In today’s increasingly fragmented media landscape, with the proliferation of new marketing channels and devices that are available for consumers to engage with, mass marketing (or the “shotgun” approach) is no longer the most efficient or cost-effective option to reach a target audience.
As the consumer becomes more complex, it creates more marketing risk. To mitigate this risk, it is essential to holistically know and understand the consumer. Marketing success - acquisition, long-term engagement, retention/loyalty and profitability - begins and ends with the consumer. The more you know about consumers, the better you can target them with relevant messages and offers in a meaningful way.
The saying “actions speak louder than words” is still very much true. But, in trying to understand consumers, both words and actions are critical when it comes to driving actions. Advertisers and brand marketers spend significant time and money trying to understand consumer behavior and what factors influence purchase decisions.
Segmentation is a foundational element of understanding consumers and remains a powerful tool for strategic marketing planning and execution, especially in this digital age. In its simplest form, consumers are grouped based on specific defining characteristics. Agencies and advertisers have been segmenting customers for years, but the rapid proliferation of technologies and the era of big data (especially from digital and social data “signals,” which provide rich and dynamic consumer intelligence) are making it more essential - and complicated - than ever.
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To realistically define, understand, reach and effectively communicate with consumers, it is important that agencies and advertisers deal with them on three relevant levels: demographic, attitudinal and behavioral.
- A demographic segmentation attempts to define consumers based on different combinations of age, income, education, geography, etc. This is a historically important and intuitive approach to segmentation because consumers think and behave differently depending on the stages of their life. However, these factors only tell part of the story and no longer suffice in the connected consumer era. Behavioral and attitudinal segmentation are needed to paint a full picture of the consumer.
- An attitudinal (or psychographic) segmentation scheme tells you the motivational and non-conscious attitudes that drive an individual (the "why"). Purely attitudinal segmentation schemes can backfire when what the audience says isn’t aligned with what it does.
- A behavioral segmentation can only answer the “what.” Purely attitudinal segmentation schemes are insufficient in illuminating the underlying needs.
In a nutshell, demographics tell us who an audience is, psychographics describe their attitudes and opinions and behavior tells us what they are doing.
There is a historic dichotomy between attitudinal and behavioral styles of segmentation. Both data types can be used alone to build marketing strategy, but they are most valuable when used in combination. Behavioral data provides insight into what customers do (answering the “what” question), but that’s only half the story. To make that data actionable, agencies and brands also need to understand the reasoning behind consumer behavior: the “why” factor. Knowing “why” a consumer does something without linking it to a clear and measurable behavior is of little value.
Therefore, it’s imperative to not look at behavior and attitude from individual lenses, but understand them using a combinatorial approach that links behavior and attitudinal data - each is related to the other and affects the other. In fact, attitudinal and behavioral segmentations can reinforce each other. Personal characteristics, such as beliefs, values, attitudes, perceptions, opinions, preferences, interest, emotions and feelings drive usage and behaviors, and behaviors in turn confirm what people actually do.
A synthesis of multiple data elements is needed to create a composite view of the consumer and find a solution that best aligns preferences, attitudes and behavior into insightful and actionable segments. A successful segmentation requires uncovering what consumers truly think, and linking that to what they actually do. However, in order to understand consumers in their entirety, you must examine the influence of both psychological (e.g., values, emotions and motivations) and contextual factors (e.g., social groups and cultural settings) on their attitudes and behaviors.
Agencies and marketers need to develop consumer personas not just in broad categories but also in highly targeted homogeneous groups by integrating several multichannel disparate datasets (demographic, transactional and behavioral, attitudinal, geographic, econometric, etc.) to micro-segment the type of consumers they hope to reach with their ad campaigns and relevant messages. Also, combine client data in its various forms to create viewpoints on value potential with regard to segments and use this knowledge to connect with consumers on a deeper and more enduring level. If customer data is not used as the basis of a segmentation, this will limit the ability to operationalize the segments.
By putting the consumer at the center of their marketing strategy, agencies and advertisers will have a true understanding of their needs, wants, motivations, perceptions, attitudes, values, preference, behaviors and purchasing history (including paths to purchase). This empowers them to maximize every interaction with consumers, minimize distractions and create meaningful and differentiating experiences for them across all platforms, devices and screens.
The goal: highly targeted and relevant information that delivers the right ad message to the right audience, in the right place, at the right time, at an optimum and effective frequency. If marketing has one goal, it’s to reach consumers at the moments, or touch points, that most influence their decisions. Therefore marketing must make heavy use of consumer data and analytical techniques.
As with most analytical techniques, selecting segmentation techniques depends on the business objectives for the brand and what problem they are trying to solve. However, relying on fixed state or static segmentation approaches fails to reflect the dynamic behavior of connected consumers and becomes increasingly irrelevant in marketing campaigns.
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