In today’s edition of “Back to Marketing Basics” we’ll talk about segmentation and target marketing. First a little background:
- Market segmentation – market segmentation is the process of separating a market into segments or groups of consumers who are similar, but different from consumers in other groups. For instance, female consumers are different from male consumers in terms of their needs, attitudes, and lifestyles — after all, women are from Venus and men are from Mars.
- Target marketing – segmentation divides a market up into subgroups. Target marketing involves deciding which segments are most profitable. For instance, you might segment the market into 5 groups based on demographics — millenials, Gen X, Gen Y, Baby Boomers, and Seniors
- Positioning – involves creating a product image that appeals to a target market or several target markets. For instance, you might decide to position certain products for millenials. You might use music and celebrities important for millenials.
Tools of segmentation
Commonly, we use demographic variables (age, income, education, gender, etc), geographic variables (country, city, state, neighborhood, etc), psychographic variables (lifestyle, attitudes, beliefs, etc), and behavioral variables (usage, etc).
For many years, marketers used demographic and geographic variables in defining their target markets. Now, most marketers are more sophisticated; using psychographic and behavioral variables that are MUCH more effective. We now refer to buyer personas rather than target markets.
Buyer personas are much more valuable for marketing than earlier target markets. However, they’re more difficult to construct.
Steps in creating buyer personas
Constructing buyer personas involves more research to build a clear picture of the psychographics defining each persona. With rich social media data, constructing buyer personas is much more effective and less costly.
In constructing buyer personas, marketers must go beyond the superficial and use insights to create buyer personas. Marketers must understand the buyer’s personality; what TV programs they watch, what music they listen to, what their household looks like … Many firms don’t do enough research and come up with inaccurate personas. This problem preexists buyer personas and I remember firms constructing target markets comprised of:
35-60 year old women who care about clean clothes.
Not particularly insightful and likely inaccurate.
Social class is really a compilation of demographic characteristics. For instance, middle managers are commonly educated, own homes, send their kids to college (and maybe prep schools), they vacation via airlines or cruises, have good incomes, and busy lifestyles.
Lifestyles may be divided several ways. One of which is the 4 C’s from Young and Rubican and looks like this:
|Resigned||Rigid, strict, authoritarian and chauvinist values, oriented to the past and to Resigned roles. Brand choice stresses safety, familiarity and economy. (Older)|
|Struggler||Alienated, Struggler, disorganised – with few resources apart from physical/mechanical skills (e.g. car repair). Heavy consumers of alcohol, junk food and lotteries, also trainers. Brand choice involves impact and sensation.|
|Mainstreamer||Domestic, conformist, conventional, sentimental, passive, habitual. Part of the mass, favouring big and well-known value for money ‘family’ brands. Almost invariably the largest 4Cs group.|
|Aspirer||Materialistic, acquisitive, affiliative, oriented to extrinsics … image, appearance, charisma, persona and fashion. Attractive packaging more important than quality of contents. (Younger, clerical/sales type occupation)|
|Succeeder||Strong goal orientation, confidence, work ethic, organisation … support status quo, stability. Brand choice based on reward, prestige – the very best . Also attracted to ‘caring’ and protective brands … stress relief. (Top management)|
|Explorer||Energy – autonomy, experience, challenge, new frontiers. Brand choice highlights difference, sensation, adventure, indulgence and instant effect – the first to try new brands. (Younger – student)|
|Reformer||Freedom from restriction, personal growth, social awareness, value for time, independent judgement, tolerance of complexity, anti-materialistic but intolerant of bad taste. Curious and enquiring, support growth of new product categories. Select brands for intrinsic quality, favouring natural simplicity, small is beautiful.(Higher Education)|
We think about usage behaviors such as having Turkey at Thanksgiving in the US, as well as the 80/20 principle that says 80% of sales come from only 20% of your market. Not all markets have an 80/20, but markets like dog food — where big dogs eat most of the food — do. So does the domestic beer market.
Behavioral segmentation also includes benefits sought from a purchase. For instance, some consumers might want a simple, inexpensive computer, while others want an Apple, even though it’s more expensive, because of its reputation for innovativeness.
Using psychographic segmentation
Obviously, there’s no real reason for creating psychographic segments or buyer personas unless they help you market better.
Psychographic segmentation helps you in digital advertising, such as PPC and Facebook advertising, where you can select psychographic segments more likely to click or buy your product.
Psychographic segmentation helps construct products or position them in a way that makes them more appealing than competitors. Creating perceptual maps helps you understand how consumers see your brand and allows you to position your brand for maximum benefit.
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