Marketing offices around the world are littered with thick quantitative research segmentation reports that are more useful as doorstops than as guides for innovation decisions. While these tomes may look valid and important, it’s a testament to their failure that The Journal of Marketing Management concluded that after 70 years, market segmentation is still being done poorly. And each year in the U.S., 85 to 95 percent of 30,000 new product launches fail because of poor market targeting.
What’s wrong with the research?
Segmentation studies use statistical techniques called factor analysis and cluster analysis to combine attitudinal and demographic data into segments that are easier to target. Dividing the market into relatively homogenous subgroups or markets, the theory goes, is more effective when formulating strategies and making tactical decisions.
On the surface, it seems like a great way to target your products. But the research falls short. That’s because the very nature of the research forces marketers to consider consumers in contrived situations, reflecting just a particular moment in time. Yet there are so many moments in time. Research subjects tend to have a limited range of responses because they’re only being asked predetermined questions with very specific parameters.
Mood and timing count for a lot.
People are situational animals. We use products differently depending on our mood and the circumstances in which we find ourselves.
Betty, for example, may wear glasses to "see better" (at her computer) or to "be seen" (when she’s doing television interviews). Trying to segment her into one kind of eyeglass buyer isn’t terribly worthwhile; she’s open to different messages at different times, after all.
Segmentation can put her in two categories, such as "practical" and “fashion,” but Betty’s a human being who’s constantly realigning herself with brands or products depending on what she needs at the moment.
Stick with common sense instead.
Think of it this way: The person who’s buying your product is a moving target. He or she has fast-changing and ephemeral wants. So why invest in an expensive segmentation study to figure out who your customers might have been in the past, before the Internet and smartphones broadened everyone digitally--not to mention the immediacy with which people can be influenced. Common sense alone should tell you that.
Internet has reshaped customer-to-customer interactions. Social media is a sea change, and comments sections or reviews sites give consumers the eye-opening power to change their brand loyalties in a moment.
Even more significantly, smartphones and mobile devices have made segmentation nearly impossible because they open people up to unexpected, felicitous events. There’s a certain emotional experience to turning on a mobile device. It feels as though the user is included and participating in the events of the world--stemming from a sense of energy, engagement, and being in touch--so no one has to be or feel exactly the same from one day to the next.
Be authentic and you’ll be fine.
Make your brand stand for something meaningful. Convey that meaning in an authentic way, and the right people (your natural customers) will show up. Whole Foods and Patagonia are great examples of this strategy. Each focuses on sustainable growth and has been doing so unrelentingly for years. It let their customer base (and their businesses) grow organically from a core base of early adapters to more mainstream consumers who caught on through media attention and personal experience.
When the two companies started, they were niche brands that went after small market segments. Today, they’re two of our country’s strongest brands. That doesn’t mean they cater to the masses. Their missions have not changed. So when you enter the market, stand for something specific and communicable. Give your positioning a clear focus--even if you think the messaging may limit your audience.
Cement your messaging and services in the truth.
A brand should be true to itself. That said, make sure you convey truth in your messaging too. Let your consumers and their migrating groups and networks pay attention when it suits them. Take faith in the fact that there are plenty of consumers--and many with shifting values--to sustain you. If your brand is well-defined, the benefits will be obvious.
Tap into your customers by letting them talk about you. Amazon proves that customer feedback is a good thing. Trip Advisor has built an entire business on the art of the customer review. Social media of all types lets you communicate with people and read their pulse at the same time. Brick and mortar businesses communicate "on the ground." And the best of them do so by consistently packaging their message and beliefs in everything they sell, which speaks volumes.
Look for more flexible ways to learn about customers.
So forget about dumping money into fat research reports that force individuals into pre-determined segments that don’t flex. A better bet: Spend your money on quick, real-world tests of new, rapid-fire ideas that can truly bring revenue to the company. Things like instant surveys or feedback forums in social media that allow for consumer engagement and quick responses.
In today’s market, it’s a smart move to test prototypes and let consumers play with them, criticize them, and praise them in "pop up" locations online or in a shopping center. Invest in a doorstop and your shut the door on yourself.