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Carl Finkbeiner, Executive Vice President, TNS
Denise Stella, Senior Vice President, Segmentation, TNS
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Reprinted with permission from Marketing Management, January/February 2008, published by the American Marketing Association.
Output from segmentation initiatives has traditionally offered very good descriptive information for the marketer. The challenge has always been in moving from a descriptive summary to a more action-oriented view. Two advancements have succeeded in this transition because they enable marketers to develop insights about their customer and to use this knowledge in a more prescriptive manner to make informed, insightful, and actionable decisions. These advancements include focusing on several domains instead of one, and measuring the role of emotion in a way traditional research cannot.
More Domains Are Better Than One
Single Domain
Cluster analysis, the process of mathematically dividing customers into mutually exclusive groups, is a popular segmentation technique used throughout marketing research. This analysis is based on identifying patterns of similarities among customers, in terms of some domain of interest (a domain being a set of variables that measure something in common, such as attitudes or values or behaviors)—and eventually producing several mutually exclusive segments. Although segments derived from cluster analytic techniques tend to be well-differentiated on a single domain of interest like attitudes, there is a frequently encountered drawback: Other important domains (such as demographics or behaviors) tend to show little if any variation. This impedes the effectiveness of such programs by failing to address important questions like “who are my customers?” and “what do they do?”
Multi-Domain Segmentation
Alternatives that work best are more holistic solutions that examine patterns of relationships between several variable domains and identify common dimensions that account for the varying relationships. A segmentation performed on only these common dimensions yields customer segments that are as differentiated as possible on all the domains simultaneously without being artificially dominated by a single domain. The outcome of this approach is that segments are more strongly distinguished on all domain characteristics—particularly behaviors, but also attitudes and demographics. The robustness of this approach gives marketers more information on the “what, who, and why”—essentially providing greater differentiation, and thus increasing the ability to identify, locate, hypothesize, and take action by customizing marketing actions at a more granular level. (See Exhibit 1.)
Exhibit 1
Typical performance outcomes on key criteria
The Role of Emotion
Today’s most successful brands are those that develop a strong and enduring relationship with people. Critical to developing an enduring people-brand relationship is satisfying both the functional and emotive needs of people. Brands actively satisfy these needs through actual experience with the brand and all of a brand’s different touchpoints, which include its marketing communications. Therefore when developing segmentation that can effectively dictate brand strategy it is important to go beyond the rational to understand deeper emotive needs. It is well recognized that what people say they want and what they actually do are frequently very different things. Indeed Daniel Kahnemann (Behavioral Economist & Nobel Prize Winner 2002) has proven that in buying behavior “the domain in which we should expect to see rational behavior is limited”. Using a holistic segmentation approach that encompasses multiple domains creates customer segments that are truly differentiated on behavior. The next key step is to understand the drivers of behavior. We know through our research across hundreds of brands and categories that these drivers are both rational and emotional.
Exploring behavior and functional needs of people has always been rather straightforward through direct questioning. But accessing the deeper emotive needs is a lot tougher as people have trouble articulating their emotional needs – and often aren’t even aware they exist at all. To explore needs at a greater depth than the rational requires a research approach that gets down to the human emotions that actually drive behavior. The NeedScope System uses unique tools that have been validated globally to explore, measure and analyse emotion together with more functional drivers and perceptions.
NeedScope™ Consumer-Brand Relationship Model
All layers of consumer needs and brand image must be measured so they are internally consistent. NeedScope unravels the layers.
NeedScope Model©
The heart of NeedScope is a psychological model that summarises human emotions. This provides a constant framework to develop and implement strategy.
Quantitative Projective Tools
Projective tools provide the key to unlock emotive drivers and brand symbolism. NeedScope’s standardized, validated photosets and collages make it possible to not only explore the emotive element but also to measure it. NeedScope uses projective collages quantitatively to measure emotion. Collage sets have been validated globally
Look to the Future
Segmentation, because of its strategic focus, will continue to be a valuable tool for marketers. The creative changes to typical segmentation approaches described here arm a marketer with more information and knowledge. And they improve the ability to take action—which, after all, is what all segmentation programs seek to accomplish.
So, ultimately, a holistic segmentation approach, in order to drive business results, must incorporate the following key elements.
- It must encompass multiple domain techniques in order to create segments that are truly differentiated
- And it must have a validated model for understanding emotive positioning
The benefit to your business will be a segmentation output that yields actionable segments i.e. the who and what.
By including an emotive positioning tool, you will now know how to optimize your brand building activities because you will have the insight needed on how to activate emotions. This will enable you to build an emotional connection with each segment.
Essentially it is the combination of these two elements that will enable you to construct and execute a targeted, successful brand strategy.
Carl Finkbeiner may be reached at carl.finkbeiner@tns-global.com.
Denise Stella may be reached at denise.stella@tns-global.com.
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