Segmentation
is Crucial for Successful Strategy
(Be Remarkable)
--Chris Kennedy, SVP, Strategic Consulting and Market
Research--
"Marketing is merely a civilized form of warfare in which most battles
are won with words, ideas, and disciplined thinking." (Albert W. Emery)
Segmentation is the most effective driver
to create winning words, ideas, disciplined thinking and, ultimately, successful strategies. Segmentation begins customer
understanding, allowing organizations to build healthy relationships with their customers. The media marketing sector will
be a $1.6 trillion market
by 2010...how will your company earn its stake of the future?
Up
until the mid-20th century, the word "strategy" was mainly a military term, first used as strategos
by the ancient Greeks, which referred to a 'military commander' during the age of Athenian Democracy. Later, Sun-tzu centered
his Art of War on strategy. Machiavelli merged military strategies into
political power.
Strategy didn't convert into a business term until the Depression forced academic thinkers -- such
as John Maynard Keynes and Peter Drucker -- to literally help business and government "think forward" in order to break a
desperate and deep economic situation. Strategy meant targeting to create new opportunties.
A strategy typically starts
as an idea and ends with increased power or improvements for the owner of the idea. It's always been associated with empire
building, which is why it's so tightly linked to war. However, as America's economy influenced the world's economy, the idea
of "empire" shifted from the battlefield to the boardroom. New battles were for the minds of consumers and control of their
spending habits, not just for kingdoms and property. Persuasion of the masses were not done just with guns and bombs; modern
persuasion required strategy, marketing and the media.
For 50 years, TV was the ultimate marketing partner in order
to reach the masses. Imagine, advertising we welcomed right in our living rooms! "As Sold On TV"...hey, it's got to be good!
That's
been over and done for years.
Now that we are "new millenials" and deep into our Great Media Evolution, strategy, marketing and
media are still the essential tools for successful business. To use those tools effectively and achieve strategic "victory",
business needs to know its new target, which is constantly moving. Dependent on market conditions, consumer demands and brand
image perceptions shift, erode, grow or die. New media times require new strategies.
In the past, marketing was unsophisticated.
To reach the masses, marketers could "carpet-bomb" campaigns on TV, radio and newspapers. Consumers had fewer media options
so this strategy worked because marketing messages could reach nearly the total population. After all, "carpet-bombing" worked
as a military strategy. However, just as war's evolution now requires the use of "smart bombs" instead of carpet-bombs, marketing
strategy has evolved, too. As "The Economist" recently wrote, marketing
is now about small, not large, audiences. New millenial marketing requires multi-platform sub-niche strategies that precisely
reach their intended target.
As author Seth Godin says in Purple Cow, being safe and
boring is risky. Look at radio, look at NBC (and most of the cable channels), look at the advertising in any newspaper.
Safe and mainly boring, not compelling or remarkable. When do billboards work? When they tease or boldly break beyond their
rectangular dimensional space. To get heard through all the noise and clutter, today's marketing messages, programming and
products need to be remarkable. There is no mass media anymore, just lots of free-wheelin' micromedias -- some with larger
audiences than others.
Be remarkable, not safe and boring. And target the remarkable consumers best for you, not just the
massess. How is that done best?
Segmentation, for starters.
You have to know your market and know what links
the customers driving that market...the customers with influence.
What is segmentation? In layman terms, segmentation
determines -- through market researched statistical techniques -- unique sub-groups of people with common likes and dislikes
within a larger customer population. For example, in TV, some people just like comedy; others may only prefer news and talk
shows. The list of different TV segments is long. Same thing for radio, music downloaders, e-zine readers and bloggers,
and the rest of the multi-media universe. What's important is learning each segment's (or sub-group's) commonalities, demands
and attributes...what makes them different than the rest of the target population...and how they impact or determine various
business strategies.
Essentially, proper segmentation gives marketers precise targeting in order to achieve successful
strategies.
In this hyper-competitive time for media companies, effective market segmentation is the #1 information
advantage for the battle of today's consumer minds, whether you are on-line, over-the-air, wireless or in-print. Why? Because
so few companies make the investment to segment properly. Too complex, costs too much, no budget and other excuses. If segmenting
is done, it is done rarely. It is common for companies to segment only once in 4 years (if at all). This is true in all
media platforms, mainly because of cost issues and an expectation that markets don't shift that much in 4 years.
Really?
4 years ago, the iPod and iTunes (still only for Mac users) was just getting hot. Broadband was in less than 4% of American
homes. No cable system had HD digital delivery systems. Satellite radio was brand new with virtually no subscribers (which
now are more than 10 million). In 2002, words like "blog" and "podcast" were pure geek science. ESPN and other networks
now send custom programming to be viewed on cellphones. Think the media universe and how consumers use media hasn't changed
much in 4 years?
Do you think target segments have remained the same? Think again.
Nowhere is segmentation
most dramatically under-utilized than with web analytics. Strangely, with the amount of natural data constantly collected
with web usage, you'd think that segmentation would be a given. But it's not. A recent JupiterResearch study found using
Web analytics to target e-mail campaigns can produce nine times the revenues and 18 times the profits of broadcast mailings.
Yet the same research says few marketers are using segmentation techniques.
The same is true for all companies utilizing
media for their marketing, programming and content distribution. Consumers typically use media -- in one form or another...or
several at the same time -- for nearly half of every 24 hour day.
Reasons for the lack of segmentation, in general, are clear:
1) Marketers (and the people responsible for putting
marketing decisions into action) are suffering from tactical information overload (you name it, we all can get instant time
media reports on deliverables),
2) Multi-tasking "do more with less" marketers are trying to do great things with little
time and few resources,
3) "Fix-and-run" decision makers can slow down long enough to process the meaning of segmentation
and how to effectively use the information,
4) Segmentation is still viewed as an investing luxury, not a necessary
cost of wisely doing business to gain advantage.
As mentioned earlier, whether you are on-line, over-the-air, wireless
or in-print, segmentation is the #1 information advantage for the battle of today's consumer minds. If you're not segmenting
every year or so, you are missing a huge competitive advantage and probably wasting revenue on ineffective marketing campaigns.
So, how can you start using segmentation?
Well, for starters, you can contact us at Joint Communications.
We've been market segmenting since 1977, helping media companies around the globe win their perception battles with words,
ideas and disciplined thinking...and successful strategic results.
