Beyond Segmentation -

Beyond Segmentation

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By Matt Baker, AMD

Motive-Driven Shopping
The holy grail in marketing has become: join in a dialog with the shopper instead of targeting them with prefabricated messages, so we can capture more of the nuances driving buying behavior. Is the traditional marketing philosophy of “segmentation” now less relevant, as we strive to engage consumers one on one in real time–or some marketing approximation to real time. We posed that question to industry veteran John Greening, who worked on the now legendary Budweiser campaigns in the 90’s, and is now Sector Head, Advertising; Associate Professor, Medill Graduate School of Integrated Marketing Communications at Northwestern University. His response:
JG: Traditional marketers were interested in what the shopper did, what they bought. But people are not in the buying business, they are in the shopping business. Now, we must focus on the motives that drive shopping. A shift from demographics, to psychographics. So, while segmentation is still valid, it now should be segmentation by motives.
So much energy in the past was spent on organizing supply. This led to the mega-retailer model, where supply inefficiencies were wrung out of the system. And it also created early on the model where in retail the store buyer who sourced product was the same person responsible for selling the product to the shopper. We organized the supply side–but perhaps too well. We have now moved from the need to organize supply, to the need to organize demand. The need to create communities–the shopper needs and wants to belong to communities. The next step: those in a community wanting to see what other people in that community are buying. If you know what others are buying, you might want the same thing. In stores you are entertained by what others are buying and want to buy the same things. We get an idea of what to buy from others. We then feel we are part of a savvy group. Trader Joe’s does not try to compete on price. When people share the same interes–that is the essence of branding.

There is a strange irony about traditional marketing practice that is becoming more evident as consumers become more autonomous. While products are designed to meet consumer needs, marketing is usually designed to meet the company’s needs for volume and profitability. It’s this inside out instead of outside in view that gives rise to marketing communications techniques like consumer or shopper segmentation. Shopper segmentation is a marketing convenience, useful to an extent, but unable to fully grasp how multifaceted consumers really are. The assumption is that if you know enough about the consumer, you can transform her behavior in ways useful to you in meeting marketing objectives. The problem is, this buyer assessment can be no more than a snapshot in time basically already outdated by the time it is executed on. Another more basic problem is that consumers don’t care about marketing objectives and yet they should be placed at the epicenter of everything brand marketers do. While marketing’s basic premise of connecting buyers with sellers is still valid, the environment within which this goal is pursued and the means for achieving it have changed fundamentally in the modern marketplace. To remain productive, marketing must rethink its basic purpose and how this should be accomplished. To earn a share of the customer’s very limited attention span, marketers must provide consumers with advertising content that fits the consumer’s agenda rather than their own. They must truly become “consumer centric”.
As consumers, how we respond to brand messages is about how we are wired personally and to whom we are wired socially. These facts are changing organically all the time. Our mother of three from Paducah may be a “traditionalist” by day but a “freak” by night. How she responds to our brand is a matter of her constantly shifting context that is influenced by her own psychology and by her connections, maybe even globally, to an infinite community of influencers. Segmentation is an abstraction, a statistical aggregation, helpful to marketers contending with the demassified mass media but lacking in real precision. Our buyer’s precise motive for buying a particular product is a consequence of all these effects at the point of decision – a singular moment that is like no other moment exactly. As marketing communications people, how can we ever hope to engage this moving target, especially when we consider how much consumers generally dislike advertising?
The good news is that segmentation may be becoming largely irrelevant now that we can engage consumers one on one in real time. Today, thanks to the internet and other modern communications technologies, we are able to meet our customers on their own terms, whatever those terms may be at the precise moment they touch our brand. By joining them in real dialog instead of targeting them with prefabricated messages, we can capture more of the nuances driving buying behavior at the only moment relevant to our shopper – that moment.
I posed this question to four marketing at retail experts:
What specifically are you seeing that works? Not your wish list, but working today, to establish this "dialogue" with the consumer.

Robyn Waters, President, RW Trend, LLC
There are 2 myths that I would like to obliterate. The first is that customers buy products designed to meet their needs. The second is that “the next big thing” is the holy grail of retailing.
Products designed to meet consumer needs no longer rule. Today, as good design enhances life, it merges with desire and touches the soul. In the “claustrophobia of abundance” retail landscape, products that appeal to the heart are the most sought after.
The same is true for marketing messages. It’s not the latest technology, or the newest form of media, or the most clever POP that will resonate with the today’s customer. A message that appeals to the heart as well as the head will garner the most attention and stimulate the desired result.
Trying to create, market and deliver “the next big thing” is treacherous these days. The trend landscape is filled with contradictions. For every trend, there is a countertrend. In addition, today’s customer exhibits contradictory behavior. A woman wearing Prada, driving a Mercedes, isn’t the least bit out of place at Costco, stocking up on her bulk paper goods.
In order to determine what’s important to customers and understand how to reach them effectively, you have to go inside, into their hearts and minds, in order to understand what they value…what’s important to them. That’s the basis of my ‘trend from the inside out’ philosophy.
“It’s not about what’s next. It’s about what’s important.” It’s also not about the consumer’s age, income level, zip code, or education level. It’s all about the heart.

