Editor's note: Smita Srivastava is manager, consumer and technical insights - North America at Unilever, Trumbull, Conn. Sourabh Sharma is senior manager at research company SKIM, Hoboken, N.J.
Throughout the history of marketing, brands have loved to segment consumers. Marketers slice slivers of data and information into painfully thin generalizations that are used to define attitudes and behaviors. The principles behind segmentation were established long before the digital age and easy access to big data. Besides being a counterproductive generalization of groups of individuals, marketers often start and stick with demographic segmentation, based on traits like age, which oversimplifies the pursuit of actually understanding consumers better.
The growing focus on Millennials and aging Baby Boomers has made marketers focus heavily on age-based segments for channeling their marketing and communications efforts. The easy availability of such factors makes such demographic variables more prominent in consumer segmentation and targeting compared to psychographic variables such as people’s interests, attitudes, opinions and lifestyles. For example, traditional approaches to defining the Baby Boom generation, Generation X or Millennials have relied on both demographic variables (classifying individuals based on birth years) and psychographic variables (such as beliefs, attitudes, values and behaviors).
While starting with age as a segmenting criterion for crafting your message is good heuristic, it’s well worth asking the question: Is it still relevant? Effective marketing needs to account for distinct consumer groups and the differentiated needs they have. More and more research shows that imposing age or any such rigid dimension can be very limiting.
Compartmentalize people
We have all heard the stereotypes. “Traditionalists don’t understand technology,” “Baby Boomers are workaholics,” or “Millennials are lazy, arrogant, impatient, entitled with no work ethic.” The trouble with stereotypes, or even genuine patterns, is that they compartmentalize people into rigid segments by conflating demographic variables such as age with psychographic variables such as people’s interests, attitudes, opinions and lifestyles. While these may describe some aspects of a group, they often create an incomplete and less meaningful picture of the people we are talking about. It just so happens that these people are the very consumers of our marketing brands.
Marketers, like everyone else, have a tendency to resort to such stereotypes that are based on instinctual, dominant patterns that surround us and are often irrational and not grounded in any statistical logic. This has been eloquently described by Daniel Kahneman, a leading behavioral economist, as System 1 reasoning. He suggests that there is a tendency to always measure the differences of our target from a benchmark or an anchor point. Therefore in marketing, we create profiles of younger people as in some way being different from older people, wanting different things than older people. We gravitate to age as a dichotomous variable that segments our audience as “A” and “not A.”
Like all stereotyping, this carries the risk of overgeneralization of the characteristics that define the target. More importantly we risk alienating certain people with our message just because we think they don’t belong to our target age. Kahneman suggests that if we want to make better decisions in our personal lives and as a society, we ought to be aware of these biases and seek ways to overcome them. This powerful and important discovery applies very well to the world of marketing and product messaging.
There is more and more evidence that we have the means to overcome these biases regarding age or gender as rigid categories through continued introspection and inquiry into our ways of thinking and questioning the validity of such distinctions. All we really need to do is to modify the anchor or the benchmark – in this case, age – and shift our focus to what actually influences the choices our consumers make.
Through research in segmentation on the personal care category, we have found that age is irrelevant when trying to find ways to articulate benefits to consumers. While there are some general trends that work for older versus younger consumers, ultimately it is about the psychographics of consumers and how you speak to them.
Overlooks opportunity
Overt segmentation often overlooks opportunity, i.e., those populations that try or are willing to try new products. Marketers targeting different age groups often fall prey to stereotyping. The image of an older consumer wrapped in blankets is archaic; 75 is the new 55, owing to progress in beauty, medication, health, technology and life expectancy. Senior citizens are often active, exploring, fulfilling dreams and those over 65 own over 75 percent of the wealth, making them a lucrative target. Similarly, a ripped-jeans-clad group of yuppies is a far cry from the modern youth who are collectively responsible for $2.45 trillion of purchasing power. These young people also are guided by a social awareness that peaks early thanks to digital media, making them a solid target, too. Clearly, it is the psychographic differences that make these two extremes interesting, not so much their respective ages.
Aside from behavioral economics, research has also shown that organically-deduced consumer segments rarely differ by demographics but more by benefit area of psychographics. For hair care product research, women who focused on beauty and aspired for deeply-nourished hair formed the largest segment, followed by those who sought nourishment and strength and those who responded to products that fight damage and repair hair. The differences between these segments arose from the interaction with hair treatments, not the age of the women.
To further showcase the trend across genders, a similar study showed that men preferred hair care products that described a benefit of resilient and healthy hair, followed by those preventing dandruff and flakes and, lastly, a smaller segment of men seeking clinically-proven results. Demographic differences between these segments were not significant, relaying an opportunity to segment consumers based on benefit areas, which unveiled a newer opportunity for line extensions.
A recent piece of research by the Boston Consulting Group, along with Barkley and Service Management Group, surveyed 4,000 Millennials (ages 16 to 34) and 1,000 non-Millennials (ages 35 to 74) in the United States (Barton, Fromm and Egan, 2012). A key goal of this research was to identify how behaviors and attitudes differ between the two groups.
