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Disruption is prompting marketers to revisit segmentation strategies and take a fresh look at how to effectively engage with specific clusters of customers.
I recently asked Stefan Lysak, principal, product commercialization and analytics practice at Kantar, for his perspective on recent segmentation innovations.
Paul Talbot: What impact has the Covid-19 pandemic had on the process marketers use to design and manage the best possible segmentation strategies?
Stefan Lysak: The pandemic has impacted business strategy over the past several months, in many cases causing marketers to pause on large-scale strategic offers such as segmentation during such a turbulent time for consumers as well as the economy.
However, there are industries such as tech, and gaming in particular, where marketers have seized upon the opportunities presented during the pandemic to develop broader, more educated targeting efforts through the implementation of global segmentations.
Talbot: How should a marketer evaluate the strength of their existing segmentation strategy to determine if changes make sense?
Lysak: The strength of any existing segmentation strategy lies in its ability to assess the needs, behaviors and motivations across the market and reach the various groups of targeted consumers with the right messaging at the appropriate point in their purchasing journey.
In most cases, marketers can determine the strength of their targeted efforts by measuring the ROI of segment-specific marketing and deployment efforts.
Identification of diminished impacts from existing targeted efforts may signal a need to revise the marketing strategy to account for fundamental changes in the product or category of interest.
Talbot: How should this process be managed to avoid making potentially harmful changes?
Lysak: In many cases, changes to the market are more subtle or perhaps simply temporary in nature. To that end, most segmentation schemes can be refreshed to incorporate the existing framework while simultaneously exploring the nuances and implications of any slight changes in the dynamics across the market.
Talbot: Which types of changes to the market are subtle?
Lysak: This would include changes in consumer needs, attitudes or behaviors that do not dramatically influence the strategic initiatives of existing brands in the market.
Talbot: Can you provide an example?
Lysak: While there were certainly groups of consumers who displayed dramatic reactions to the pandemic, many felt the need to maintain a similar routine and structure in their lives, purchasing the same brands or maintaining similar nutritional habits.
However, even those who resisted change were forced to try new things, such as cooking healthier meals, shopping online or using credit/debit cards as their regular payment method. For some, these were simply viewed as minor inconveniences to endure during an extremely difficult period of time.
Talbot: How can a change which is temporary best be distinguished from a change with more permanence?
Lysak: The best method to truly determine whether a change can be considered more permanent is to track these behaviors over time. In many cases, forced behavioral change will not ultimately lead to a change in preference unless we observe a similar change to a consumer’s underlying attitudes or needs. For some, the impact of an event may have created a long-term shift in their needs or a change to their lifestyle that requires a more permanent change in their behaviors.
Talbot: How should a segmentation tactic be refreshed?
Lysak: Segmentations are often ‘refreshed’ when the underlying assumptions related to the creation of the original segments have undergone slight changes over a period of time, such as the introduction of a new competitive brand in the market, the expansion of an existing portfolio of products or services or the desire to explore potential growth opportunities across adjacent or even entirely new categories.
In many cases, organizations wish to maintain a link to the core framework from the existing segmentation while infusing fresh insights and strategic ideas to allow for the identification of newly evolved consumer segments.
Talbot: Any other insights on shifts in segmentation strategy you’d like to share?
Lysak: During the height of the pandemic and economic shutdown, marketers were quite cautious about changing strategies and making large-scale segmentation decisions while lacking critical information about potential future implications on consumer attitudes and behaviors.
However, as we began to emerge from the pandemic into a ‘new normal’ way of life, evolving segmentation strategies were at the forefront of many client initiatives as they began to look forward into 2021 and beyond.
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October 21, 2020 at 08:41PM
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