Segmentation in ActionMar 17, 2021
By Andrea Tartaglia – Co-Founder/Director @ The Marketing Leaders Ltd.
Further to Nick’s blog post from last week, where you can find a definition of segmentation as well as some great examples on why it is needed and what the benefits are to apply segmentation to your marketing and commercial strategies, I will draw from my experience to expand on this topic and offer my perspective.
The starting point of a marketing strategy
As well explained by Nick, segmentation is critically important to inform the development of a marketing strategy.
It is the very starting point of my thinking and I would say that some elements of segmentation need to precede the development of the marketing strategy and form the backbone of the commercial strategy of a company.
In this respect, segmentation helps defining the addressable market both in terms of the product offering and of the potential consumer the company intends to go after.
Product(s) and consumers are then further analyzed as part of the marketing strategy and help informing decision on how to market those products to the intended consumers.
Here is the difference in my mind:
- the definition of product categories and consumer segments in a commercial strategy is ‘top line’ with enough information to define the addressable market
- the definition of product and consumer segments as part of the marketing strategy is more sophisticated and goes much deeper to unearth details that can play a big role in the definition of the marketing tactics to be implemented for reaching the company’s goals
Let’s bring this to life and use a company and Brand I end up referencing quite a lot… The Coca-Cola Company.
The commercial strategy includes reference to the different products the copany sells and their reason for being in the company portfolio. Sticking to the main brand for example, these products are (just limiting to three) Classic Coke, Zero and Diet.
They are defined by the specific product benefits and configuration with the specific ‘carbonated drinks’ category or the generic ‘non-alcoholic drinks’ category. And they are also defined in relation to generic consumer segmentation information: general consumer, male health-conscious consumer, female health-conscious consumer.
In the marketing strategy, these top line definitions are further detailed, with rich information that inform important decisions for the product and the marketing activities to be implemented.
How much more can we know about the 3 kinds of consumers? A lot. We can know their age group(s), socio economic class, whether they are urban living or not, what their cultural interests are, media consumption, etc.
This information is then used to develop a variety of marketing ‘tactics’, for example:
- tone of voice of each sub brand
- distribution channels
- key messages
- media strategy
- packaging/brand identity
And it can also be used to segment further each of the 3 ‘generic’ consumer groups into smaller segments that can be identified and addressed in a specific way related to their needs and interests.
This is what Nick’s referred to as ‘buyer personas’ and they can lead to very specific marketing activations that increase the relevance of the product/brand for that segment and increase the chances to convert and generate a purchase and/or build brand loyalty.
For example, identifying a sub segment of Coke Zero drinkers that are cinemagoers unlocks a series of marketing initiatives that make the brand visible when these consumers do what they enjoy the most – watching movies in cinemas or at home.
Segmentation and the buyer’s journey
This is another critical point. Segmentation informs the buyer’s journey and should be used to drive the effectiveness of a Brand’s marketing efforts.
The buyer’s journey is the process buyers (in our case consumers) go through to purchase a product (or service).
It is normally split into a number of phases, the most essential of which are awareness, consideration/interest and action/purchase.
This is also commonly referenced as the marketing funnel.
As mentioned, one output of the segmentation process is the definition of buyer’s personas. Each buyer’s persona goes through the funnel and that journey can be influenced by the marketing activities of a brand.
Understanding where each consumer type (or persona) is in the funnel drives the kind of marketing that is needed to move the consumers along until they reach the point when they are ready to commit to a purchase.
The kind of marketing that is needed to generate awareness is quite different from the marketing needed to convert an interested potential buyer into a consumer of the brand or product.
For example, using a product I am very familiar with: a movie.
The marketing to launch a movie is a great example of taking potential consumers through the funnel with dedicated marketing activities for each phase:
- Awareness: a first trailer communicates to the audience that a specific movie is coming
- Affinity/interest: further marketing materials provide more information to generate interest: the cast, the plot, etc.
- Action: nearing release date, the marketing needs to make clear when the movie is coming out, when and where tickets are on sale, etc.
And each buyer’s persona can be addressed specifically in each phase, adding sophistication to the marketing approach and as mentioned above, adding relevance and increasing the chances of a positive outcome:
- Awareness: use of specific platforms/channels where I can reach each buyer’s persona
- Affinity/interest: bespoke messages tailored to the specific likes of each buyer’s persona
- Action: use the triggers that move to action each buyer’s persona (for example good reviews for potential consumers in need of social proof, local cinema advertising for potential consumers for whom convenience is a deciding factor, etc.)
All this work results into a marketing strategy that generates a connected consumer journey, linking all marketing activities to the different stages of the journey for each consumer persona.
Segmentation is dynamic
The final consideration I’d like to make is that segmentation should not be seen as a one-off exercise, that once it’s done you are good and do not have to revisit.
Segmentation is not static and needs to be revisited regularly: its context changes constantly and can cause modifications in the way products and consumers can be grouped.
This does not mean that segmentation needs to be relook at at every occasion.
To help me with this, I follow the normal planning cycles of the business and pay attention to what may affect my segmentation analysis and deriving strategies when working on a new iteration of the overall commercial and marketing plans.
This typically happens during the yearly budgeting process (for the year ahead) and the long-term planning process (looking at 3-5 years forward).
That is when I want to validate or change the segmentation analysis and:
- I go as deep as needed. In most cases it is a question of small adjustments that do not require a new in-depth analysis into product, consumer groups and buyer’s persona. But if the context has changed/is changing significantly, then a much deeper understating is needed. This might lead to finding more insights into the situation. I imagine pretty much everyone had to do this with the arrival of the global pandemic…
- I am particularly interested in defining new potential consumer segments that might become a source of growth within the planning cycle. In fact, I articulate my strategies on the basis of my current consumer base and the identification of new potential consumers, developing the strategy to go after them.
- I hope I made clear how important segmentation is in defining and developing commercial and marketing strategies that drive results.
- It is the starting point of my strategic thinking and something I revisit at regular intervals making sure it is as current and relevant as possible, for now and for the future.
- The value of segmentation increases with the level of sophistication applied to the analysis. That is how I move the thinking from generic consumer segments to specific buyer’s personas and unlock the development of plans across the marketing funnel that are bespoke for each group, generating the connected consumer journey and increasing relevance and effectiveness of the marketing efforts.