When you are marketing a product or a service, it's imperative you understand what the category consumers want and how they think, and a segmentation can serve as a valuable tool in achieving this understanding. A segmentation inevitably involves an act of simplification, grouping large numbers of individuals based on certain common, assumed traits or behaviours. But Buyer Beware, while the concept of a segmentation is easy to understand, there is a risk associated with each attempt to simplify complex consumer needs into a simple marketing framework.
Take a category like rice for example…instead of just selling rice, we have product variants like basmati, easy cook, brown etc. With format we have different variations like portioned bag, boxes, and larger bags. But the available product features in a category do not define the target consumer. A person can have a variety of reasons for buying different product features from within the same category. For even further complexity, rice at retail competes with other categories like pasta and vegetables, while of course take-home rice may be a substitute for a chinese take-away. So if you are selling rice, what is it that triggers your consumers when they buy or consume rice? A one-dimensional (demographic, behavioral, attitudinal) segmentation in a category like rice would result in 'interesting', but unremarkable results that your competitors could easily replicate.
So we at Levercliff recommend that you start with the end in mind - what business problems do you look for the segmentation to solve? Is it about retail penetration growth, innovation opportunities, competitive threats or addressing category decline? It's unlikely that you will be able to design a segmentation that is actionable for all of these business issues, so do your homework and be prepared to prioritise. There is no shortage of data available to use in a segmentation, so it's important that you end up making the right choices that align with your objectives.
And while you are at it - don't dismiss the power of qualitative input into a segmentation! Having an understanding WHY a consumer, belonging to a particular segment, behaves or thinks in a particular way can be the insight that unlocks the most value out of a segmentation exercise. This WHY can help bring segmentation to life not only because a single consumer will have different needs and a variety of occasions over a period of time. Perhaps a single bag of rice can be for a quick lunch in the office while the same consumer might also have a bulk bag of rice at home when cooking for the family. It may even be that early qualitative insights help you define HOW you want to to go about the segmentation exercise as you uncover the true motivations for purchase or consumption.
So if you have a product or a service to market, make sure you think in the mindset of your varied customer types when making strategic decisions. Talk to consumers and non-consumers alike and make sure you really understand where similarities and differences lie. Focusing on your customer and checking in with them is key to success and longevity.
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