Segmentations and market segmentations can be an incredibly powerful tool for businesses, providing strong platforms for innovation and a targeted approach to customer relations. However the strength of customer segmentation hinges on the level of similarity between the individuals in each segment. The greater the similarity the more comprehensively the group represents its individuals and as such the more accurately it predicts their behavior.

The more angles that we can describe the individual from the more points of similarity we can draw between them. Each individual angle is only part of the picture of the individual, like the sun shining on the moon.

The majority of segmentations are based around one angle; the articulated views of an individual, what they say they do, what they think, what they want etc…

However there are a couple of inherent problems with this, firstly articulation statements can be very hard to write, and must be carefully thought out in order to ensure they resonate and are interpreted in the same way for consumers, particularly across international borders. Take the statement “It is important to me to eat healthily”; there are a number of areas that this statement can be open to interpretation by the respondent; what is the definition of healthy? How important does it have to be?

The second major issue with an articulated segmentation is that it is all based around a respondent’s view of themselves as opposed to an impartial third party view of them. A respondent may say that eating healthily is important to them however if we looked at their shopping bills we might see that they buy a below average amount of fruit and vegetables.

By looking at consumers from the articulated angle we don’t see an accurate picture of their actions. Experiments in behavioral economics have routinely shown that the gap between our view of ourselves and the truth is wider than we think. A shining example of this is consumers’ understanding of mobile tariff usage; despite the myriad of different ways to track data usage, the vast majority overestimate how much it is that they use. For a complete picture of the individual we must take into account this discrepancy between perception and behavior. An example of this would be m-commerce; to identify the leading edge consumers you don’t want to look at those that say they are happy to make payments through their mobile you want to look at those that already do.

But there are a number of different ways we can look at the individual from a behavioral angle;

Consumers can report their behavior and this is often the most cost effective way of collecting behavioral data; however it needs to be done carefully to avoid the pitfalls above. Questions need clear parameters and to be strictly reporting as opposed to summarizing or predictive.

Take activity frequency:

1. How many times have you been swimming in the last month?

as opposed to;

2. On average how many times a year do you go swimming?

or

3. How many times will you go swimming in the next year?

There are a variety of other ways to build the behavioral angle but the availability of these can vary greatly by market:

• Data from passive monitoring of smartphones, geo-tagging and browser recording
• Qualitative ethnography can give an independent observation of the individual
• Customer data such as sales can be used by organizations to provide rich understanding of an individuals’ specific interaction with the brand. Particularly useful when designing a segmentation that can be integrated back into a client database

A purely behavioral based segmentation however is also a flawed concept because it does not acknowledge the importance of the idealized self. The idealized self is a product of our aspirations and these are what drive purchases. We may see ourselves as a bit of a foodie and so will be drawn to the look of the fridge advertised alongside bottles of wine and wheels of stilton. We convince ourselves that we definitely need the ambient section for storing Merlot at optimum temperature, even if our appliance rarely sees anything more adventurous than Carlsberg and Baby Bell. The aspirational self is a key part of the marketing and messaging value of segmentation. It is essential to understand the consumer not just from your own perspective but theirs as well.

The most powerful segmentations therefore will have the most rounded view of the individual including;

• Company understanding of the way in which a consumer interacts with its products
• Consumers’ perception of how they feel and what they want
• Consumers’ reported behaviors
• Observation of consumer behavior

For more information please contact Samuel Carter at samuel.carter@gfk.com.