There’s still a place for segmentation in your marketing strategy — even with today’s emphasis on hyper-personalization. However, it may be time to rethink the way you are dividing your market.

“As society evolves, there may be more value to removing the walls that have traditionally been built between market segments,” said Michael Solomon, professor of marketing at Saint Joseph’s University in Philadelphia, and author of Marketers, Tear Down These Walls!: Liberating the Postmodern Consumer.

Segmentation Is Strategic

By definition, market segmentation is the process of dividing consumers into sub-groups based on some type of similar characteristics.

Demographic segmentation, for example, slices the total market on the basis of variables like age, gender, income, family life cycle, educational qualification, socio-economic status, religion, and similar characteristics.

Psychographic segmentation divides buyers based on lifestyle or personality characteristics, while behavioral segmentation, creates groups of consumers by their knowledge, attitudes, uses, or behavior towards a product.

Segmentation is a strategic first step that informs your marketing strategies and defines the intended targets of your product or service. It identifies possible customers, clearing the way for deeper, personalized messaging.

Personalized marketing celebrates the uniqueness of each individual. It’s so targeted it looks and feels as if a personal friend handcrafted it.

When Segmentation Goes Wrong

In theory, segmentation and personalization are complementary, working synergistically to produce the best marketing campaigns.

But Solomon argues segmentation is ready for disruption. Today, he suggests, people “change their identities faster than a chameleon changes color.”

“On Monday, you may be a Hugo Boss suit-wearing salaryman who listens to Adele, reads The Wall Street Journal, quaffs a greasy burger for lunch, and tunes into Fox News.

“Come Saturday, out come the tats from underneath the starched collar, you ditch the suit for a Kid Dangerous tee and Vans kicks, you down a tuna poké with a craft beer, and listen to Imagine Dragons while you check out the latest issue of High Times. Just what lifestyle category do you belong to? Good luck to the marketer who tries to describe you,” he writes.

Solomon said it’s even hard to identify fairly large groups of customers that share common needs. “The basic idea still makes sense, but now it’s often more accurate to talk about ‘ markets of one,’ where every individual customer makes up his/her own market segment,” he said.

“We are simply too diverse, too hungry (and impatient) for new stuff, and able to access such a dizzying array of options, that we no longer have the luxury marketers in days gone bye enjoyed to target a very large, homogeneous group of consumers.”

6 Considerations for Marketers

Solomon said marketers should recognize several realities about today’s consumers.

  1. Fewer consumers identify by chronological age. Generational lines are blurring, along with the traditionally defined boundaries of age-appropriate lifestyles, behaviors, and preferences.
  2. Consumers today tend to “buy by committee.” A customer’s journey to a purchase used to be fairly linear: identify a need, find several options and choose the best. Now it is more complicated. Consumers now tend to do more research and consult with social networks before buying.
  3. There is no “offline” life anymore. Most people make no distinction between their lives on and off the internet. Companies need to understand how channels have blurred.
  4. Authenticity is king. People crave products and brands with a long history and a believable story with which they can identify. What’s more, “People want to be involved in the production as well as in the consumption of what they use,” Solomon said.
  5. People now more closely identify with their possessions. Marketers need to reduce buyer uncertainty by offering consumers multiple ways to picture themselves already owning the item. “We don’t buy things because of what they do. We buy them because of what they mean,” he said.
  6. Stop thinking in terms of traditional industry “verticals.” Consumers freely sample products across verticals. They are also open to new hybrid products that combine the best features of multiple categories. For example, the booming “athleisure” market successfully integrates styling from traditional athleticwear and leisurewear verticals.

Redefining Your Market Segments

Vancouver designer Chris Lee suggests it’s time to redefine markets by what they really are — “a collection of a group of people who need a product because of their circumstances, not their demographic.”

“Sure, someone’s attributes may correlate with why they want to purchase something. But that’s all it is — a correlation,” he writes.

Who benefits most from segmentation? Companies that know the most about their customers — and understand how to market to their unique problems, preferences, and desires — always lead the pack.

Want to create the most effective segmentation and personalization strategies? Email Chris Spears or Margaret Wise for more information.

About Arke

Atlanta-based Arke develops strategies and implements digital technologies for better brand experience for your customers.