Segmenting the Consumer Base in a New Way
Segmenting your market traditionally means searching for groups of customers who are sorted out such that there is some similarity among them and some distinction between them. The segmentation variable is what determines how similar or different the two groups are meaningfully. Hair color may be used as a rudimentary segmentation variable to show the concept. However, it is fair to presume that you will do anything with it after segmenting the consumers into groups. Assume you’ve chosen to focus your efforts on a certain market. In order to reach this market group, you’ll likely need to engage in some kind of marketing activity that appeals to this particular demographic. The segmentation variable may be sufficient in some circumstances (“listen to me, all you red-heads out there”). Most of the time (like the group of people who exclusively drink beer outside their house), you’d have to define your target audience first before you could speak to them directly. To put it another way, you’d have to specify what, outside your segmentation variable, characterizes the segment’s customers and how they vary from customers in other market groups. Characterizing your market segment is a different job than defining your market segment. It’s a logical progression. However, if you’re being honest with yourself, I believe you’ve already discovered that it’s a scam.
Historically and in traditional cultures (sectarian), people’s behavioral patterns were mostly shaped by their ethnicity, nationality, religion, social class, and age group. This is a far cry from today’s society, but it was true back then as well. Aesthetics, general conduct, and especially consumerism were all grouped together. Then, if you knew one thing about a cluster back then, you could probably predict the rest of it. All of that has changed, though. With the rise of individualism and the expansion of options, individuals are becoming more difficult to categorize.
First and foremost, let’s face it: our customers reject segments that establish homogenous groupings based on demographic, socio-economic, or even lifestyle factors entirely. Our client is not going to act and consume as we expect. The “eclectic consumer” is someone who is a “collector.” His favorite things include Frank Sinatra, fast internet, expensive BMWs, international Giorgio Armani, and locally rooted folk dance. He’s also fond of the new (Frank Sinatra), old (Frank Sinatra), expensive (Hardware Do-It-Yourself shops), and crude (Folk Dancing) (football).
With so many choices, the eclectic consumer has grown enamored with the idea and has become hooked on it. In order to make sure he doesn’t miss anything, he lives a multi-faceted yet burdened existence.
So, how can you appeal to a client base that is always on the lookout for new and exciting things? The eclectic consumer, who doesn’t want to miss anything, “connects” to a variety of motives, some of which are even conflicting, at various points in time. In light of the fact that these motives aren’t always in sync, the eclectic customer is always shifting from one lifestyle cliché to the next.
If we are to meet the needs of today’s consumers in an appropriate way, we must change the way we segment the market (and, by extension, how we design our goods and services, as well as how we advertise and promote them). If you read my last paragraph, you’ll see that when I say “uses,” I’m referring to things like mood management, self-esteem improvement and fantasy support that are psychological as well as social in nature. Segmentation based on contexts of purchase or use/consumption is the latest technique, dubbed “Contextual Segmentation.”
Note that segmentation thinking is undergoing a genuine revolution as a result of this. There are undoubtedly those of you who would say that this is more about customer behavior analysis than it is about segmentation. So, allow me to respond. Let’s go back to the beginning and remember why market segmentation was created. In order to better target our marketing/branding/advertising efforts and differentiate ourselves from the competition, the market has been segmented into smaller units. The pursuit of tiny consumer groups seems to have stalled. However, focusing on groups of “purchases/consumptions” instead than individuals may open up new possibilities.
Let’s make things a bit more focused, shall we? A need/preference/motivation characterizes each category according to the previous segmentation strategy. This idea has been preserved in the new strategy. However, in the new world and with the new strategy, the incentive is no longer shared by all members of a certain customer demographic. A “segment” is now a collection of “purchases/consumptions” characterized by a particular context of buying or consuming a product and a specified motive.
This method of segmentation allows us to examine consumer behavior by identifying distinct settings of product consumption and the varied motives that define customers who are exposed to these situations. For example, the “I’m going to teach that spouse of mine a lesson he’s never going to forget” segment, or the “Wow, I haven’t seen YOU in a long time” segment, the new relevant segments may be moods or social situations, depending on the relevance of the product category. There are many consumer motives (such as “tonight we’re going out alone, no kids” vs “we’re celebrating grandpa’s birthday”) that exist when we encounter a particular buying environment (such as a meal at a restaurant), and these would be regarded distinct market segments. Depending on the customer, they may engage in just one segment, a small number of segments, or not at all. The previous segmentation still applies, and each one represents a portion of our revenue, allowing us to calculate our profitability in the same way.
We should thus focus all of our marketing efforts according to Contextual Segmentation on a specific context of purchase/consumption plus a specific motive rather than on general groupings of customers.