Customer segmentation: what’s the best approach to targeting?
There are four common approaches to targeting. Some provide a better basis for evidence-based decision-making than others.
If you’ve read my previous posts you’ll know I strongly favour a combination of attitudes and behaviours that provides a more commercial, actionable segmentation and minimises assumption.
Targeting on behaviour:
In my experience, by far the most effective segmentations are based on a combination of behaviours, and the factors (barriers & motivations; propensities) that influence these behaviours: what makes you more, and less, likely to choose and buy any given category and any given brand? Might you change your mind if offered a new, different proposition?
This approach not only tells you whom to target based on each segment’s current or potential value, but also how to target them: what to say to or provide for them that makes them more likely to choose your offer. As a result, you will take decisions on brand propositions, products, services, communication and media plans based on evidence and impact to the business not just assumption.
Targeting on demographics:
This is a common but blunt means of targeting. Simply assuming that people who share age/gender/postcode etc are also the same consumer-type in your market is better than pure guesswork…..but only just.
Targeting on attitude:
Attitudes are sometimes added to fine-tune demographic targeting. As long as these attitudes are not generic but relate to the specific market and its products and services, then it’s a clear improvement, albeit still limiting. This is because attitudes are often very different from what people actually do in any market – and after all, it’s what they do that puts money into your P&L.
Targeting on needs:
Targeting on needs can be effective, as it ties more directly to category motivations and so helps craft messages and identify gaps in the market for new products and services. However, this can still lead to false conclusions as needs-based segments may actually behave very differently to what you’d expect from their perceived needs. Furthermore, both needs and attitudes are subjective and hypothetical, making it difficult to place a value on or prioritise needs-based segments.
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