‘ME’ marketing will destroy the tradition of standard marketing practices.
Brilliant marketers get that ‘ME’ segments generate higher returns than market segments produced by traditional marketing.
The four bases of commonly prescribed market segmentation are demographics, psychographics, behavior and location (‘geographics’) and the marketing process is to develop programs targeted at potential customers with similar traits within a particular segment.
Segmentation studies are based on observations of population behavior; the characteristics of the masses (represented by the ‘average’ person in the population) determine the conclusions of the study.
Why are these four segments used as the prescription for marketing segmentation? Because this type of data on people is readily available to the marketer.
Census data provides demographic and location information, billing and web visitor tracking systems produce product usage information and standard market research studies ask for lifestyle preferences which people are generally ok with providing.
For a marketing program, individuals are ‘mapped’ into each of these segments and are assumed to be like everyone else in their segment in terms of their likelihood to be attracted to a particular marketing program targeted to the segment.
The marketer’s assumption is that each person in the segment ‘looks the same’ in terms of the segmentation variable chosen and because of this similarity will all exhibit the same buying propensity.
I’ve always found this assumption to be a non-starter. Just because I’m a skier does not in any way suggest that other skiers would be interested in buying the same products as I do.
And just because I’m in the boomer demographic with a specific income in no way is a good predictor of what others with similar characteristics will be interested in buying.
In this approach, an ‘average’ target for a service might be ‘a male boomer with an annual income of between $60 - $100K who lives in Vancouver and who has an annual ski pass at Whistler’.
And the flaw is that there may actually be some people who do have the targets attributes and who would be interested in what is being offered, but there will also be many with these attributes who won’t be interested and who will not be interested in the offer.
Traditional segmentation produces hits and misses and the marketer hopes there are more of the former. But you can’t count on it—Roy, a good marketing plan isn’t based on a hope and a prayer
There are two serious issues with traditional segmentation methodology; its underlying assumptions are flawed.
First, having segmentation variables prescribed with the simplifying assumption that people tend to make purchase decisions on the basis of their demographics and so on, is fallacious; people express their differences with their own buying triggers which can’t be prescribed up front.
And second, assuming that people who exhibit the same segment characteristics will make similar buying decisions is simply not true; there are many sub-clusters within any given segment that have their own buying motivations quite apart from those in the overall segment.
‘ME segmentation’ is different from the commonly-used methodology, and should be adopted by a marketing organization that wants to stand out and perform above their peers.
ME segmentation poses the research question to an individual person not the population.
ME segmentation is strategic
It is considered as a strategic exercise which asks the question “How should the market be segmented to expose as many opportunities as I can?” not how do I assign my customer base into the prescribed segments.
The prescribed segmentation variables such as demographics, location, usage and lifestyle are not automatically used; they are given mild attention only: the focus is on determining the appropriate variable that will unlock the growth key for the organization.
The objective is not to place people in the prescribed segments, but to discover the appropriate segmentation elements that will produce the best sales result.
For example, if a specific web application best appeals to a Gen-Z individual with an IOS device, lives in Tsawwassen BC, is a member of a family of 4, and has a household provider who is female, then this is the appropriate segmentation to use.
It’s focus is on differences
Traditional segmentation seeks to define small numbers of customer groups that share similar characteristics, and these characteristics are broad and general in nature.
People who are over 65 years old who have right-of-centre political beliefs, women who live on the west coast who are pro abortion are examples of the segments that are produced by the traditional approach.
ME segmentation, on the other hand, is a process driven by the intent to find differences in customer clusters in order to expose as many customer clusters as possible.
Opportunities come from the differences between people NOT similarities among them — Roy, harvester of differences
And greater the number of segments that are defined, the more intelligence you have on each person in the cluster AND the better the ability to match a product, service or experience to their specific individual need.
It’s end game is on ‘the many’
As stated above, ME segmentation tries to define as many different customer clusters as possible in order to get closer to the individual with the belief that if you have a tight fit with an individual person, you have a better chance of selling them something than if the person’s desires are watered down by a larger group.
The probability of making a sale increases due to the fact that you are better able to match your offering with the more precise needs. wants and desires of the individuals in each cluster.
Person-research will yield many conclusions; one for each person you talk to.
And each conclusion will be valid unlike conclusions from population research which will be valid for some individuals (who just happen to be exactly identical to the population profile) and invalid for others (whose special unique characteristics don’t match the population profile.)
Better to have 100 different conclusions from 100 individual people rather than 1 conclusion based on the “average” person in a population of 100.
ME segmentation is a continuous process of going deeper and deeper into a cluster of customers. Obtaining more and more information on the individuals in the cluster.
The marketer needs to keep looking for differences until they are nose-to-nose with an individual because that’s when total understanding of people’s desires is achieved — Roy, deep digger
If there were one million customers, the result of the ME process would be one million segments of 1.
What are the implications of a million clusters of 1?
- you would be different as few undertake the journey;
- you would have more rich and deep knowledge on your customers than your competitors have;
- your sales potential would increase exponentially;
- you would build both share of market and customer share;
- customer loyalty would increase because you are better able to match your solutions to their needs and wants;
- you would be better able to survive unpredictable ‘body blows’ you might suffer in an ever changing world because you are so tight with your customers.
All because you choose to put in place a marketing philosophy to treat segmentation as a continuous strategic learning down to the individual.
Keep segmenting your market until you are nose-to-nose with a person.
The role of the ME marketer
Within the ‘ME’ context of segmenting markets down to ‘the nose’ of an individual and examining their needs and wants rather than treating markets as homogeneous groups, the ME marketer’s role is different than what marketers have done in the past.
The ME marketer:
- Is driven by individual people have to say, not by what is implied by large markets or populations, and puts the individual before the average needs of the crowd;
- Is ok with the possibility of creating a unique marketing plan and product or service solution for an individual;
- Drives IT to ‘mass-personalized’ serving systems capable of uniqueness delivered to thousands of customers;
- Reserves Customer Appreciation Day events for specific customers who have demonstrated their loyalty to the company for many years;
- Looks to the power of new technology to define the needs of individuals and to use the secrets discovered to create personalized solutions and not to flog their current product portfolio;
- Uses every tactic available to build long term relationships with people rather than flog products at them with a focus on making short term sales. They see AI as a way to create new experiences for people and not a productivity tool;
- Is a strong advocate for the customer inside their organization, ‘doing battle’ for them to protect their interests in their own bureaucracy;
- Does whatever it takes to try and eliminate any dumb rules in their organization that infuriate customers and threaten their loyalty.
Mass marketers are the dying breed of the profession, and it starts with the practice of segmentation.
Segmenting down to ‘the nose of a person’ enables a deep understanding of what people want and desire, and exposes opportunities to not only enhance marketing productivity but also to create sustaining long term value for the organization.
ME markets are superior to crowds.