Market segmentation and persona development are two crucial exercises for any brand. Once you understand the different types of consumers in your market, you can be much more effective at developing customized products and messages, and more efficient at targeting media buys.
But one of the biggest obstacles that confronts researchers is to simply help internal decision makers understand the segments so that they can take relevant actions. That’s why it’s important to translate your segmentation studies into robust persona profiles that paint a picture of your targets as whole humans and not as one-dimensional consumers.
In our long experience with market segmentation projects, we’ve found that there are five components that deliver the most impact to your final persona profiles. If you focus your efforts on fleshing out these five elements, you’ll be well on your way to segmentation success:
We understand why marketers and researchers tend to view people as shoppers — they want to know where people buy, what they buy, and how they buy. But creatives and innovation teams need to understand the person they are designing for. Psychographics take a much wider lens, looking at general human characteristics: how they live their lives, what their values are, how they view the world, etc. Are they business professionals? Gym rats? Technology adopters? Political mavens? While these characteristics aren’t obviously relevant to your business, they go a long way toward bringing your target consumers to life, suggesting creative ways to reach them.
Technically, this is a subset of psychographics, but it’s important enough to consider on its own. When we engage with the world, we are (sometimes non-consciously) trying to satisfy our fundamental BASE needs: Belonging, Appeal, Security and Exploration. The relative importance of each BASE need varies from person to person, generating individual classifications (IC) that suggest varying preferences, motivations and behaviors. Put it all together and you have BASE-IC — five motivational profiles ranging from Independent Spirits (who prioritize Exploration and Security) to Social Butterflies (who are high on Belonging and Appeal). By understanding these non-conscious motivations, researchers can develop greater insights into current and future consumer behaviors.
Every segmentation profile contains demographic data. That’s a no-brainer, especially since marketers and C-suite executives have an easy time wrapping their heads around traits like age, race, gender, household income, etc. But demographics are more informative when combined into “life stages” So, you could say a segment tends to be young or married or Hispanic or male or whether they have kids. But it’s much more informative to know that they tend to actually be young Hispanic dads ormarried high-income women. The more specific you can get with your demos, the more impactful they can be.
It’s no secret that today’s consumers typically shop online and offline before they make their purchase. But these behaviors will vary depending on what they’re shopping for. The way you shop for a car will be very different from the way you shop for toothpaste. LRW’s Omnichannel Segmentation helps you identify how shoppers in your category weave in and out of brick-and-mortar and online destinations to inform their decisions. You can also compare these patterns to other categories to identify new and overlapping opportunities.
A successful segmentation doesn’t just help you understand what types of consumers are out there, it helps you allocate your limited resources by prioritizing which segments to go after. That’s why it’s important to answer two fundamental questions about the segments you find: 1) What is their economic opportunity (value in the marketplace)? and 2) What is your brand’s ability to capture a meaningful share of their spend? These two questions always go hand-in-hand, and the answers need to complement each other. You may be able to identify a highly lucrative segment of shoppers, but that segment may be misaligned with your product offering, so it wouldn’t make sense to invest time and resources to go after that segment. If you’re Toyota, for example, you may be able to pinpoint a lucrative segment of affluent car buyers who come back to the market every couple of years. But since the brand is about value and longevity, you’d be better off focusing on another segment.
Speaking of limited resources… we would suggest that you invest in illuminating only your target segments, through a combination of self-reported survey metrics and appended third-party data in a separate mobile-compatible survey launched as soon as your segmentation structure has been selected, but before it is rolled out to the organization. You don’t want to base all your future marketing decisions on the rich profile of a wonky respondent who was willing to take a 45-minute PC-only survey!