Slicing up the consumer cake

New segmentation methods have overtaken social demographics as the best way for companies to understand customers.

New Labour may be looking for ways to increase its votes from the C2s, that famous group of aspirational workers who are the Holy Grail of political parties these days. But social demographics – segmenting the population by occupation – is somewhat old hat.

Tony Blair could do better by following in the footsteps of brand marketers, who look at the lifestyles, attitudes and values of consumers rather than simply what job they do. Indeed New Labour’s use of modern marketing techniques suggests the party is taking a leaf from the marketer’s book – it has employed direct marketing consultancy Evans Hunt Scott to do its target marketing on membership, the same agency which Tesco uses to run its Clubcard loyalty scheme.

There are many ways to cut a cake. The job for retailers and brand owners is to come up with new ways of segmenting their consumers to understand what makes them tick and how they relate to the products they buy. By using effective methods of segmenting consumers, suppliers can gain an advantage over their rivals in the battle for the loyalty of shoppers.

Segmentation is the process of splitting the whole into a number of smaller groups. Once you do this, you can better understand what motivates the members of these groups. And this helps in devising tailor-made marketing packages to target each group.

AC Nielsen has developed some segmentation techniques derived from the Homescan consumer panel. This panel of 10,500 households is polled each week to collect data on grocery purchasing, including: what the panellists buy; how much of it; where it is purchased from; how much they pay; and whether it is on an offer of any kind. This is then merged with the additional details known about that specific household such as their demographic profile, where they live, their type of housing and their postcode.

With the introduction of Homescan Surveys, this information can also be tied to a wealth of attitudinal and general behavioural data on these same households.

The surveys collect information on attitudes, values and beliefs, as well as some more fundamental information on topics like media exposure, habits and hobbies, and category-specific behaviour like drinking habits or laundry habits.

ShopperFocus is one such segmentation technique and splits consumers by their attitudes to life, health and shopping. It ties Homescan Surveys to panel purchasing and from this approach six distinct shopper groups have been identified: Habit-Bound Die-Hards; Struggling Idealists; Comfortable and Contented Consumers; Frenzied Copers; Self Indulgents; and Mercenaries.

Take the Habit-Bound Die- Hards for example. This group tends to show what they like and are not too responsive to marketing persuasion. They are old fashioned and rather scornful of trendy fads. They are set in their ways, unreceptive to new ideas and somewhat blinkered in their approach. While not short of money, waste appears frowned upon and any chance to be prudent is actively pursued – for example collecting coupons and keeping an eye out for a bargain when shopping. However, they are brand loyal and reasonably store loyal and habitual in their behaviour. This group accounts for 19.5 per cent of households and 18 per cent of grocery expenditure.

Comfortable and Contented Consumers are happy homemakers, have money and are contented with life. There are slightly less of them than the Die Hards, but they spend more, accounting for 22 per cent of grocery expenditure. They are home and family focused with a modern outlook and convenience oriented. They are open-minded, yet tend to be brand and store loyal and importantly are generous shoppers. They will take advantage of a good buy on their preferred brand and as they have few budgetary constraints will stock up when possible. Multibuys are most attractive on their usual brands.

The next biggest group of consumers are the Frenzied Copers, those busy, chaotic shoppers who are brand and store loyal because they have no time to think about changing their shopping habits. They are closely followed by the Mercenaries, who are bold and brassy and are out to screw a good deal from suppliers. They are not loyal at all, but are conspicuous consumers.

The Struggling Idealists would save the earth, if they could. Environmentally conscious, they are hamstrung by a shortage of money. They shop about to buy their favourite brands at the lowest price. By contrast, the Self Indulgents are just looking out for themselves and are fickle with little loyalty.

By segmenting their consumer base, marketers can target their consumers more effectively and tailor product offers and promotions to reach key consumers. They try to maximise groups such as the Comfortable and Contented who are the most loyal. The key is to understand the base of buyers and to constantly update information to measure the success of tactical marketing strategies and see if they have been successful in targeting key consumers. Those manufacturers and retailers who take these methods on board can increase their competitive advantage, and drive growth and profitability.

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