Neil Perry, acting CEO of XLNTads
Consumers today have become masters at tuning out traditional brand messages. However, open dialogue about brands is happening every day on the Internet – in blogs, social networks, online reviews, discussion board, etc. As much as brands would love to jump in and join those conversations, many have a hard time doing so objectively, without pushing their brand messages in front of the consumers. Brands can take advantage of these online conversations by hosting online environments where consumers are able to talk freely about their likes and dislikes. The benefit to the brand is the learning experience and the opportunity to accentuate their strengths, fix their weaknesses and ensure they remain top of mind. Also, since 78% of today’s consumers place the most confidence in recommendations from other consumers, according to a recent Nielson report, these open dialogues allows brands to tap into word-of-mouth marketing and advertise through the consumers’ voice. Dove is an excellent example of a brand who is doing this the right way. On the Dove Web site, visitors will find sections where they can share their views on Dove products, hair care tips, self-esteem building stories and more. Dove also utilizes consumer-generated advertising to incorporate the consumers’ voice into their ad campaign.

Greg Smith COO Neo@Ogilvy
Marketers have unprecedented data. As more media become digital, more data is exhaled. Every day we get closer to the following two predictions coming true:
- In the future, you’ll know the names of all your customers.
- In the future, the only messages people will see are the ones they want to see.
But this will also mean unprecedented changes in how we message:
1. Consumers are very good at avoiding ads, so marketers will need to look beyond advertising to new forms of messaging and provide utility, entertainment, information, community, connection, advocacy. The brand will need to stand for more than just the product and its claims. (Look at some leading brands; Google, Craig’s List, Starbucks. Look at how Target creates messaging that is not simply advertising.)
2. Logistics will change. Marketers claim 24/7 capability, but we go to bed after primetime. Consumer commerce and activity is happening at a tremendous pace and yet marketers are using 20th century approaches and timetables.
Marketing will look something like this very soon:
15% of time and effort to create the brand and its essential message as well as big “tentpole” media deals that are crafted to integrate the brand and make a big impact. 85% of time and effort will be deploying simpler variations of messaging across wider ranges of digital media through mass customization of message, algorithmic decision-making, behavioral targeting and auto optimization. This will be tool dependent; based on parameters, not individual human input.
3. Brands will still matter. In fact, with market fragmentation and increased choice, brands are more important to consumers than ever.
Building and supporting them will simply be more complex.

Peter Guenther VP National Sales Director Digital Aisle
What we’re seeing that works today, specifically in store at the critical point of purchase, is the combination of technology coupled with the right content to grab a shopper’s attention, hold them for a minute or two, and promptly move them as close as possible to putting not one manufacturers product in their basket but multiple products from the same manufacturer! It’s about building real shopper-based intelligence into the content so the consumer can decide for themselves what information they’d like communicated back to them from the product or brand, a dialog that happens right at the manufacturers’ shelf or display! This might be basic product or brand education, step-by-step instructions, how-to demonstrations, and/or targeted solutions or brief survey to determine what’s right for them!
Keep in mind the manufacturer wants to drive sales while the retailer is looking for total category growth. The right consumer engagement application can and will do both!
As we have moved from a production driven to a consumption driven economy, the whole nature of marketing is changing. This change has been amplified by the forces of digitalization and the internet in particular. No longer isolated but now socially connected and armed with information from the internet, today’s empowered consumers are freely expressing their preference for intimate and honest dialog over prepackaged and manipulative advertising messages. Eventually the only advertising messages people will see will be the ones they want to see. And yet, what’s old is what’s new. Like in the original markets that existed for thousands of years before the industrial revolution, buyers and sellers can now meet again one on one and in real time for conversation and to co-create market value for products and services. As we have discussed, some brand marketers are beginning to get it. They are starting to engage with their customers on terms that are relevant to both parties and showing a willingness to be more authentic and less manipulative. They are asking permission to become a part of important community discussions about issues that matter to real people. Some are even using consumer generated advertising content as the ultimate endorsement of today’s consumer as a multifaceted human being. As we have discovered, some of this new marketing is reaching the store level as we see several new intelligent digital signage applications with shopper intelligence on board. The best of these create an immersive environment where the shopper is fully engaged in a dialog with a seller that is uniquely derived from the algorithms of the interaction.
As Alan Mitchell points out in his book, Right Side Up, “We are entering a new era where the most influential businesses organize demand rather than supply…where the dominant form of marketing revolves around helping buyers to buy rather than sellers to sell”. I am impressed with some of the most recent marketing efforts in-store that have embraced this paradigm shift and our truly putting the shopper first.


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