Segmentation for Fishermen

In the debate about product-market fit, the phrase "boiling the ocean" is used to negatively describe a target market that is too big to effectively service. Can a product be good enough for everyone? Not really - as the one size fits all mentality ignores many of the obvious and subtle differences between individuals that can make or break a buying decision. On the other hand, the product and marketer needs to balance the needs of the individual sale with other considerations, such as volume, cost to produce/deliver, product maintenance, and support. In my earlier segmentation post, I discussed how log analysis and excel spreadsheet cranking let to understanding a segment.

In the big picture, you won't always have excel jockeys or tools that quickly reveal market segments. That when you take a deep breath and acknowledge that segmentation can and does take many forms, leading to misunderstanding, misuse of the terminology, and poor delivery on expectations.

When creating products or marketing campaigns, there are many layers of customer identification. Here are a few:

• Demographics (age, gender, location)
• Psychographics (personal interests, activities, and opinions)
• Behavior (specific site actions, loyalty engagement, frequency and usage rate)

The cost of segmentation mechanisms increase with the dept of the data-set, but the resulting targeting should also yield the best results. Imagine the difference marketing to a Female of 35 years, with 2 kids in elementary school, vs marketing to a Female of 35 years, with 2 kids in elementary school who uses coupons, watches Ellen, and likes reading books? How would that change product or the marketing campaign? Would that change if you know she spent 2 hours a week on coupon sites, read mommy blogger reviews, and signed up for 3 product safety for kids email lists?

Don't get too carried away. Having more data could lead to analysis paralysis. The smart marketer knows that he/she needs to wade through a haystack of profiling info and extract the key actionable nuggets that allow him/her to make an impact. If profile data suggests that the physical or online places that the target 'hangs out' are within your ability to reach them, then 'go fishing' there. This common sense advice is a basic extension of using the old BPA statements for magazine advertising applied to online advertising or other physical events. Find the venues and vehicles where your target segment is involved or engaged, and communicate to them there.

Social media explained and the next phase of #socialmedia

While people debate social media and what all the services do, I found an elegant, yet tongue-in-cheek, image from Adverblog that does the job admirably.

From a clarity and classification standpoint, this image  delineates a complementary ecosystem owned by the major companies shown. Nearly every social media company who currently or hopes to compete with one of the leaders would overlay one or more of the companies listed.

If you agree with not only the implied classification but also the market dominance suggested by the image, then you may also agree that any competitor in that space has a low probability of success due to the ownership of each social media category by an incumbent 800lb gorilla.

New entrants, may attempt to introduce product suites, integrated features, or better differentiated features, however the problem is not one of a better product, but one of category ownership. A new entrant with a suite or integrated product must be more than just better with some feature advantage. They need to overcome thought leadership of each of the major competitors that they overlap. I would argue that direct competition for those major segments is over, unless one of those leaders grossly pisses off their user base.

The implication for me is that a new entrant must follow a narrower vertical strategy where they can capture both the pain and imagination of a niche market and own it. Yes, the whole of social media will likely follow the path of social networks - products for businesses in narrow verticals where the open access and unsecure information of the current leaders creates social media demand that lacks the privacy, security, and narrow market knowledge that practitioners in a narrow field of focus require.

This is not new, of course, as this parallels the growth and segmentation of enterprise software. Where once there was ERP, CRM, and Supply Chain, etc, there are now those software (and SassS) in specific verticals such as government, human resources, finance, automotive, energy, bioscience, medical etc. The only thing that prevents or delays the next wave of vertically focused social media, is the process and structure of demonstrating consistent and repeatable results and ROI in the same way that CRM analytics enabled the creation of pretty charts showing how to identify, cull, and optimize that sales funnel.