Classification maps draw on group culture

As society continues to evolve, marketers are turning to a new generation of hi-tech consumer classification tools and market research methods to identify targets by groups rather than demographics.

It’s hard to put people in boxes and stick labels on them, but that’s part of what marketers have to do. As brands witness consumers shopping less by age or gender and more by their mindsets, the trend of putting consumers into “tribes” or “groups” rather than relying merely on demographics is more important than ever.

Many companies are using off-the-shelf consumer classification products, such as CACI’s Acorn and Experian’s recently updated Mosaic UK, which claim to make that job easier. Smaller companies may not be able to afford these, and may instead rely on their agencies, in-house teams or other market research-based methods. But regardless of what methods are used, this style of segmentation is growing increasingly popular.

Some of the “tribes” appearing in Mosaic’s 2009 list include Active Retirement, Alpha Territory and Terraced Melting Pot, which are the names used to describe groups of consumers and their habits. The groups have been updated over the past 12 months to reflect the types of people now appearing in British society.

As part of reclassifying the consumer groups, Mosaic found there are now two distinct phases of retirement within our ageing society, as well as an enclave of extreme wealth, increasing multiculturalism and growth in both single households and broadband penetration.

These findings may not be surprising to brands that have already experienced some of these changes in consumers over the past few years, but it can help them refine and target campaigns rather than treating people of similar ages or incomes in the same way. Robert Haslingden, head of marketing for business strategies at Experian, suggests: “The manifestation of new “neighbourhoods” can capture marketers’ imaginations.”

Such tools aren’t the only option for businesses wishing to glean a greater understanding of the population at large and how cultural attitudes affect spending. For example, “co-creation” specialist Promise has been working with financial services companies and Government departments to develop a better understanding of people coming to live in Britain from abroad and how best to communicate with them – with the aim of being able to produce more relevant products and services.

Following ethnographic research in targeted branches of a high street bank, Promise conducted focus groups in the respondent’s mother tongue, wherever possible. Respondents were also able to bring along a friend, who might have a better level of English.

“We spent at least three hours with respondents and involved clients directly,” says Ben Hayman, deputy managing director at Promise. “We found that ‘friend pairings’ can be more effective than using translators, which may prevent you from developing a connection.”

On the back of Promise’s research, its financial client was able to develop and tailor its product to individuals who have just moved to the UK. Rather than targeting these people by demographics, it found the common experience of immigration meant customers were looking for greater flexibility as opposed to extensive cover of goods that they may not yet have acquired. It also reflected the fact that some immigrants required single-room insurance and a product that took into account the high level of transience in their lifestyles.

Promise has also worked with the Ministry of Justice, the Department for Work and Pensions and HM Revenue & Customs to develop a more detailed understanding of immigrant communities. While noting the demographics are important, a source from the public sector says that developing cultural understandings through groups was vital and involved “huge” sensitivity.

Unfortunately, there’s no single consumer segmentation tool that can achieve optimum levels of cultural understanding for all brands or provide a single easy-to-apply shortcut. What’s more, working with research specialists comes with a price tag, as does using customer classification products such as Acorn and Mosaic.

Adele Gritten, head of media and financial services research at YouGov, describes such tools as “a winter coat over the rest of your clothing”.

“A number of our clients will look at [Mosaic’s] clusters for highly locally targeted campaigns, in a key region or in a test town or city,” she says. “It can help to tailor your message. But if you’re a good researcher, you’ll be spotting these trends yourself.”

She believes that Experian’s competitors will have to play catch-up, but that any researchers relying on defining consumer groups should redefine “tribes” at least every five years, despite the fact it’s “a costly process”.

Luckily, there are other ways for those brands without deep pockets to update knowledge about customers, which may not necessitate off-the-shelf solutions or large amounts of outsourcing. Many experts advocate standard online qualitative research, which can then be used to broadly segment consumers. This can be done in-house or brands can hire experts.

Even better than merely segmenting consumers into groups is getting people to define themselves by interest through communities. These allow companies to interact with consumers and maintain conversations over time. This type of immersive research – if done well – can even lead to the development of new products. For example, when Dutch-based Royal Philips Electronics wanted to look at psychographic profiles, such as whether individuals are early adopters or tech-savvy, it used online communities to recruit and to get to know market segments in various countries.

“This type of work can be more cost and time effective than focus groups or ‘mall intercepts’,” explains Julie Wittes Schlack, senior vice-president of innovation and design at US-headquartered Communispace. “Brands can take advantage of the fact that online communities can be built to develop long-term relationships and use these people for discovery.”

Community respondents can keep online diaries or create videos; such narratives become a vehicle for what Wittes Schlack describes as “virtual ethnography”.

Such community segmentations and “tribes” may be very helpful for brands to research the consumer landscape but they are not sufficient on their own. “You need to fill in the gaps with more precision,” she adds.

After all, people are unique, as are brands. A tool or an approach that works well for one won’t be appropriate for another. It will never be a case of just keeping up with the Joneses.

Case study: Vonage UK

Internet telephony provider Vonage is devising a marketing plan to target British expats outside the UK. The company is researching people by segment, rather than demographics.

“We go after niches, rather than country by country,” says Vincent Potier, Vonage UK managing director. “But even though 10% of the UK population live outside the UK, there is no data available on them.”

Vonage UK’s media agency uses Acorn and its data management agency uses Mosaic. Recently, the Vonage database was checked against Mosaic and the segments examined.

“We were looking at where we over-index and where we under-index,” explains Potier. “We were looking with some granularity, drawing conclusions with regards to channel of acquisition.”

Potier admits he finds the Mosaic cluster names “quite non-intuitive.” He believes the tool is more useful for companies with “huge” customer databases, in the tens of millions. “We appeal to certain people and behaviours so for us it is less telling,” he says. “Most of the time, I draw a pen portrait of my clusters rather than looking at pre-optimised clusters.”

However, if a major over-indexing or under-indexing is noted, Vonage will investigate. Potier describes his use of Mosaic as a “secondary check” research tool to refine campaigns. “We look for professional, tech-savvy, urban types and Mosaic hasn’t defined that segment for me. Sometimes it doesn’t tell me a lot about attitudes,” he adds.

The marketing team now creates bespoke clusters in-house, built around the propensity for an individual to subscribe to Vonage. “Mosaic is nice to know but not my bread and butter. But we are a very data-oriented company, so I’d be interested to find out more about the new clusters, and how they can help my business,” says Potier.

Case study: TNT Post Doordrop Media

Mark Davies, managing director of TNT Post Doordrop Media, says consumer segmentation by “tribe” is very important to his company. “We use the Mosaic classifications because our business is about targeting – targeting the right geography is fundamental,” he says.

Doordrop as a medium is primarily a customer acquisition tool, explains Davies, and brands use it in order to find more people who look like their current customers. “It’s far too early to talk about results driven off the back of the updated product, but it certainly offers greater granularity,” he adds.

TNT has been working with Zurich Insurance for the past year to build a targeting model based on Mosaic. According to Davies, “We need all the customer data we can get. These tools really help.”

A full review of targeting has also been undertaken for Macmillan Cancer Support, a new account for TNT Post Doordrop Media. By the end of the first week of a campaign using doordrops to help generate donations, they had “hit their revenue target, exceeding expectations in what is a very difficult market.” Davies puts the success down to effective targeting and says that doordrop can allow brands to speak to whole areas at a low cost per contact.

He adds that until a better system of consumer segmentation comes along, he’ll be sticking to the groups defined by Mosaic. He claims: “There are more than 700 data variables on most UK households. Until there is a response from Experian’s rivals, this move has pushed the product into a new league.”

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