There is a well-worn adage in marketing that the marketer who tries to be everything to everyone ends up being nothing to anyone.
As media and communications opportunities become more fragmented with seemingly new options almost daily, we think it’s timely in this August Newsletter to discuss the many ways and methods of segmenting your potential market and in particular, a preferred methodology and approach we employ for many of our clients at BrandQuest.
Whether you are a service driven company, a product manufacturer, importer, retailer, organisation or not-for-profit (or parts thereof) if you haven’t yet segmented your market within your marketing strategy then your marketing message is without doubt being diluted and your ROI is being minimised.
Here’s why you need to segment – ‘A fisherman’s tail’.
These days more than ever before, your customers are being bombarded with - and exposed to - competing messages across a broad spectrum of media.
However, much as you might want to think or wish there are customers out there who are waiting with great anticipation for your specific product or service to come along - while ignoring all other alternative or competitive offers – it is simply that…wishful thinking.
The whole purpose of your marketing is to first engage your potential customer with a compelling reason for them to purchase.
Without over simplifying the challenge, any self-respecting fisherman will tell you that “you can’t catch a fish if its not attracted or lured to your bait in the first place”.
So to continue the analogy, how can you as a marketer, make sure that your ‘bait’ is what the market wants or is waiting for?
Answer? Simple. You need to feed them what they are hungry for.
If you want to catch a rainbow trout you don’t cast with a hook and sinker. If you want to catch a large salmon you don’t drop a fly over the side of the boat.
And you certainly won’t catch any fish (other than the odd hungry flathead or European carp) if you try and use the same bait or tackle to lure every variety of fish.
And that’s the lesson of segmentation – much and all as you’d like to be, you just cannot be all things to all things to all fish! Or people.
So what happens when we take the fishing analogy and apply the same thinking to the marketing needs of your company or organisation?
Exactly how many types of fish are you wanting to catch?
If the answer is ‘all the fish you can’, then that’s the wrong answer!
Casting a wide net in the ocean may result in you catching a cross-section of fish for your table (or often not) – but casting a wide net in a marketing sense simply means you’re marketing by hope rather than good judgment – and any customers you might be lucky enough to catch, you’ll really be none the wiser for why they were attracted to you in the first place, or how you might catch more just like them.
Plus, your competitors will be simply picking off the better customers (the big, fat juicy fish) and leaving you with the leftovers, so to speak.
So how can you ensure that you get your fair share of customers?
You first need to segment the market so you can pursue (target) certain particular segments within your market.
When you have identified those segments (are you ready for this?) then you can decide which ‘bait’ is most likely to attract them to your ‘hook’ (product or service offering).
Easy huh? Well not quite so easy.
The next thing you need to decide upon is how you might best segment the market to suit your business needs.
How the textbooks go about market segmentation
Let’s first explore the textbook definition of market segments and then we’ll move on to our preferred BrandQuest method.
A market segment refers to a group or cluster of people or organizations that share one or more characteristics, causing them to have similar product or service needs.
A true market segment meets all of the following criteria:
- It is distinct from other segments. Different segments have different needs.
- It is homogeneous within the segment. People belonging to a market segment exhibit common needs.
- It responds similarly to a market stimulus.
- It can be reached by a market intervention or stimulus
The term ‘market segmentation’ can also be applied when a company divides (or groups) customers with identical product or service needs, so they can charge them different amounts of money (ie; ‘A’ level customers might have more regular purchase habits or higher spend than ‘B’ and ‘C’ level) or apply certain stratas of service levels – VIP etc..
However in the marketing terms we are discussing, there are a number of traditional methods of market segmentation and generally the following are the methods most likely to be utilized in consumer marketing.
Geographic Segmentation;
Not surprisingly and as the title suggests, this segments the market by:
Region: by state, by postcode, by suburb
Size of area, clusters of population ie; high density, urban, suburban, rural etc
Behavioural Segmentation;
This approach is based on actual customer behaviour data and includes;
Frequency of purchase
Need for purchase
Quantity and type previously purchased
Occasions that stimulate purchase
Demographic Segmentation;
Typical demographics include: Age, gender, income, occupation (blue collar, white collar, homemaker etc), education, ethnicity, nationality.
Many demographics models use the most current Government census data to gain their information and statistics.
Demographic segmentation is rightly considered an outdated way of marketing and dates back to a time when there was less competition and greater homogeneity when the notion of branding was first forming (eg; Ford vs GM in the 1920’s).
If you want further evidence of this outmoded methodology just spend some time in an Apple flagship store – and take a look at the myriad of customers from all and many varied demographics.
Psychographic Segmentation;
This method groups customers according to their lifestyle and life cycles, activities, interests and opinions. Here in Australia an often-used psychographic model is based on the familiar Roy Morgan Values SegmentsTM.
These include ten Value Segments that attempt to group the total population ie; Basic Needs, Real Conservatism, Traditional Family Life, Conventional Family Life , Young Optimists etc.
However we don’t believing in this day and age that psychographic segments are static – one moment a person can be a ‘conventional family lifer’ and the next they can be a ‘visible achiever” – so how can you prepare a lure or bait to meet their changing needs as they move from one of these psychographic segments to the other?
Which brings us to our preferred segmentation method.
Now, like almost all marketing theories, there can be arguments for and against the use of all or any of the above segmentation methodologies.
However, here at BrandQuest we believe that many of the above are outmoded or beyond the needs and capabilities of many of our Clients who, in the main are aggressive growth Clients and for whom these alternate methods do not really address the needs of the modern day agile, nimble, fleet-footed marketer who needs to constantly adapt their marketing as the world and population adapts around them.
Why we believe all marketers should be motivated by…what motivates their customer!
Motivational segmentation is based on variables that relate to what drives customers to make purchases in the first place. This data can be collected using a combination of customer surveys along with the customer knowledge and experience already within the company.
Although, our experience is that the collective knowledge of almost all our Clients provides an incredibly insightful and comprehensive understanding of their customers and the customer motivations and needs at time of purchase or pre-purchase decision-making.
For instance, in a workshop process that might include, say eight key Client stakeholders, there might be 80 or more collective years of wisdom, customer knowledge and customer contact in the room.
This combined knowledge of the many and varied customer motivations plays a very important role in framing NOT ONLY the customer segmentations at work within the market, BUT ALSO once the segments become clear the opportunity to decide which of the segments represents the best opportunity to select as our ‘catch’.
Understanding the customer motivations behind their purchasing needs can then be used to develop marketing strategies and craft advertising messages or offers that appeal directly to these motivations of the customer.
In other words, once our Clients understand which ‘fish’ they are fishing for, they then have the information required to select the most likely bait for a strike!
So in summary, if you are casting a net and waiting in hope for a catch we suggest there is a much better way – and the opportunity, the means and the knowledge to ‘bring in the big ones’ is most likely currently working within your business!
* For more detailed information on developing Customer Motivation Segmentation please refer to our book now in most popular book stores or buy online at www.brandquest.com.au