Marketers, It’s Time To Rethink Target Market Segmentation
Market segmentation as you know it has become more complicated today than ever before. Capturing data in CRM systems, doing primary research, etc. all help, but the ways of segmenting we’ve learned don’t allow you to see your customers in their natural space. Sure, sales, marketing and customer service teams capture a lot of information, but is it insightful? Is it useful in understanding the segment? Or is it just what ‘they heard’ and made a note of?
There is a lot of hype around social media tools like Twitter, Facebook, YouTube, etc., but the fact remains that social media (as a concept) is the first time that organizations have ever been able to see, listen to and get to know their customers in public spaces (again, in a ‘natural’ setting). Social interactions tend to be natural and not forced or coerced, which often leads to deeper insights.
Let’s look at all of the “-graphics” to get a better understanding of segmentation and how segmentation has changed.
Demographics & Firmographics
Ah, demographics and firmographics…the marketers tried and true methods of slicing and dicing their markets. We know them well, don’t we? They were drilled into our heads as marketing majors and have stuck with us through the years as the best practice for market segmentation.
But the days of mass marketing have come to an end and it doesn’t make sense to segment markets only to treat them as if they all live, think and buy the same way.
As you know, demographics allow B2C marketers divvy up their markets by size, age, income, education, ethnicity, etc. and firmographics allow B2B marketers to manage their markets based on employee size, revenue size, industry, number of locations, etc.
Does looking at someone’s income really provide an indication of how, where, when or why they part with their paycheck? Does knowing a business buyer’s revenue size tell you exactly how they manage their budgets or what types but products/services are purchased? No and no. Demographics and firmographics truly leave marketers empty handed when trying to get a deep understanding of markets.
So what’s a marketer to do in order to get deeper insights into their market in order to segment them properly? If demographics and firmographics are all you are using, consider adding psychographics, sociographics and ethnographics to the mix.
Psychographics
Want to know what your customers’ values, attitudes and lifestyles (VALs) are? Then psychographics should be a part of your segmentation mix. While psychographics have been around for quite some time, they often aren’t used to their full potential. While the VALs segmentation seems strongly linked to B2C marketing, it’s important for B2B marketers need to understand is that just because someone is buying in a business situation it doesn’t mean that they don’t have certain attitudes or values when it comes to products and services (i.e. “I want the best bang for my small business budget!”). It is smart and safe to assume that many consumers carry their VALs with them into the office. But, is psychographics even enough to really know your customers?
Sociographics
If you are looking for the ability to connect with your customers at a level much deeper than demographics, firmographics or psychographics, consider sociographics. Sociographics allow marketers to relate to customers as individuals. Remember one-to-one marketing of yesteryear? It was a great concept and made CRM systems very popular. But today, social media plays an important concept in marketing. By social media, I don’t mean using tools like Twitter, Facebook, blogs, forums, communities, etc. but the two-way conversations these tools allow for. As you get to know customers online, you’ll be able to determine their individual values, attitudes, friends, hobbies, passions, who influences them and more. Essentially, sociographics allow you to discover what makes your customers really tick.
[Image: Stefano Maggi]
Ethnographics
What is ethnography? Basically, it’s about understanding your market’s everyday life where they live it and from an insider’s point of view. Meaning, you understand the market because you view them in their natural settings. Take for example, Graco’s marketing and social media team. A lot of them are moms and as such they can relate and market to moms because they understand the needs/wants moms have.
Social media, again, is one way to understand the common values, lifestyles, hobbies, needs, etc. that drive people to join communities and forums of like interests. Typically these types of online groups have their own culture, speak in terms that are unique to the group, and they often help or influence each other to make purchasing decisions. Relating to your market in this manner allows you to seamlessly blend in with it.
[Image: Gina Zacharias]
What’s The Answer?
Marketers have more tools than ever at their disposal these days. Between CRM systems and social media monitoring tools, marketers can gain a lot of insights into their markets. With social media being still so new for many organizations, it will take time to truly understand the shift from demographics and firmographics to sociographics and ethnographics.
