The Elephant in the segmentation room

By Tim Brooks and Kath Ludlow [Founding Partner at Legend Engage]

Legend Engage:

Do digital analytics mark the beginning of the end for traditional market research? In the first of a series of articles exploring the impact and opportunities afforded by digital and social data, we debate to what extent these new research functions can replace or supplement traditional consumer marketing research. In this paper, we discuss segmentation opportunities in 2017.

Can digital make segmentation studies truly actionable?

There has been a long debate on the value/ROI of the major investment consumer-facing brands make in global [and local] segmentation studies. As a benchmark, a robust global segmentation can set you back a cool £1-2m.

At one end of the debate are the Sharpites[1] and their disciples [e.g. Mars] who don’t really believe in targeting at all. Their marketing target is seen as… just about everyone. At the other end however, we have most other FMCG brands who invest millions in segmentation to better define their category behaviours and ideal target audience, the aim being to improve the effectiveness of future marketing.

For the record, I’m happy to declare myself a fan-boy of Byron Sharp. ‘How Brands Grow’ is the only book I would insist that every person connected to a consumer business should read. That said, I am uncomfortable with following this sort of fundamentalism and dogma. Segmentation is clearly not the answer to the question, but it is a robust insight/understanding framework that should enable brands to refine and discriminate their marketing.

Segmentation creates a single, global version of [some of] the necessary consumer truths – which is always valuable to drive alignment on a global brand/category approach. A needs-based segmentation will also create valuable inputs for innovation, campaign creative etc.

But, there is an elephant in the segmentation room.

I have been involved in multiple global segmentation studies and have seen some fabulous work, but there is nearly always an issue. Segmentation outputs are just not very actionable versus the tasks most brand marketers have to do today. The theory can be lost in translation. Here are just three examples of why most segmentation studies sit gathering dust on a shelf rather than being used to drive business growth and brand loyalty.

  • Talk to your media agency… and ask them to buy media against your key segments. They can’t. They use proxies [TGI etc.] that don’t really match the deep insight of the segmentation.
  • Talk to your comms/digital agency and ask them what difference this makes to their work/output… and how closely they use it to plan and deliver your campaigns. Or do they ignore it and just ‘do’ stuff?
  • Review your business strategy – has it integrated your segment outputs into its priorities and tasks? Doubt it, as most current segmentations are just expensive, albeit useful, background data.

So, we have many FMCG brands still investing in a potentially great piece of input that is only partly executable – and see limited evidence of them becoming hard-wired into company ways of working. They are diluted through the machinations of pragmatism and real politic. And 18 months later… they are useful background info filed on the corporate server.

So how might we make segmentation more actionable and therefore valuable? The solution is relatively simple and I’ve seen it done – so we are talking about an immediate action that can be taken now, not a hypothetical one

  1. Choose evolved learning cycles – when you have your final segmentation and targets in place don’t think you’re done. Add a continual learning step to your process. NB your segmentation agency currently can’t do this.
  2. Choose a specialist marketing and social insight consultancy who has a proven expertise in building and actioning segments in the digital space. NB there aren’t many who do it properly i.e. don’t be fooled that this can be created from a bit of social listening or a programmatic ad buying algorithm – it needs deep analysis/insight and human expertise.
  3. Give this specialist consultancy your £2m segmentation study and brief them to turn the segments into actionable ‘audiences’. Maybe, it will add 10% to your segmentation study investment. But it will exponentially change the ROI.
  4. Use this data to brief your business [Marketing and Shopper/Category should have it hard wired into their plans]; brief your agencies [your media agency will have no excuses, your creative agencies will suddenly be accountable for who their work engages with etc.]
  5. Use this process to turn it from an interesting piece of market research into a measurable piece of planning at the heart of your future growth.

How do I know it’s doable? Cards on the table, I’m not neutral. I came across just such a consultancy last year and now work with them as an advisor – Legend Engage. Their Mapper360 approach can do exactly this. It has actually done this with segmentation studies. And they could do it for you… even rejuvenating your recent moribund segmentations. It can work globally or locally and for a hoary old marketer like me… I find it amazing. It’s what I’ve always wanted. Every CMO or Insight Director should be talking to people like Legend Engage… before, during and after their shiny new segmentation is in play. And the research company should not feel threatened either. It’s building on the original work.

So before segmentation moves from being the elephant in the room to the dinosaur on your budget sheet, don’t replace it… revolutionise it.



[1] Byron Sharp: How Brands Grow.

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