Segmentation based solely on demographics is harder than it used to be, and it’s not about to get any easier. There are a number of reasons for this, including the cultural shift away from “we” thinking toward “me” thinking that has driven the trend toward hyper-personalized products. However, there is a far simpler reason . . . the proverbial John Doe is dead.
In simpler times, people felt comfortable with the idea of homogeneity. People made a point of living in close geographic proximity to people who looked and talked like they did. Being different was unfashionable. This made the marketer’s job simple. Mass producers of goods and services simply needed to figure out what the “average American” wanted, and make lots of it at a good price. People clustered themselves into big groups, and the herd mentality kept demand steady over time. Demographics usually correlated tightly with psychographics and behavioral variables.
While demographics can still play a role in segmenting your market, they are far less reliable predictors of purchasing behavior than before. Society has redefined who “John Doe” is, how he lives, and what’s important to him. There is no “average” American. In today’s self-absorbed culture, no one wants to be average. John Doe wants to be different. John Doe wants to stand out from the crowd. John Doe doesn’t want to be John Doe. What are the marketing implications of this shift?
Segmentation is more critical than ever. The science of identifying profitable market segments not only requires the mastery of more sophisticated tools and techniques, but it also requires adopting a new paradigm. You can no longer structure your market research around questions such as “what large group of people will steadily buy my products for the next ten years?” Market segments appear quickly, and they sometimes disappear the same way.
In today’s market, great marketing is about watching the radar screen and keeping your organization prepared for an ideal market segment to appear on short notice. Easier said than done? Of course. But it’s doable for companies who are willing to step up to the plate. The key to tapping this opportunity: mastery of hyper-segmentation.
The internet has made it easier than ever to reach groups of people based on individual choices they have made. This is essentially why opt-in e-mail campaigns work. It’s also why search-based advertising services like Google AdWords work. Facebook’s ad platform took things a step farther, allowing advertisers to display messages selectively based on social factors. These technologies work primarily because they allow skilled marketer to identify small, fast-moving niche segments before anyone else sees them.
Instead of designing products, services, and promotions for an imaginary John Doe, why not devise a marketing strategy that allows each market segment to voluntarily identify itself, one person at a time? You might be surprised when you learn who your market really is.
My challenge to you: what mechanisms and practices could your organization put in place that would allow hidden segments of the market to start revealing themselves to you?