The key here is to understand that it will take a lot of time, roll-up-the-sleeves hard work, patience, strategic savvy and management. You can’t buy a list that tells you this data and you surely should not jump off the plank. Your starting point should be audience research analysis and training on how to properly engage customers in their surroundings. Once you have that down, the next steps will be finding tools and determining a strategy to pull it all together in a manner that provides a valid return.
Your thoughts? How has social media affected how you do market segmentation for your B2C or B2B customers?
[*NOTE: This post originally appeared on the Serengeti Communications blog, Endless Plain.]
[Image Source: Talk, Inc. Blog]
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Tags: Data, Data-Driven, Demographics, Ethnographics, Firnographics, Market Research, Marketing, Marketing Analysis, Marketing Communications, Marketing Management, Psychographics, Segmentation, Social Marketing, Sociographics, Target Marketing
12 Responses to “Marketers, It’s Time To Rethink Target Market Segmentation”
The Harte of Marketing by Beth Harte is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.
Based on a work at www.theharteofmarketing.com. [If you have a question about what you can use from this blog, click on the above Creative Commons link to learn more.]
Beth thanks for the great insight into the heart of new marketing. It baffles me that some companies still believe in mass marketing – in the digital era we’re living in, we are screaming louder than ever before trying to promote our individuality!
Unfortunately, the hesitation of most companies to engage in such segmentation was highlighted in your last closing paragraph – it requires a lot of hard work and time dedication. How can this ever compete with management’s fixation with ROI and immediate results. I wish we can start thinking of ROI as Risk of Ignoring rather than Return on Investment!
Once again Beth, great post – hope it helps shift the mindset of old-school marketing!
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[...] This post was mentioned on Twitter by Restaurant Marketing, Renilde De Wit and John Antonios, Sharon Mostyn. Sharon Mostyn said: There's a lot of -graphics in @BethHarte's "Marketers, It’s Time To Rethink Target Market Segmentation" http://bit.ly/cnDsGZ [...]
Great information here Beth… causing me to rethink a few things. But I’m not 100% with you on throwing demographics out the window.
If nothing else, those demographics often tell companies where their audience *is* using Social Media tools.
I’ve recently been trying to figure out how algorithms which use specific tools & platforms to measure ‘influence’ are going to adapt to the fact that behaviorally, different groups (specifically those which can be broken down into demographics) differ so wildly that they cannot be accurately measured by those who don’t fit the preconceived behavioral model.
To whit: Klout recently attempted to list “influential Mommy Bloggers” on their site based on list that was generated by another site (Babble.com) and then their Klout score (based on their Twitter & Facebook usage.) The observant person will pick up quickly that the last word in that descriptive phrase is “bloggers”.
The assumption that influential bloggers are also using Facebook & Twitter is predicated on the behavior of other digital communities in which that is true. But behaviorally, those who are influential in the “Mommy Blogging” space are not always active on the other 2 platforms.
It’s only one example… but I use it to illustrate that demographics are not entirely useless when it comes to Social Media Marketing – they do give marketers an idea of where to look for the “consumers in their natural environment” – by allowing them to see where that environment is.
Does age, income, gender, etc influence where they can be found online? Yes. As does the hardware medium they are connecting through. In an area where cellphones are the primary connection method – blogging is not the primary method of connection.
I guess what I’m saying (in a long-winded way) is don’t throw the baby out with the bathwater. :\
Beth,
Right on the money. This is the work I have been doing. This is where things are headed. If you caught the webinars I have done for NetBase, this ties in very well. How we take the vast amount of data and look at the Insights from our Marketers lens is key.
Netnography is leading the way toward this understanding. Making sense out of the data provides the directional signs we need to determine a number of areas we should focus on.
