The coolest segmentation and mapping solution you ever saw: how it all began 100 years ago with 1 man

December 2012

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We struggle because we can’t handle the planning requirements

As marketers we are pretty crap at managing 1:1 relationships

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Creating individual plans and objectives for each customer is impossible

As marketers we are pretty crap at managing 1:1 relationships

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Even targeting communications to individuals is hard

Finding the optimal combination of offer and content for each customer

As marketers we are pretty crap at managing 1:1 relationships

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Instead we use segments

And we use segmentation techniques to create them

The reality is that we manage relationships with groups of consumers

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And we do this because

It is easier to manage relationships with a groups

Rather than individuals

The reality is that we manage relationships with groups of consumers

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If we are talking about existing customers then we often have behavioural data to play with

Tesco and Woolworths think

You are what you buy

And generally they are correct

The reality is that we manage relationships with groups of consumers

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They use this wealth of information to create multiple segmentation solutions

Across multiple dimensions

Which they use to manage relationships with their shoppers

The reality is that we manage relationships with groups of consumers

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But what do you do if you don’t have access to data at this level?

Or

If you are looking at acquisition opportunities?

The reality is that we manage relationships with groups of consumers

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Where do you get the insight that allows you to plan your communications strategy?

To create relevant offers and content

Using appropriate imagery

Across preferred channels

The reality is that we manage relationships with groups of consumers

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You start with generic segmentation solutions

And there are lots of them

The reality is that we manage relationships with groups of consumers

PRIZM

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These allow you to break the population up

Into a series of segments

To better understand your target market

The reality is that we manage relationships with groups of consumers

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They all classify consumers based on where they live

The assumption is that

you will be more similar to the people who live in your neighbourhood

Than those who live in other neighbourhoods

The reality is that we manage relationships with groups of consumers

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“Birds of a feather flock together”

So in the absence of knowing more about you

You are where you live

The reality is that we manage relationships with groups of consumers

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And we known this to be true

The reality is that we manage relationships with groups of consumers

Bondi Penrith

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The segmentation industry as we know it today

began over 100 years ago with this man

Where did segmentation begin?

Charles Booth

(1840-1916)

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He was a wealthy businessman who made his fortune through

shipping

But he had a bit of a hobby

He devoted almost 20 years of his spare time to a study of poverty

At a personal cost of about £1.3 million in today’s money

Where did segmentation begin?

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Where did segmentation begin?

Booth's circle of friends regularly discussed the social problems of the day

Perhaps the most pressing in the rapidly growing Victorian

cities was that of poverty

This was often sensationally reported in the contemporary press to provoke fear amongst its readers

Booth recognised the importance of a true description in facts

and figures of the social landscape.

In 1884 he undertook to assist in the allocation of the Lord Mayor of London's Relief Fund, by analysing census returns

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Where did segmentation begin?

From this he discovered that the census, at that time, was not fit for purpose

A report was published in 1885 that stated up to 25% of the

population of London lived in extreme poverty

Booth disagreed and told the author that "in his opinion he had grossly overstated the case“

And that he would himself be undertaking an inquiry into the

condition of workers in London

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Where did segmentation begin?

The outcome of this work was published under the title

Life and Labour of the People in 1889

A second volume, entitled Labour and Life of the People, covering the rest of London, appeared in 1891

This was later expanded between 1892-1897

A third volume was published as

Life and Labour of the People in London in 1902-1903

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Where did segmentation begin?

Booth and his team of researchers recorded a huge amount of

data over the years of study

The survey methodology was complex and original

Booth attempted to understand the lives of Londoners

through an investigation of

1. their places of work and working conditions

2.their homes and the urban environments in which they lived

3. through the religious life of the city

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Where did segmentation begin?

Investigators accompanied London School Board visitors, and

policemen on their beats

They interviewed factory owners, workers and trade union

representatives at their places of work or in their homes

They visited ministers of religion and their congregations

The data they gathered was then used to generate statistical

evidence of the living and working conditions of Londoners

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Where did segmentation begin?

Originally he wanted to collect data for every family in London

He began in Tower Hamlets and worked his way through

Hackney

Soon realised that this goal was unachievable

They collected information for the rest of London on a street

by street basis

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Where did segmentation begin?

The study identified 8 categories of

social class based on their degree of

poverty

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Where did segmentation begin?

Each street

was the put

into a

segment

and the

results

mapped

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Where did segmentation begin?

It’s the black areas that are the most interesting

“Lowest Class, Vicious Semi Criminals”

He expanded on this description

This doesn’t sound like Mosman

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Where did segmentation begin?

West End

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Where did segmentation begin?

Bayswater

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Where did segmentation begin?

Borough

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Where did segmentation begin?

Limehouse

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Where did segmentation begin?

Booth popularised the idea of a “Poverty Line”

He set this line at 10 to 20 shillings

Which he considered to be the minimum amount

necessary for a family of 4 or 5 people to subsist

Through his work Booth finally identified that 35% of

Londoners lived in poverty

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Where are we today?

Booth’s work was eventually the start of the modern

movement

In 1966 Richard Webber was working at the

Centre for Environmental Studies investigating

measures of social deprivation in Liverpool

He used data from the 1966 Census to build a ward level

classification that identified deprived areas with different

needs

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Where are we today?

In 1979 Richard went to work for CACI where he built

Modern Geodemographics was born

This was immediately overlaid onto TGI to allow the

segmentation to be cross tabulated with the UK’s largest

market research sample

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Where are we today?

In 1985 Richard left to join CCN - which later became known

as Experian

The largest business services company in the world

In 1986 they launched

Since then Mosaic has taken over the world

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Where are we today?

There is even here

Which we are currently using on Aegon

to identify

the target market for launch

and to

create value propositions for their Insurance products

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Where are we today?

Segmentation is now a multi billion dollar market worldwide

And it was all started by a ship owner from Liverpool who

wanted a better view of the scale of poverty in Victorian

London

hamish.hartley@ogilvy.com.au