Insight: Customers are not created equal

Improving advertising effectiveness via segmentation methods – First published in IT@Work, The Sun, Mon, 20 August 2001

You’ve probably heard this phrase a million times. Not all your customers are created equal. The art and craft of creating advertising that compels your customers to buy in droves depends on your ability to dissect, analyze and glimpse the lifestyles of the people you will be selling to.

Even if your product targets a huge market, grouping them into segments can help you create advertising messages that are relevant to each group. Take for example bottled water. Although you can say that the target market for bottled water is everyone who drinks water, naturally that is not the case. Some people expect water to be free, while others will fork out RM5 for an Evian.

With good segmentation, you will be able to position and craft advertising that speaks your product benefits to those who value them most. You will be able to be more specific rather than resort to vagueness or clouding your advertising with too many messages, a classic case of trying to be everything to everyone.

By Geography

The most simplistic form of targeting is by geography. This basically means targeting based on where your customers live. Some of the key factors you may consider when targeting geographically include region, climate, season or city. Some businesses, especially smaller retail units would target its customers based on how far they live. Petrol stations for one depend on their local traffic for business. Thus, they may place advertising around the area that guides potential customers to their stations. As long as somebody lives in the area owns a car, they’re a good prospect.

If you’re an Internet business, targeting by geography is an excellent method. You may want to limit yourself to Malaysian businesses as you may not be able to service foreign customers. In terms of numbers, most Internet users are centered on urban areas, most notably the Klang Valley, Penang and Johor.

By Demographics

Targeting by demographics is the most common segmentation technique in use. In other words, it is targeting your advertising messages based on attributes such as age, sex, occupation, education and race, among others. Usually, demographic attributes are combined to create a profile of the customer. By using demographic profiles, advertising messages can be better created as well. For example, when you are advertising to women audiences, the tone and delivery are slightly different and in most cases appeal to emotional attitudes. Even if you’re selling the same products, demographic targeting can help differentiate the audience so you may compose slightly different messages to those audiences, such as between parents and children.

In many instances, demographics and geography groups are not enough to draw an understanding of your customers. After all, two 20 year olds living next to each other are hardly alike. They may have different shopping habits, their Internet usage could be different, as well as interests and hobbies. Beyond where your customers live and who they are, you may also employ more advanced techniques including segmenting based on “behavior” and “psychographics”.

By Psychographics

Psychographic segmentation is identifying customer profiles based on interests, society divisions and personality. You may be able to market to people who share similar interests. ClickZ, and online publisher does fantastic work with their site by targeting professionals who are interested in marketing and advertising. Marthastewart.com on the other hand builds up an audience of women (and some men) who are interested in home-making. Another good example is Apple Computers, who have managed to group together a diverse range of people around an avant-garde personality.

By Behaviors

Behavioralistic segmentation on the other hand is focused on crafting groups based on the behavioral characteristics such as purchase occasion, user status and loyalty status. Often, understanding customer behavior is important in order to fashion highly targeted advertising. For example, you may run advertising campaigns around specific occasions, capitalizing on normal behaviors such as cakes during birthdays, flowers during Valentine’s or neck ties during Father’s day.

Think about the benefits sought as well. Is your audience looking for economy, convenience or prestige? What else could they be looking for besides those attributes? You may also divide up your audience based on user-status and usage rate. Find out whether they are first time users, regular users, or experts. If they have used your products before, are they using it regularly or just occasionally?

Another behavioral trait you can examine is their buying process. At which stage of the buying process are you targeting? Different stages require different messages to be sent to your audience. If they are unaware of what you sell, your message could be educating your audience about your products, your business and how it will benefit them. If they’ve heard about you before, your message could be geared towards immediate purchase with special offers or samples. When you segment out the different stages, you will be able to carefully guide your prospect along the buying process to close the sale.

Why is it segmentation important?

Segmenting your audience into profile groups will help primarily in two ways: develop creative advertising messages that appeal to your target groups and to develop a niche position for yourself that your audience can readily identify and get accustomed to. Over time, this will help your business develop strong branding and most importantly, loyalty.

At the end of the day, creative mixture of segmentation methods will be able to help you develop better marketing strategies and advertising messages that will really make a difference. So the next question will be, where do I find all these people?

[Written by Jui Hong Teoh, Managing Director, BRANDTHINK Malaysia. - First published in IT@Work, The Sun, Mon, 20 August 2001]