Marketing 101. Chapter 5: Understanding The Consumer

Market segmentation and positioning sound dry and reading about them can be. However, I find this to be one of the most fun and enjoyable aspects of developing a strategic marketing plan.

Once you've determined your target market and done some market research it is time to work on market segmentation. This is a process of identifying sub groups within a broader market. For example women might be a broad target market because we control most of the household spending in this country. However that's such a massive group that it would be impossible to market to all women. You probably want to focus on a particular group of women.

Market segmentation allows you to understand and serve your consumers, customers, clients, contributors or readers. It also makes your job easier because you can better communicate the features, benefits and value you offer with your product, service, blogging or whatever you offer to the world. Your market may only have one segment and that's fine; in that case you'll just be describing your target consumers but the same principles apply.



image credit: Christian Gidlöf from Wikimedia Commons used under CC by-sa 3.0 license

Demographics

Demographics are group classifications like age, gender, race, geographic location, household income and other measures. For example, married women between the ages of 35 and 49, employed part-time outside the home who live in urban areas and who have two children under the age of 12 living in the home would be examples of a group's demographics.

Psychographics

Psychographic attributes have to do with individual interests, activities, mindsets and ways of thinking. For example a market could be segmented into birdwatchers who practice yoga and engage in green practices such as recycling and composting.

Here's a very simplified example from my days working on the Jell-O brand: There are several products under the Jell-O brand umbrella. One key group of Jell-O consumers are mothers who buy Jell-O products for their children to eat. All mothers want to show their children love. Some mothers do this through cooking with their children. Other mothers spend time doing other activities with their children and so prepared foods can give them more time for non-cooking activities. Moms in the first group might prefer making Jell-O eggs with their kids and use boxed gelatin. Moms in the second group likely would appreciate refrigerated pudding cups. So demographically the two groups could be similar (i.e. women, with children, between the ages of say 5 and 13, who purchase snacks) but psychographically distinct thus creating different market segments for the two products and leading to different marketing mixes.

Creating a Consumer Portrait

One of my favorite techniques is to give the target consumer a name, a face, a story and even a theme song. There are a variety of approaches out there. Some marketers model their theoretical consumer after a real person. Others make up a fictional character. I like to use characters from TV shows and movies just because it makes it a bit easier for most people to quickly and easily understand the portrait I am trying to paint.

Positioning

Once you've described your market segments you'll want to determine the best marketing mix for reaching that segment. This is positioning and sometimes called the 5th P and allows you to best adjust the 4 Ps to reach your market segment. For example, if consumers in a market segment are value conscious or price sensitive you will want to price accordingly (e.g. lower margin, higher volume), create effective promotions (e.g. coupons), communicate benefits (e.g. cost per wearing or use), possibly adjust your product or service (e.g. max sizes or bundles) and certainly ensure you are available at the places they shop (e.g. Dollar Stores vs. 5th Avenue).

Homework

This is the fun part! Create a story about a typical consumer in your market segment (or at least one if you have more). If you sell a product or service this would be the ideal buyer or if you are looking at your blog then think about readers. If you are interested in partnering with companies as sponsors or advertisers then this exercise will give you useful material to include in your media kit. Alternatively, you could look at products or services you use or admire and see if you can understand their market segment. Any of these exercises will help you better understand the process of market segmentation and positioning and, if interested, seek out potential partnerships for your blog or business.

Some approaches:

1. Start with the broadest market you can think of and put it in a large circle. Narrow down and refine the group and place each smaller group inside the circle until you have a bullseye.

2. If your blog is a personal blog likely your readers are much like you. So write your bio. Who would play you in the movie of your life story? What is your theme song? How would you give a quick demographic and psychographic description of yourself?

3. Pick a favorite product, service, blog or blogger and see if you can understand their market segment. Say you are an Apple fanatic... What's the market segment for their laptops, their desktops, the iPhone, the iPod, the Mac Mini...? How are they similar, how are they different and who is the consumer for each?

Previous Chapters

Chapter 1: Introduction
Chapter 2: Setting Goals and Creating a P&L Statement
Chapter 3: The Marketing Mix and the Four Ps
Chapter 4: Marketing Research

Additional Resources

Nancy H. Bull, Gregory R. Passewitz at Ohio State University: Finding Customers: Market Segmentation

Laura Lake at About.com:Marketing Market Segmentation for the Small Business

John Assaraf at Articlesbase: The Difference Between Demographics and Psychographics

Jairo Senise at strategy+business: Who Is Your Next Customer? Strategies for targeting potential consumers in foreign markets.

At Gruma, we use two methods: psychographics and “chefmanship.” Psychographics is the study of personality, values, attitudes, interests, and lifestyles. The use of focus groups and specialized research into local psychographics helps executives answer one of the most important questions about potential consumers: Are they willing to try something new, and specifically, are they willing to try your new product? If psychographic research shows that they are not, the operating environment probably won’t matter. Companies should be prepared for a long period of slow acceptance and plenty of difficult and expensive promotional activities before the product catches on, if it ever does. In other words, if the psychographics are less than desirable, you need to decide whether the market is worth the effort.

People in certain markets are looking for healthier, less fattening foods, and are thus open to products like Gruma’s wheat flour sandwich wraps. Other markets are becoming faster-paced, and so flatbread, which can be eaten on the run without utensils, is a good fit. In still other areas, such as China, people seem predisposed to experimentation. They want to try new things. Tortillas are more expensive in China than traditional sandwich bread, but they are growing in popularity nonetheless.

Cross posted at BlogHer.