Is it me, or are traditional segmentation studies just not cutting the mustard these days? The time has come to rethink how segmentation can contribute usefully to any business looking for clear direction on future growth. Product managers scratch their heads looking for ways to navigate new and complex paths to satisfy demanding consumers. Today’s segmentation approaches are not helping them any more.
An abundance of choice is ultimately to blame, which is of course a good thing. But knowing which way to turn to stand out from the ‘toilet roll of choice’ can be a headache. Markets are saturated and consumers are bombarded with the next best thing. Trying to sell the same product for any occasion no longer works. Plus, consumers see straight through brands attempting to appeal to their ego in the hope of stealing a higher price tag. An American Express card oozed wealth and prestige, an Apple Mac shouted creativity and rolling up in a Mini Cooper was only for the positively zany. Traditional segmentation studies were used to delve deeper into the lives of the target audience, looking at their motivations, attitudes, life stage, or any other key proxy for who they were as a person, in order to understand how their purchase would reinforce, change or even improve their persona.
But consumers have become superconsumers – informed, opinionated and connected through social media. They expect brands to be more ethical, accessible and flexible. Brands are expected to multitask but only in the right way, and even that could change without warning.
To top it all, one man’s indulgence is another man’s health and sometimes it is the same man. In short, consumers are complex, but their ability to choose between brands has grown exponentially. Some brands have reacted to this well, finding ways to ‘live’ in everyday lives by creating irresistible experiences across multiple touchpoints. Getting this right is important.
So, where does growth lie? The one constant for businesses is the importance of looking for growth, but navigating through this world has become so complex that achieving sustainable growth is difficult. It is our role as insight marketers to design tools to simplify this complexity so that strategic choices are easier to make. It is about identifying where demand lies in the total market, not just segments; knowing how different types of people satisfy different needs on different occasions or creating a ‘demand framework’ – a clear view of your whole market, plotting where your brands sit and highlighting where the opportunities lie for your business to grow and, importantly, how.
If you think about it, how many times have you fancied a snack today before you started reading this? The guy sitting opposite you probably has too, only a different snack, at a different time. You may be grateful for breakfast biscuits in the morning dash, while he savours them at mid- morning. If your brand portfolio is targeting only one need, it could be missing a trick. Similarly you could also have brands competing for the same need. Step back and assess which parts of the portfolio require investment for growth, which may need to be culled, and where there is an opportunity space for something new. It can be quite radical. The end goal has to be to win with as many brands as possible but as few as necessary.
Understanding how people, needs and occasions interact is definitely time well spent. Delivering a demand-led growth plan, backed up with insights that tell you the value and size of the demand spaces, will inspire your chief financial officer, but also engage the entire business to get behind it and make it succeed.
It will need to be future-proofed. Take a look through the lens of culture to see how these spaces will grow, evolve and shift to become more valuable. A small demand space today could be a key source of growth in the future.
To return to the breakfast example, the need for ‘healthy eating on the go’ has grown massively in the past decade with products such as SunBites, Quaker Oat So Simple bars and Innocent smoothies. An understanding of changing trends in work, lifestyles and health would have predicted that this need was going to grow, taking a niche market into the mainstream.
Lastly, you will need a rich, nuanced view of the demand spaces through consumer and cultural understanding to know how you can win. You will need springboards for inspiration to bring these opportunities to life, enabling clients to understand how to turn these into reality.
If your demand space is around ‘evening time together at home’, for example, you will need to delve into what that world is about, its cultural meaning and expression, its associations and influences, and where you can draw inspiration in order to build ideas and possible routes forward.
These days, people have a holistic view on brands wrapped around their different needs and occasions. This needs to be unravelled to create growth plans that are clear and easy to execute.
In short, in order to realise growth today you need to feel confident with your simple (not simplistic) insight-led demand framework, know it is future-proofed and be armed with a deep understanding of the cultural meaning of the opportunities you have.
Sound ideal? It is.
The fusion of transformational consumer insight with a future-facing cultural perspective and quantified data is a new and powerful philosophy for growth, and the backbone for any strategic growth plan.
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