Does the segmented-self mean the death of demographics for marketers?
Just because you are the same age as some of the people you see, earn about the same or are the same sex doesn’t mean you buy the same things or love the same brands. There may be some life stage similarities, particularly if you have kids, but it's a leap to think that we are all that simple based only on demographics and there is a real danger you end up stereotyping rather than truly segmenting based on an understanding of your consumers.
Demographic segmentation has been around since the 1920s, when the world was simpler, with fewer TV channels, less choice for consumers and less sophisticated engagement points for consumer interaction and data exchanges to help marketers understand and personalise. Due to the sheer size and scale of things, marketers needed easy ways to bucket people together and age, gender, income and geography provided a good safety blanket. It’s been firmly entrenched in marketing and media for decades but can such a static definition of consumer groups really be reliable in our extremely volatile society, especially in today's economic climate with big data, new influencers and less defined boundaries? Is it really still the most effective way to target? The answer is not in isolation.
We are all complicated beasts. Each of us has filters developed through three significant periods: from birth to 7 years old, from 8 to 13 years old and finally 14 to 21 years old. It's believed this last phase sets up our core set of values helping us distinguish good from bad, valuable from wasteful etc. These help shape the importance you place on things, leading to different people focusing on different things e.g. the environment and community, material goods and wealth etc. Given we all have different psychological makeups, how can age, gender and income alone define us?
Our lifestyles have also radically changed over the last 20 years. The mobile phone allows us to switch between professional and personal. The age of the C Suite has significantly evolved, with the birth of Silicon Valley and new technology changing the age range and stereotypes of the boardroom, creating more challenges in targeting by demographics alone. Retirement isn’t a given at the state pension age any more, and the vast swathes of the younger generation can’t get on the property ladder, all of which makes targeting by traditional age, gender, and income much more complicated.
So how can we start to target more effectively?
You’re as old as you feel
As a triathlete one of the things that always surprises me are my fellow competitors. The one thing they have in common is not their age or income but a desire to challenge themselves and achieve something. This can't be targeted by demographics; it has to be targeted by attitude and requires a different approach.
Bucket list vs basket list
Recent studies of shoppers show why you can't just use demographics to label consumers. It would be logical to assume that younger shoppers use technology more as part of their shopping experience but regardless of age, research has shown , more than half of us still write our shopping list on a piece of paper. There is a ritual to it, and a learnt behavior, probably from our parents, but also driven by our need to escape phones and screens. Again this means we can’t target simply by demographic, we have to target by behaviours.
The generation game
Technology is another area where we see traditional demographic targeting evolving to meet new needs. Our recent global research has shown us that Esports isn't just the stereotypical preserve of teenage boys. Instead we are seeing older gamers (their parents) playing computer games for escapism from their busy stressful lives. Even older silver surfers playing computer games to keep their minds active and to experience new things. Again this shows that demographics are a blunt instrument and we need to target by consumer needs, to truly engage consumers in a more meaningful way.
So where does that leave us?
However you look at it, we need to understand consumers to help shape new products, engage with new campaign ideas and provide better communications strategies and ultimately meaningfully add brand value. But as the recent elections and Brexit voting showed, understanding and predicting consumers has never been more complicated.
Just using demographics to target clearly isn’t the answer, and we need to fuse this with behavioural, attitudinal and needs data and insight to really develop consumer segmentations. There has to be a shift from brand-controlled segmentation to enabled self-segmentation.
With consumers now in control over so much of what they see, isn’t it better to let them choose what’s relevant than to try to predict it based on demographics? For companies that can, the opportunity to use data and single customer views to truly understand and personalise consumer experience is the right thing to do. This year, Wimbledon used IBM’s cognitive solutions to find out what makes a Champion, which allowed Wimbledon to engage and learn from their spectators.
As CRM and data systems improve, marketing technology will take care of the customer understanding for you at an individual level, with the caveat that this needs careful monitoring for algorithm schisms which can occasionally crop up.
But for companies where the data plumbing hasn’t been fixed or where they don’t have the basic data to start with, it’s clear that demographics, and in particular life stage, can still offer a good starting point. Additional qualitative or quantitative work is required to really understand behaviours, attitudes and needs to become truly actionable.
However you look at it, the key point is if you want to create genuine relationships in the marketplace and substantially enhance your marketing strategy, consider connecting to values and meaning rather than just age, gender and income level.