Struggling to finally unlock segmentation? Find clear water

Amanda Herbert, co-owner and director of consumer insights agency Syren, reveals why she believes segmentation is even more relevant today than when it was first introduced.

How has segmentation as a discipline developed?

In the early noughties, it was very typology-led. As an industry, we’d do a solid piece of research on usage and attitudes with some consumer values usually chucked in at the end of a survey. What quickly happened in the 2000s is that people started to realise that approach didn’t work for all categories, especially FMCG brands that were proliferating and line extending. There was so much choice and so many categories that consumers’ choices became less about who they were as people and more about the needs they had on a given moment of consumption.

From typology to needs

Next, we all started segmenting on needstates, or we started targeting on occasions, such as “afternoon kids treat” or “morning pick me up”. It helped explain a lot about the market and got lots of people excited. But where that approach fell down was that it was too complicated for brands to use. Agencies weren’t guiding clients consistently. For those with a big portfolio of brands, it wasn’t uncommon to be advised to target a brand at a consumer across a number of needs and then another brand to not even target a consumer but particular needstate.

For strategic alignment

In recent years, the industry has shifted away from needs and occasions to demand spaces, demand moments, demand needs, opportunity spaces. Different clients and different agencies use different languages but what they’re doing is essentially the same, looking at: What is a moment? What is a pocket of opportunity? What is a pocket of demand?

On the surface, it’s more complex because it brings together lots of dynamics in a market, combining people and needs, needs and channels, needs and occasions or people and occasions. But what has emerged from this way of segmenting is a simpler articulation of the output. Companies are using it to ground a brand and their portfolio in a space. It becomes the Guiding Light of the portfolio strategy and the anchor point for the positioning.

“It becomes the Guiding Light of the portfolio strategy and the anchor point for the positioning.”

Segmentation should tell us the here and now and allow us to anchor a brand. It can give the landscape of the market through all the brilliant demand space and demand needs tools that are out there. But if we really want to get into what to do, segmentation isn’t the tool for it. That’s where we’ve come to as an industry and that’s a much better place. Sometimes it’s criticised as being too simple and high level but I believe you know you’ve got it right when everybody really understands it and is able to get behind it. Brand teams and research agency teams can take it forward. That’s when qualitative work should come into play, getting granular on: What is that moment all about? How does that moment come to life for our consumers?

What is your biggest piece of advice for getting segmentation right today?  

Less is more. Very often I’ll see perhaps nine segments, nine demand spaces, nine demand needs: that’s too many. You end up with grey water in between them and it’s very hard for brand teams to understand, for instance, how an “energise” need differs from a “little uplift” need. There are usually three or four core macro needs that sit above this. It is hard, particularly with a large portfolio of brands, but not every brand needs a different space: it’s fine to have brands stacked on top of each other. There’s going to be different degrees of premiumisation, value propositions, channels that exist within any one space, so there are other ways that brands can be split within a space. Getting that space commonly understood and to the heart of the consumer nuances and language within it is the starting point. That’s where the magic lies.

“That’s where the magic lies.”

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