Marketing involves getting the right message to the right person at the right time to influence their purchasing decisions. BJ Bueno, founder of The Cult Branding Company, offers up 52 different types of marketing strategies to accomplish that objective. He explains, “In order for businesses to win market share and stay relevant they need to consider many types of marketing strategies. Each marketing strategy can communicate to a target market the benefits and features of a product.”[1] That raises the important question: Who constitutes your target market? Defining your target market is often referred to as segmentation. Anne Sraders (@AnneSraders) explains, “Market segmentation is a marketing strategy that divides consumers’ interests, demographics and behavior into different groups to better market to specific needs.”[2] Murali Nadarajah, Head of Big Data and Analytics for Xchanging, believes big data and cognitive computing systems can provide insights so granular they can create a “segment of one.” He explains, “Traditionally, companies have marketed products with a specific demographic in mind. This approach groups people into buckets and develops specific marketing programs for each segment. While this can be an effective approach, it doesn’t take into account potential customers who may not fall in the predetermined buckets. Through machine learning, businesses can see people beyond generic segments and target them as individuals — creating a ‘segment of one’.”[3] Of course, a company will never stay in business selling to a single customer. So the question remains: Who constitutes your target market?

The art of segmentation

“As a marketing strategy,” Sraders observes, “market segmentation is designed to help companies better market to groups that they will have the most success at meeting their needs. Market segmentation helps companies create a market mix that allows them to target their marketing campaigns to audiences that are more likely to need their product — and, potentially find under-served segments to branch out to. By more narrowly targeting their key markets, companies are able to be more efficient with their resources — including money and time — when mounting campaigns to draw new customers.” The art of segmentation involves identifying the right group of people so ad spending obtains its best return on investment. Targeting too broad of a segment can waste ad dollars while targeting too small of a segment could miss reaching potential customers. Sraders asserts, “In each market segment, there are typically three things that are common to all segments — homogeneity, distinctiveness and reaction.” She explains, “In each individual group, the potential customers are generally homogeneous — meaning they are generally fairly similar in terms of their common needs. Additionally, the members of each individual grouping are distinct from the other groups — or, they are different in some ways than customers in other groupings. Lastly, consumers in each group have similar (or relatively similar) reactions to various marketing, advertising and products directed at their segment, and tend to perceive the full value of products differently than others in different groups.”

Although identifying segments seems straight forward enough, it’s not as easy as it may seem. Drew Hendricks (@DrewAHendricks) explains, “Marketers are so focused on technologies, channels, and influencers that they sometimes forget exactly whose attention they need. It’s this ‘can’t see the forest for the trees’ approach that sabotages their attempts at connecting with their intended target.”[4] Hendricks claims marketers often make four common errors when it comes to segmentation. They are:

1. Assuming surface-level information is all that counts. Hendricks writes, “The vast majority of consumer data brands buy focuses on demographic information like age, gender, and geographic location. But, it’s not possible to build an audience profile with this information alone. Their purchase decisions are not the same across a certain age group or location. Instead, today’s consumers are much more complex and fickle.”

2. Failing to truly “see” their audience. Hendricks explains, “For many companies, the buyer is typically the same person as the user. But, with other products like school supplies, the target audience may not be so straightforward. Many products with less-than-obvious buyer-user splits are bought as gifts. … The lesson here is that marketers should conduct interviews with buyers. Find out whether they plan to use the product themselves; if not, determine what motivated them to choose it for someone else.”

3. Trusting data merchants. “In marketing,” Hendricks notes, “third-party data sellers are notorious for telling buyers what they want to hear. They know somewhere around 71 percent of purchased data is inaccurate. … Give your users an incentive to truthfully and thoroughly describe their backgrounds, interests and opinions.”

4. Neglecting cultural differences. Hendricks explains, “Cultural nuances can cause problems when marketers don’t bother to interact directly with their audience members.”

Wilson Raj (@wilsonraj), global director of customer intelligence at SAS, observes in some situations it is as important to identify who not to target as it is to identify whom to target. These include consumers who remain loyal customers but never respond specifically to marketing campaigns. He explains, “This is definitely NOT to suggest that there’s no value in knowing customers and interacting with them in a meaningful way. Instead, take the money you would spend on the non-responders and put it into programs and areas where you can grow and influence others, activities such as acquisition or reactivation marketing. The business will clearly be better off.”[5]

Targeting your ideal audience

Marianne Hynd, Vice President of Operations at Ann Michaels & Associates, believes too many retailers target only their customers without really understanding the segment from which they come. She asks, “How do you learn more about your customers as individuals?”[6] Her answer, “Ask them!” She explains, “When there’s opportunity, find out more. Include a question or two on your feedback survey that asks unrelated, personal preference questions.” These “unrelated” questions can help identify different customers segments you might not, but should, be targeting. Hynd continues, “Use social listening metrics. Many available tools can drill down beyond age and gender demographics. Look for analytics such as marital status, interests, familial makeup, etc. — any commonality can give you insight for creating great content. Find ties using insight metrics from your social sites. This is extremely beneficial for local groups or social pages. People will generally talk about a wide range of topics — look for themes, where members connect most, and build on that. … Digging just a little deeper can go a long way in bringing customers together, closely tying them to the brand, and creating a positive experience for all. So, next time someone asks who your target audience is, go beyond ‘our customers’ and really think about it. This first step can make the difference in your next campaign.” Sraders asserts, “In general, there are four basic types of market segmentation (with some variation in them) – behavioral, demographic, psychographic and geographic.” Within those broad groupings, you need to look for nuanced differences that can sharpen your targeted campaigns and improve your return on investment. Advanced analytics can help you in these efforts.

Footnotes
[1] BJ Bueno, “52 Types of Marketing Strategies,” The Cult Branding Company, 10 October 2013.
[2] Anne Sraders, “What Is Market Segmentation? Definition and Examples,” The Street, 11 January 2019.
[3] Murali Nadarajah, “Machine Learning and the Great Data Analytics Shake-Up,” Information Management, 2 March 2016.
[4] Drew Hendricks, “How Marketers Dig Themselves Into Holes When Designing Audience Profiles,” Business.com, 4 March 2019.
[5] Wilson Raj, “The Benefits of Not Marketing to Certain Customers,” Chief Marketer, 10 February 2019.
[6] Marianne Hynd, “How Marketing Fails When You Target ‘Your Customers’,” Customer Think, 1 March 2019.