Segmentation Thoughts

Tipping Point author Malcolm Gladwell discusses the roots of market segmentation, and also argues that it makes consumers happier and the market more vibrant.

But really, is segmentation really the key to happiness? I mean.... 

Do these make people happier?

Is a product successful simply because it sells? 

At least in terms of food, it seems that there are a few established brands, and then everything else just turns over because people like something new. Grocery stores are the great example of the ridiculousness of American consumerism.

So what is he really talking about?

He gets into his main point at the 10:00 mark in the video, the 3 ideas that changed marketing:

1. Don't ask what people want, they don't really know...or at least can't articulate it.

2. HORIZONTAL SEGMENTATION - Markets are now divided into segments of 10-20% each, or less. Big companies might be able to be successful across many segments. Small companies have to find their best segments and maximize their value.

3. The end of the 'Platonic Ideal'. It's not about being 'the best' it's about people liking you the best. And it's difficult to discern what people will like.

Ch 8 - Segmentation & Targeting

Market Segmentation - Sorting customers into groups based on usage, consumption or desired benefits of a product or service.
Targeting - Selecting the groups that will respond best to your message/product/service.

B2B - Biz to biz - Market is huge, well connected to internet and often invisible to the end consumer.
B2G - Biz to government - Big market, highly regulated, all contracts up for public bid.
B2C - Biz to consumer - Marketing to the end consumer. What we see, all day every day.
C2C - Consumer to consumer - Ebay, Craigslist

Market Segmentation Bases and Variables
Demographics - Age, gender, income, ethnicity
Geographics - Where they are - can be as specific as street or postal code, as general as country
Geodemographics - demographics + geographics
Psychographics - Opinions, activities, interests
Behavior - Benefit sought, usage, brand loyalty

Ethnic Groups -
Influentials - Opinion leaders, 'the cool kids'
Interest Communities - Social networks, forums. Able to get very specific on the internet.

Attitude - Speak to people how they like to be spoken to. What is the best way to engage the consumer? "Technographics"

Usage Segments
How do they use media? Differences between say, teenagers and babyboomers. 
Simplifiers - Use technology to make life more convenient. Search for quick, quality services.
Surfers - Spend time looking for the next cool thing. Cutting edge.
Connectors - "Relative novices" who use the internet mostly for email/social networking. Usually attracted to brands with a strong off-line presence.
Bargainers - Looking for deals.
Routiners - Rely on the internet for news, information. Looking for a one-up.
Sportsters - Enjoy sports and entertainment content, likely to pay for content.

Targeting On-Line Customers
Mass marketing - One strategy for your whole market. Banner ads on big sites.
Multisegment Marketing - Creating strategies to reach 2+ segments. The most common targeting method.
Niche Marketing - Developing multiple strategies to reach the same market. Used by Amazon.com. Good for the internet, where rivals can quickly move in on a market.
Micromarketing - Targeting a very small, specific demographic.