What’s segmentation got to do with it? Or, who’s your customer? Marketing begins and ends with the customer. Brands attuned to this principle know how, when and where to find their customers and what to do to engage them. The end game: a purchase! And repeat purchases!
I spoke with subject matter expert Albert Thompson, Director, Brand Strategy, Transient Identiti, Inc. to get his insights on how marketers can identify key segments to develop effective strategies. The overarching message Albert emphasizes is that consumer demographics and behavior in the U.S. has changed dramatically from 10 and 20 years ago.
“The speed of the evolution of consumer behavior in each market category is daunting. It makes the average marketer play a constant game of catch up. You see gaps in how brands show up in the market in contrast to what consumers do. The new consumer makes decisions in different ways from the past,” he explains.
The big ideas Albert shared:
Marketers over rely on data and would benefit from personal understanding
Marketers operate with different tools, budgets and assumptions. At the millennium, many catastrophic marketing failures were tied to massive cuts in budgets and the rise of ecommerce. That led marketers to an over reliance on back-end data about the consumer’s purchase path. This created a dynamic where a lot of information that would make the findings more useful was not incorporated into traditional consumer modeling. As automation became the norm, the need to understand the consumer and invest in consumer facing research decreased. People got lazy.
The result? An approach to analytics and insights that assumes the machine will calculate the intimate nuance of consumer behavior. It cannot. Simultaneously, others watched unicorns and the emergence of a singular aim or ideal. That led to wishful attempts to replicate the successes of Apple and Tesla without having the proper context that it was their unique obsession with the consumer which led to the unicorn status of these enterprises.
Segmentation starts with the product and how consumers respond to it
The average marketer today lacks a full perspective. Understanding consumers and what leads them to a purchase requires multiple sources and intensive investigation, e.g., third party data, publishing partners. It includes people in the field to talk directly with consumers, review social media insights market studies and more. Most brands require important relationships with consumers. They need a renaissance of high touch and intimacy focused along the continuum, not only on the super fan. Bring back the basic intellectual curiosity marketers and willingness to go beyond machines and data. Dig, seek what consumers want and why they buy. You can be smart, more efficient, more automated, but still to do the work to unpack consumer psychology. Stand on the store floor to see who consumers are, how they come in and the behaviors they exhibit at the POS.
Big Miss: Predetermine customers from your own experience
Many brands predetermine who they want their customer to be. They may run ads to a young demographic, only to learn that their customers are over 60. Be honest: who is the product designed for? Get an early read on how it is tracking. Look at trend adoption curves. Under Armor started with serious athletes and evolved into the mass market. Selling at Walmart you get a different demographic than at Dick’s.
It starts with product cadence. You may make things with different product attributes that target particular demographics or regions. But then product personas come into play. How do people identify with you? Everyone uses wireless telecom services, but packaging, access and network strike consumers differently. The average brand has 4-6 audience segments based on culture, personas, needs, more. Those with an international presence need a matrix by country by persona. The goal: start with more and reduce to those that are most profitable.
Turning to Diversity
Albert wants brands to know that it’s not enough to talk about gender, race, LBGTQ, and how long consumers have lived in the US. If your audience is highly diverse: face the world the way it faces you.
Don’t underestimate how multicultural/DEI impacts decisions. Women’s roles in car buying have been downplayed because most working in automotive marketing positions and at dealerships think that men drive those decisions. If you see a man at a drive-thru window, don’t assume he is choosing the food; he may be placing the order his wife gave him to feed the family.
Another bias? Some marketers struggle with consumers who are different from them, e.g., age, culture, race, aesthetic. They consciously or unconsciously want to do business with people most like them. Instead: pivot and prioritize. Seek out the bigger segments with bigger share of wallet for bigger profit. Many brands don’t segment to minority communities because they don’t have the expertise to understand the cultures and marketing continuum. They end up leaving a lot of money on the table.
There are notable examples:
Toyota and Lexus get segmentation and messaging right. They have been running multicultural initiatives that speak to Asian, Black, Latino, and LGBTQ consumers for more than a decade. Few have done that consistently. Others turn marketing to multicultural segments on and off. Toyota has stayed the course with its deep market reach and understanding aimed at subcultures.
Ralph Lauren recently released an HBCU collection that celebrates fashion and culture, paying tribute to styles that were popular on the campuses of two of the most iconic Historically Black Colleges – Morehouse and Spelman. The collection drew inspiration from the 1920s to the 1950s.
Many department store retailers have historically underinvested in multicultural advertising despite the diverse nature of their foot traffic instore. Their marketing programs have been about the longstanding supplier relationships with couponers and adjacent media buying agencies whose greatest concern has been media efficiency rather than facing the various profiles of multicultural consumers flocking to the stores. However, these department store brand largely exist today because Black, Hispanic and Asian cultures still purchase at retail and shopping malls. Perhaps the next generation of marketers will see business opportunities otherwise or experience so much pain that they will do things differently.
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