While there were a number of characteristics that defined the Millennials as belonging to a generational group, the group was far from homogenous. The researchers identified six distinct segments based on people’s responses to questions about technology, cause marketing, media habits and general outlook on life. Each segment exhibited Millennial traits in varying degrees and combinations.
Understanding and recognizing these distinct segments and their nuances is essential for companies that hope to develop effective product offerings, marketing campaigns, channel strategies and messaging. A one-size-fits-all effort will fail to connect with every Millennial segment. Collectively, theory and research have showcased that the traditional way of overlaying demographic filters on consumer data can be misleading. Naturally this evokes the need for an alternative approach.
Focus on priority segments
The objective of psychographics segmentation research is to identify groups of consumers who think in similar ways and need similar things. Having an understanding of these segments enables marketing teams to focus on priority segments, which are seen as most valuable and most likely to purchase from you. As aforementioned, segmenting based on overt demographics like age, income and gender may not help us see true distinct segments. As a result a lot of marketing efforts may be lost in targeting the wrong message to the wrong group.
A more accurate, albeit challenging, approach is based on behavior and needs and how they interact with the product or message. This involves a more holistic research design focusing on both the product and message as well as the psychographics of the consumer within the same study. Typically, respondents are asked to what extent they agree with a number of statements. These statements are specifically designed to determine the values, attitudes, needs and interests of the respondents. There are a number of multivariate statistical techniques that statisticians then use to cluster the statements that go together to form a segment. The key objective is to see whether there is a group of consumers that has a set of needs and wants, and therefore will respond to a particular message in such a way that is distinct enough from another set of consumers.
No matter how you arrive at the segments, whether you work with preexisting ones or let them emerge from your data, it’s important to take a step back and ask these questions aimed at creating an inside-out framework for segmentation.
Meaningfulness: Are these segments truly different in a meaningful way?
Homogeneity: Is each segment homogenous enough to be grouped together?
Size: Are the segments big enough to isolate and prioritize them?
Sustainability: Are these segments sustainable over time?
This four-step framework will allow marketers to better assess the differences between the segments that emerge from the research and data itself, versus simply overlaying the research with demographics. While the latter is easy, the four-step framework ensures that segmentation can be done in a more organic and emergent way to identify a more complete consumer group.
Three key themes
Just as some characteristics run across many segments, certain messages resonate regardless of age. Validated research has shown that fundamentally, consumers of any demographic are most motivated to make a purchase when the benefit appeals to them. There are numerous ways to better motivate consumers across all age groups to purchase personal care products but there are three key themes to explore for personal care.
Immediacy at the forefront. With a plethora of products in the marketplace, it is critical that consumers of all ages are able to capture and comprehend the benefit immediately. Instead of spending time on campaign specifics and endorsers or influencers, clearly articulating the main benefit in prime-time messaging is essential. Marketing messages only have a few moments to influence a purchase decision, leaving no room for “fillers.” For example, a skin care brand may be better off showcasing at the outset that it instantly nourishes skin versus alluding to having natural minerals. It is a slight difference to showcase the dual benefit (instant and nourish) first but nonetheless an important one when placed in a competitive and crowded context. Regardless of consumer ages, research has shown this to be a stronger motivator, further showcasing that for sound messaging, age is of less relevance.
Addressing negative problems with aspiration. There are several universal values among all consumers young and old that are evident in varying degrees: the quest for youth, supple skin and great hair. In the quest for articulating benefits, sometimes marketers have to address a negative. Such issues can be addressed by talking about aspirations: instead of anti-aging skin care, which alienates younger consumers and demotivates older consumers, a focus on revealing healthier skin works across all ages. Similarly, promising nourished, strong hair can work across various psychographics of consumers, versus a negative connotation associated with preventing hair loss. The key is to retain positivity where possible and focus on benefit outcomes and aspirations. For after all, younger consumers want to retain their youth and older consumers often aspire it, thus unifying them regardless of their age.
Showcasing relevant evidence and proof. As human beings, similar to Kahneman’s theory, we are all in search of proof. And it is no different when marketing to any consumer: proof of efficacy goes a long way. How and when to use evidence like clinical proof or quantified claims is often an investment decision for many companies. Research has shown that consumers of all ages are impressed with clinical proof and sometimes with dermatological recommendations. Claiming flake-free to 100 percent may seem like a stretch for an anti-dandruff shampoo, which would benefit from flake-free as a prefix. But promising to reduce hair loss by 98 percent could be slightly more believable than entirely claiming to eliminate hair loss. When supplemented with such benefits, these act as reasons to believe in the product performance and evoke trust.
Do away with the stereotypes
Based on our experience, we recommend that marketers do away with the stereotypes and refresh their consumer segments to be more organic and emergent. Using this approach, they can overlay key benefits and inspire consumers to make better purchase decisions.