In case anyone wanted to listen, here are the 3 webinars I recently did for NetBase (Not a shameless plug, trying to provide value):
1.Strategy from Insights: https://netbase.webex.com/netbase/lsr.php?AT=pb&SP=EC&rID=71425327&rKey=c2d8c75f54a920ec
2. Messaging from Insights: https://netbase.webex.com/netbase/lsr.php?AT=pb&SP=EC&rID=73518057&rKey=35e010103b2441d2
3. Content from Insights: https://netbase.webex.com/netbase/lsr.php?AT=pb&SP=EC&rID=75520712&rKey=3e3d55381c6136fd
Keep up the great work here.
Dean
2.
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John, great point about “risk of ignoring.” Customers are more complicated—emotionally, for example—than marketers understand. Yes, even business buyers. In this rough economy people are carefully questioning spending on the things they desperately need (B2B) or that make them emotionally content (B2C). If there was an understanding, businesses could adjust accordingly.
Lucretia, I never said don’t use demographics or firmographics. I hope that wasn’t the impression I gave…not the case at all. To clarify, what I said was that we are taught to start with demographics (and psychographics — i.e. the buzz around personas), but it normally ends there for most marketers. We need to also look at sociographics and ethnographics to get a true sense of the market and their buying behaviors. [By the way, this isn’t just online, this is also the case with offline.] Thanks for the great example of what you are working on! What you are describing isn’t demographics (income, race, education, etc.). You are describing sociographics (who is connected to who socially) and ethnographics (what communities do they hang out in). Kudos for diving in deeper! It’s fun isn’t it? The other thing I think we need to be careful of with demographics is that just because someone has a laptop, high-speed Internet or a cell phone doesn’t necessarily mean they necessarily fall into a certain income or education bracket.
Dean, thanks for sharing the links!
I love it when I read something like this – jam packed with useful, relevant, actionable information and when I get to the end – to the call to action or the question for consideration, the best I can come up with is “It depends.”
It ALL matters, it’s just very difficult to build sure fire tactics to engage each and every target market segment based solely on the data, but it’s hard to go wrong using the data.
So I would remind readers that we play the numbers game every day – our own private games, just like professional odds makers, where we take the best information available, add a measure of something very personal – gut, instinct, whatever – and lay out our best [educated] guesses.
The results of these games go toward better informing our next run at it, and so on, and so on.
Keep the data coming, just don’t let it get in the way of your gut because THAT’S what separates us from computer programs and vending machines.
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I resisted posting this comment since that means adding a link from my blog and making it look like a link-bait, but let me try to frame it with as much relevance as possible.
All kinds of ‘-graphics’ that marketers had at their disposal started from some information gathering process/mechanism. As you rightly say, they tend to seem coerced and perhaps constructed to fit certain premeditated parameters. As against that, with the rise of people opining in a more natural setting online, that data, if tapped correctly and diced appropriately, is perhaps incredibly more valuable. The only problem is that marketers tend to consider this raw, unstructured and all-over-the-web data as mere social chatter. If only they dug deeper with some patience, they’d notice that it is actually a treasure trove of information. It’s not as if no body is doing it – I tweeted about my love for contact lens earlier today and got followed by 1-800-lens even if they don’t have any presence in India. It is instances such as these, that look more like customer service, that are the new ‘-graphics’ that marketers are yet to fully realize the value of.
Had blogged about it earlier, under a slightly different garb – ‘From Attention Economy to Opinion Economy’ ( http://bit.ly/dDn08l ) – the content is largely similar and talks about how information sought by marketers already exists online and goes unnoticed, tragically.
I think there’s a good point in here about smaller online communities. There are so many of these small communities that count on each other for support and advice and too often these smaller communities are skipped so marketers can focus on the large community as a whole.
For example, there are lots of small groups of wine lovers around the world. They talk to each other about wine and what each of them are enjoying. They listen to each other and trust each other. However, rather than targeting these small groups, marketers try to reach out to people like Gary Vaynerchuk because he’s a big name in the online wine world. While he may influence some of the people in a smaller community, they’re more likely to listen to each other whom they know personally rather than a “talking head”. If marketers could find and reach these smaller groups they may have a better chance of having a real impact on their community than if they tried the entire world-wide wine community at once.
Cheers,
Sheldon, community manager for Sysomos
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