Building a Platform For Your Marketing Strategy

By Andriy Prudius

There are still different opinions as to the necessity of market segmentation: Some marketers wholeheartedly believe in mass marketing, ignoring the idea of consumer differences in the hope they’ll capture the largest market share with a uniform product proposition, while others admit that customer segmentation is important, but quite often find themselves busy launching new products and campaigns with segmentation being placed on the bottom of their priority list.

Experienced marketers do employ some of the existing segmentation models, but even then they usually find it difficult to apply them consistently to all of their marketing mix elements.

Before engaging with any form of customer segmentation, first identify what it is to be used for.

These are just a few examples of how customer segmentation and targeting can drive your go-to-market strategies.

Brand positioning is the most obvious place to put your segmentation to work. While usage and attitude data can help you identify the functional drivers of purchase and consumption, broader lifestyle data can uncover crucial emotional levers for moving your customers from merely satisfied ones to brand advocates.

Localization strategy is an adaptation of global brand positioning to a local market. While multinational companies need to consistently deliver functional and emotional benefits of their brands across multiple markets, it is essential that they build their brand’s relevance to local people’s lives. Unless a brand is connected to the type of people that use it (for instance: Are they like me, or what I aspire to be?), customers will prefer alternative products that are more meaningful to them.

Communication strategy. In order to create more engaging communications, you need to know when your customers most likely want to engage with your category and your brand. Category-driven data can tell you that, but lifestyle data is essential if you want a broader understanding of how your customers move through their days, what media they are likely to engage and word-of-mouth advice they give or receive through their social and business networks.

Product development. The success of any product launch depends on the ability to anticipate new demand by providing greater value to customers. Unless a new product meets consumers’ specific needs and wants – functional and emotional – not only may it encounter trouble selling, but also it can cannibalize the company’s existing products on the market.  

Most commonly,companies make use of one of these segmentation approaches that should lay down a foundation for their go-to-market strategies. 

• Demographic Segmentation is widely used, but quite inefficient.   The approach divides people by age, sex, income etc. Though it provides quite easily verifiable data, it lacks the customer insights to create better products, to develop stronger brand propositions, and execute more efficient communication strategies.

• Category-Based Segmentation. Large companies have U&A data that relates primarily to their brand and category and segment their customers according to their consumption. The insights they get can be very helpful in developing new forms of packaging, establishing competitive pricing and promotional programs. The problem with this type of segmentation lies in attracting new customers to the category. Since this approach doesn’t know enough about people’s lives, it is difficult to create relevance where it doesn’t currently exist. Also, because it so brand- and category-focused, it is difficult to know where to find customers in their lives and to communicate with them at the right place and time and in the right state of mind.

• Psychographic segmentation provides valuable customer lifestyle insights that can be applied to key marketing strategies, but lacks data on how these lifestyle segments actually interact witha brand and the category.

• Integrated Strategic Targeting. Most recently, a break-through approach was developed that provides all-in-one advantages of the models discussed here. Integrated Strategic Targeting is a form of customer segmentation that combines lifestyle, demographic and category consumption insights.

There is typically a single-source consumer database available in almost any market that large research companies have developed over the years to research hundreds of categories and then sell this category and a brand data on a piecemeal basis to client-companies and their media agencies. These databases contain a great deal of consumer demographic data, lifestyle and attitudes, leisure activities, types of media consumers engage with, and their consumption across lots of categories. A mathematical model was then developed that enabled filtering all the database information and grouping consumers based both on their lifestyle and consumption. One of the most valuable “know-hows” of this model is ability to establish the most influential customers within the category – those who not only consume the category most but can also positively influence other consumers to buy a brand.

Whichever industry you are in, comprehensive customer understanding can take you to a much more profitable game. 

Andriy Prudius is the chairman of the EBA Marketing Committee and country manager for The Garrison Group. He can be reached at andriy@garrisongroup.eu.