Segmentation Series Videos

Understanding the Segments

Episode 08

Market Segmentation: Episode 08 Transcript

Hi, I’m Kathi McKenzie, Executive Vice President for Decision Analyst. I’m here with today’s segmentation segment, and we’re going to be talking about how to understand your consumer segments.

In understanding segments, we look at a variety of different characteristics, and they mainly fall into three buckets. There’s demographics—age, gender, income, geography, presence of children, that sort of thing.

Then we have behavior—we have their brand and category usage behavior, their shopping behavior, pain points they may encounter as they’re using the product in category, and their media habits. There’s also psychographics, which are really, I think, one of the keys to understanding your consumer. These are their attitudes, beliefs, and various lifestyle factors.

So in determining the segments, you look at what makes them different from each other; so we have to understand the segment’s beginning with that. Understanding the segments also means ignoring certain factors; for an example, you will always find that there are some universals. These are things that most or all consumers across the segments believe, or use, or do, and they’re not helpful in defining a segment. For example, in a segmentation on packing lunches, you may find that all mothers say that nutrition is very important. That’s a great thing to know about the category, but it does not help you define the various segments. On the other hand, knowing that this segment tends to use packaged-lunch solutions, whereas this segment likes to include several different fresh items—that helps us to define the segments and tell them apart from each other.

It’s important also to understand the value of your segments. For example, in a recent breakfast restaurant segmentation, we looked at frequency of eating breakfast out and average check size to determine a value for each segment. We could then look at our client’s share of that value, and that would help us identify the risks and opportunities of targeting this segment versus another.

We must also identify segments that are actionable. We analyze segments to see if they have needs and desires that we can target, either with current products and services or innovative new solutions.

And finally, we have to look for targets that are accessible. Can our product reach this segment physically through geography, distribution channels, and what have you, and how can we best get our message to those consumers via social media, advertising, events, or other means of reaching out?

So, to sum up, in choosing the segment or segments which to target, we look for differentiation, value, actionability, and accessibility. Thanks so much for joining us today. I hope you’ll join us for our next session, which will be on bringing the segments to life through persona development.

See you soon!