Segmentation, Targeting, & PositioningMODULE 8

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LEIF LINDBLOM

OverviewTraditional Segmentation• Key Aspects and Failures

Optimized Segmentation• Intent and purpose

Segmentation in the Digital Age• Targeting through social media and purchase history

Traditional Segmentation

Key AspectsTraditional segmentation employs demographics, psychographics, and the like to create consumer segments that marketers and decision makers think will want to purchase their product.

They gather information on these potential customers and create profiles based on overarching behaviors and then build advertising campaigns targeting the customers they wish to sell to.

Over the years, different products have been developed to help classify and segment consumer groups for the purposes of product development and advertising. o One of the most successful products in this category is the VALS framework

developed in the 70s by Arnold Mitchell

VALS FrameworkBased largely upon Maslow’s hierarchy of needs.

Posits that consumer behavior can be predicted based on where the purchaser falls within these nine categories of psychological disposition.

Failures of Traditional Segmentation

The issue with psychological frameworks however is their emphasis on overarching consumer identities rather than on more actionable purchasing behavior.

The result is that sometimes management can find themselves steeped in psychological theory about their supposed consumer base rather gathering more useful historical data about consumer behavior.

Optimized Segmentation

Key AspectsOptimized segmentation creates actionable consumer profiles

Group consumers based upon issues such as varying degrees of profitability or volume of purchases; behavioristics.oManagement can use these profiles to make further decisions about

promotion development, new product roll outs, and pricing

Therefore the best analysis and resultant information is the kind that can be understood and interpreted by the company’s senior management to foster accurate decision making

Key Aspects (cont’d)Because these consumer profiles are not based upon long lasting psychological profiles, but fickle and ever-developing purchase history, proper segmentation is perishable or short-term.oTimelines are short and need to be conducted more frequently in order to

gain the most accurate informationoDue to the more recent advantage of computer databased analysis, this type

of purchase and sales oriented segmentation is much more easier to conduct than 30 years ago.

Redemption of Psychological Profiles

All of this isn’t to say that decades of traditional consumer segmentation is wrong; just that we continue to develop these frameworks

Now we understand them to be more complete when coupled with purchase data analysis

The severity of the purchase dictates the emotional level with the which the consumer registers the purchase; therefore, it invokes a different level of the psyche and requires a different analysis approach◦ Yankelovich and Meer deem this the “Gravity of Decision Spectrum”

Gravity of Decision SpectrumTo further explain the levels of emotions involved in purchasing, Yankelovich and Meer use examples such as toiletries for shallow decisions, electronics or a car for middle-of-the-spectrum, and purchasing a house for the deepest decisions.

Segmentation in the Digital Age

Social Media Targeting OverviewThe following targeting avenues are used by marketers to direct advertising on social media pages based upon user characteristics, web history, personal information, and moreo Interest TargetingoBehavioral/Connection TargetingoCustom TargetingoLookalike Targeting

Interest Targeting Advertising based upon the interests that social media users identify on their online profiles

Interest targeting is currently made available to marketers advertising on:◦ Facebook◦ Twitter◦ LinkedIn◦ Pinterest

Behavioral/Connection Targeting Behavioral targeting analyzes purchase history and webpage history to make connections with products and advertising. It also takes into account direct connections between users and company pages/applications to direct advertising.

Available on: ◦ Facebook◦ Twitter◦ LinkedIn.

Custom Targeting Uses known user information to target certain segments of customers provided that that information can be correlated to the social media profile such as an email address list

Available on: ◦ Facebook◦ Twitter

Lookalike Targeting As the name implies, lookalike targeting pairs advertising with users who are similar to users amongst the previously identified customer audience

Available on:◦ Facebook◦ LinkedIn

Target Knows Your Secrets(FROM THE POWER OF HABIT BY CHARLES DUHIGG)

HTTP://YOUTU.BE/RC5HNTJ3DAG

Target Segmentation Target used digital algorithms to create their own marketing segments based entirely upon factual purchase history rather than relying on customer surveys or voluntary feedback channels.

Accurate information with apt focus, interpreted correctly, and communicated effectively to senior management led to actionable promotions and increased sales.

Summary Traditional segmentation processes can be useful but are antiquated when solely analyzing psychological traits, especially in a digital world capable of analyzing large quantities of actionable data.

Optimizing segmentation mandates a focus on actionable, purchase/profit-related segments and buy-ins from both the management and marketing teams on the overall goal of the segmentation.

Many avenues exist in the modern world for targeting consumers. The online targeting that we’ve discussed in this briefing mostly applies to social media outlets, so know that there is a much larger world of modern target advertising and positioning available to be capitalized on by the savvy entrepreneur.

References “Rediscovering Market Segmentation” by Daniel Yankelovich and David Meerhttps://hbr.org/2006/02/rediscovering-market-segmentation

“Target knows your secrets (from The Power of Habit by Charles Duhigg)”http://youtu.be/RC5HNTj3Dag

“Why Social Media Advertising Is Set To Explode In The Next 3 Years” by Sonny Gangulyhttp://marketingland.com/social-media-advertising-set-explode-next-3-years-121691