Done well, market segmentation can do so much.
It can uncover entirely new markets (see Blue Ocean Strategy), provide new ways
of serving existing markets and rejuvenate entire categories and industries (remember Swatch watches?), out-maneuver
competitors (Nike segments the market into very small niches so competitors are
contained), and offer segment developers first-rights to the new market (The
Walkman had a 50% market share at a 20% price premium for a couple of decades).
Sure, competitors catch up more quickly today than
ever before – no brand has a free run for ever, or even for very long. But since new product and idea adoption
rates are quicker than ever, first-movers make a splash early, and move on with bulging pockets. Segmentation
is still a winning game. The incentive to hit a home run is still huge. Segmentation spurs innovation.
But segmentation also offers marketers a cop
out: it allows firms to find easy prey. And the easy prey consist of the rich,
the lazy, the busy, the ignorant, and the vain.
The rich (price insensitive consumers) are
easy prey – consider the thin curtain that separates business class from
economy – that curtain, a couple of inches extra of leg room, and a plastic smile
instead of a plastic frown are worth a 300% to 400% price premium to the folks
at the front of the cabin.
The lazy are easy prey. Consumers who are
unwilling or unable to comparison shop will pay a higher price than those that
spend a few minutes clicking or scanning barcodes into a comparison app. Marketers try and make it difficult to make easy comparisons – just
think of how complex comparing phone plans can be. So they target not just the very lazy, but also the somewhat lazy.
The busy are easy prey because they want the
product now, or they have not had time to plan ahead so they have to pay the full
(inflated) price. They don’t buy when there’s a sale on because they’re busy
when the sale is on.
The ignorant are easy prey because they don’t
know where or how to get a better deal. They fail to search for a coupon for an
online retailer, or don’t know how to use the comparison app.
The vain are easy prey because they’d rather
pay for the brand badge, the clothes from the most recent season, the most current
designer, be seen dining at Per Se.
The rich, the lazy, the busy, the ignorant,
and the vain are all easy targets for marketing. They are easy to find, easy to
reach, and it’s not that difficult to convince them to pay more for products
and services that are only superficially differentiated. The celebrity
endorsement, the spurious feature, the fancy packaging, and the proliferating
product line offering empty choice are all symptoms of segmentation gone
slothful. They make marketing “too easy,”
and marketers lazy. And in a classic twist of bad marketing driving out
good, it pays to target these segments.
C'mon marketers, we can do better.
4 comments:
As a young father, I see the ultra-luxury baby accessory category as the epitome of selling to the rich, busy, and vain. Priced approximately in the stratosphere, and retailed through exclusive every-baby-accessory-possible-outlets (yes, I get dragged along to these dog and pony shows all the time), the average "mortal" could not in their wildest dreams have imagined this product category until they saw it. $2,000 for a stroller?
Fortunately (or unfortunately), marketers aren't mere mortals ;)
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