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Marketing Segmentation in the Digital Age

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									Marketing Segmentation in the Digital Age
by Nancy Pekala

"If you're on the wrong train, every stop is the wrong stop." This perspective by David
Verklin, CEO of Canoe Ventures LLC, aptly describes marketing segmentation in today’s
digital age.

During a presentation on marketing segmentation at the AMA’s recent Marketing
Research Conference, Eric Paquette, Senior Vice President, Copernicus Marketing
Consulting & Research, suggested that digital technologies have forever changes the
way content is developed, delivered and consumed which directly impacts segmentation
studies conducted today.

“Fifty-nine percent of senior executives in large companies have done a segmentation
study in the past 2 years, but only 14% of those senior executives involved in a
segmentation study derived any value,” Paquette reported.

He said the issue is no longer one of just a fragmented audience or a reallocation of time
from one medium to another. “Instead, a fundamental shift has occurred in how we
communicate, entertain and learn that has massive implications for marketing strategy
and marketing communications.”

Paquette cited some common problems and associated implications with segmentation
studies today including:

•   It is unclear which groups represent the biggest profit opportunities.
    Marketing Implication: There is no guidance on whom to focus marketing efforts

•   There is little insight into what will motivate each target to buy.
    Marketing Implication: As a result, there is little help in defining your positioning and
    messaging strategy, and no assistance in identifying how to make the brand
    relevant, credible, superior and unique.

•   The various segments are more similar than different, particularly with respect
    to media exposure patterns. The targets can't be found in sales and media
    databases.
    Marketing Implication: There’s little insight into where to most effectively and
    efficiently market to these various segments.




Marketing Researchers                         1                   November 2010
Paquette stressed that there are three basic requirements to successful segmentation
and targeting strategy:

1. Who is our most valuable target?
    Identifying your most valuable target helps define the focus of your marketing
   efforts. Today, measuring “valuable” has changed.

2. What are their needs, wants, and motivations?
   This information helps marketers define their positioning and messaging strategy so
   their brand can be relevant, credible, superior and unique. Today, this also
   encompasses the message you want your most valuable target to spread to others
   about your brand.

3.    How and when do we find them? ----So we can advertise to them
     This, of course, is critical in order to effectively advertise to them and so they can find
     your brand. Today, it’s also important that you reach them when they are most
     receptive and in ways they are receptive. It’s all about “moments and mindset”,
     Paquette said.

                                        FAST FACTS

      •   There are approximately 1.2B internet users 15 years old and older worldwide
      •   In 1994, there were about 5,000 websites. Today there are at least 200
          million.
      •   U.S. adults average about 8 ½ hours of “screen time” each day
      •   Over 10 billion songs have been downloaded from iTunes
      •   American teenagers are sending over 3,000 text messages a month – more
          than 10 messages per hour not spent sleeping or in school
      •   Almost half of the U.S. on-line population uses social media on a weekly basis
      •   In fact, social media has overtaken porn as the #1 activity on the web
      •   690 million Valentine’s Day gifts were given this year…..on FarmVille
      •   There are currently about 40 million tweets per day on Twitter



Four Steps to Effective Segmentation

This new “eco-system” needs to shape how we think about the marketing strategy – and
impacts the requirements for an effective, actionable segmentation and targeting,
Paquette said. He suggested that marketers take the following steps to make
segmentation and targeting more effective in this new digital world.

1. Include measures of advocacy when assessing the value of segments and
    selecting a target.

  “Brand advocates are a small but highly engaged and influential group of customers,”
 Copernicus’ Paquette said. They typically represent 5-10% of the customer base but
 are “lovers” of your brand.


Marketing Researchers                          2                    November 2010
   “They have always been valuable because they are influential and can be influenced
   but are much more so today because of their reach, the speed with which they can
   influence and the tools at their disposal to influence,” Paquette explained.

    Some traditional measures of value/profit include: category volume, profit potential,
   decision making power, price sensitivity and alignment of their needs with core brand
   strengths. But additional measures of advocacy are useful as well. These include:
   level of engagement and “love” of your brand, interest in sharing that affection with
   others and breadth of reach.

2. Understand how your target behaves in the digital environment.
   As part of the segmentation, it’s important to capture how your targets behave in the
   digital environment. What do they do online? On their mobile device? Are they
   “authors”, “connectors”, “commentators” or “spectators” in the digital world? “The
   digital behavioral composition of your target will guide what digital tools and website
   functionality your agencies need to provide,” Paquette said.

3. Determine where your target goes digitally.

   It’s critical to understand the basics of where to find targets in the digital
   environment. How much time do they spend online and on their mobile devices?
   What websites do they visit? Where are they most engaged and most receptive?
   What types of mobile devices do they own? Where do they go on their mobile
   devices?

   “Connect your target segment to the big media planning databases by including
   questions common to their survey and yours,” Paquette suggested.

4. Understand how your target tries to find you
   Where does your target frequently search? Do they use traditional search engines,
   YouTube, and social media? What keywords do they use when searching the
   category and your brand. It is not the same for all segments in the market. Do they
   prefer to learn about your brand from your website, social media, blogs, message
   boards or expert reviews?

All these questions need to be answered as part of, or a follow-up to the segmentation
survey, Paquette stressed. Navigating the plethora of new tools that are available today
with a targeted strategy for the digital age will help ensure you obtain value from each
and every segmentation study you conduct.



Eric Paquette is Senior Vice President of Copernicus Marketing Consulting & Research.
Nancy Pekala is the AMA’s Director of Online Content and Editor of Marketing Researchers.
Send your feedback about this article or suggestions for any of the AMA’s e-newsletters to
npekala@ama.org. Be sure to follow us on Twitter at twitter.com/marketing_power/rsrch




Marketing Researchers                          3                   November 2010

								
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