and they will relate more to real data than to general statistics.
Types of aggregation in the MOB
There are two types of how you can calculate the interindustry balance using aggregation - these are horizontal and vertical methods. At the first, products are combined according to technological characteristics in a chain. That is, for example, in one group by this method will be placed cast iron, iron ore and steel. In such a group, it will be considered that the industry supplies a single product - rental. And for the second group, let there be yarn and fabric, for the third - paper and cellulose. Costs and other indicators in this case relate to one measuring line, in this example they are grouped by weight. But since all these products can be sold in various forms and at various enterprises, problems with this method can arise. That is exactly the way the meaning of the word aggregation in economics is deciphered.
In the vertical method, similar products with the same economic purpose will be combined. For example, different types of fuel materials or grain of various cereals. But this also causes difficulties in counting. After all, the production of fuel using coal or water flows is very different. And such shifts in the calculations affect the indicators and the final results, significantly distorting them. Thus, despite the fact that aggregation is a marketing strategy, in the economy it is also actively used. To determine which type of calculation is best for calculating the results, mathematical and economic methods are used. It is worth noting that the main indicators in such systems are usually price criteria.
Marketing Aggregation
When calculating the selection of goods for consumers, not only their similarity, but also indicators of the composition of the population are taken into account, the demographic situation in the studied region is also taken into account. In marketing, understanding what aggregation is, is to expand the consumer base through this strategy. In the territory under consideration, buyers are similar to each other, they have the same traditions. Most often, they choose one type of purchase, which means going to the nearest store or ordering goods via the Internet. They can also be motivated to purchase goods in similar ways. Expectations from acquisition at them are also similar. Based on these data, consumers are grouped to make it easier to conduct various research and product sales.
In order to carry out marketing aggregation, organizations analyze factors and signs, on the basis of which they then select the best solutions for marketing events, inquiries and taking into account the wishes of buyers of products. This approach allows you to fully satisfy the needs of potential consumers of products. The calculation is also underway that if the product does not fully meet the expectations of the buyer, he will compromise and purchase it based on other advantages of the product.
Strategy Benefits
Aggregated market allows you to reduce the cost of production, reduce the cost of marketing activities, determine what should be the product, which will become universal for consumers from this market segment. In addition, there is no need to restructure the production, optimization of the procurement of components and internal business processes of the enterprise. It is also worth noting that this approach to the market improves current production.
In other words, this process is the sale of services or goods of the same type to a large number of consumers. That is why in a process such as aggregation, economics and marketing are equally needed.