The Limits of Market Segmentation

By Tom Dougherty

Identification, Notification, and The Three Keys to Persuasive Branding

In the self-serving world of commercial advertising, the costs of advertising communication messages continue to skyrocket. The stakes are high because the cost of failure is high, yet the promised land of success remains illusive. How do you judge the effectiveness of the communication? Advertising Association awards? Critical acclaim? Peer commentary? Employee reaction? Competitive reaction?

The Limits of Market SegmentationWhile all of these may be important, the only true measure of success in advertising remains increases in sales. It seems obvious to measure an ad campaign’s success by looking at sales increases. However, most major advertisers settle for critical (creative) acclaim first and mediocre sales results, second. All because they have no accurate means of measuring sales increases due to advertising success. Here is why. Let’s talk about the three critical elements of successful advertising, two of which ad agencies and marketing departments already do very well. Let’s grade each element as we go.

Identification and The Limits of Market Segmentation

The first discipline is IDENTIFICATION and we give it a B+ Identifying the correct target audience is crucial to success. You must find and understand the market you wish to influence. Marketing departments, when they are not self-serving and therefore self-deluded, do a very respectable job of segmenting the target market in order to identify those potential customers who offer the greatest opportunity for sales increases.

The Limits of Market SegmentationThe traditional method of segmentation, segmenting into primary, secondary, and tertiary markets has been supplanted by a much sharper understanding of the usage and habits that seem to define the target audience. Advertising agencies and their media departments have market segmentation down to a science.It begs the question. What are the limits of market segmentation?

They can identify a particular market segment’s media habits to such a fine degree that the myriad choices of media placement and frequency seem to have the clinical precision of a surgeon’s scalpel. Remember that the recommendations are not as precise as the ad placement of them and that there is no science of media placement.

Two different agencies may have very different media recommendations both most certainly based on sound thinking. However, reach and frequency are founded on preconceptions based on experience. There is no absolute law that states that “X” number of impressions is necessary to stimulate action. These numbers are based on experience but experience with generally “failed” advertising — but more about that later.

Notification

The second discipline is NOTIFICATION and we give it an A-. To be successful at notification, the discipline ofidentification discussed earlier must be mixed with the creative juices that break through all the ad clutter and get potential customers to “sit up and pay attention.” You must reach the correct target audience and then you must find a way to get them to notice your message. The “myth of the information age” makes that a daunting task.

The Limits of Market SegmentationIt is however, the main skill set of major ad agencies. They have the creative ability to entertain and many of the advertisements they create become part of pop culture lure. From “milk mustaches”, Visigoths trying to find new jobs, to athletes sweat glands dripping with an action beverage — creative images abound. Agencies tout their creative prowess and bandy about phrases like “break-through advertising,” “creative firepower,” and “award winning creative development.”

The special effects, high intensity sound tracks and high priced talent have made commercial production the equivalent of a Hollywood blockbuster. Many of the commercials are “better” (at entertaining) than the programs they themselves sponsor. Seeing the male dubbed-over voices of the identity thieves as two little old ladies talk about the motorcycles they purchased is funny stuff. It certainly gets your attention, is entertaining enough that you might even look for it… or temporarily stop what you are doing and look up. In an age of advertising creativity, the ability to entertain has never been higher. But, is it persuasive?

Persuasion

The third discipline is PERSUASION and we give it a C-. The baton has been passed from entertainment to persuasion unfortunately; the skills necessary to persuade customers to change their current behavioral choice and choose a new brand have fallen on hard times. It is as if the market struggles only to influence customers who have come to the decision to switch brands on their own. However, the largest segment by far is the pool of customers rooted in the status quo.

The Limits of Market SegmentationStealing share means grabbing market share from your competitor’s brand camp and making them your own prompting consumers to change and not just waiting for them to change. To be persuasive, a selling argument needs to engage both the left and right brain. It needs to build a level of intimacy with the customers that allows them to see themselves in the brand message so that they can visualize themselves as being part of the brand.

It needs to reach out and build empathy, so that the brand message is received sympathetically and not as a broad challenge. It needs to represent current beliefs in the target market and yet not seem so trendy as to be dismissed. Think about the number of commercials you have seen in the past year that are so remarkably entertaining that you repeat the story-line to a friend at the office coffee pot… only to struggle to recall anything other than the “punch-line”.

Such a commercial is memorable… but if you can’t even remember the brand, it can’t be considered persuasive. Today, everyone seems to want to produce hip and humorous advertising. The funnier and more absurd… the better. The problem with this tact is that humor has a short shelf life and the joke may be more memorable than the message. Ad agencies love humor because it wins awards, clients love it because it makes them feel progressive and customers… well, they love it too…for entertainment but not necessarily for the reason it is intended.

Brand As An Afterthought — The Key to Persuasive Branding

One of the ways you can ensure that your advertising messages are working as hard as they can is to ensure that your brand definition has been created in a mode to be persuasive. Too often, brand is a theoretical afterthought considered by the agency in a single line that is entitled “Desired Brand Image.”

Your ability to persuade new customers is locked into your brand permissions. Businesses know that their profits are determined at the signing of the sales contract. In persuasion, your ability to persuade is determined when your brand charter is created. The permissions that arise from this brand charter determine the nature of your advertising and the delivery of the promise of that brand.

The advertising is the suit of clothing and the brand is the body it covers. Wearing clothing that does not suit the body makes it seem uncomfortable, awkward, and ill at ease. Almost all advertising works to some degree and is better than the absence of advertising. Having a voice in the market will deliver some results because being considered requires being known. However, this is very different from being preferred and coveted as a brand.

Choose Again

The Limits of Market SegmentationChanging ad agencies usually brings a bump in sales, not because you have made a great choice in the new agency but because changes in your advertising messages stir attention. Keep your brand consistent and keep your advertising fresh.

Wear a new suit of clothes to work and your colleagues will comment because a change from the expected is worthy of note. Wear a new style of clothing to work, one that is not in keeping with the you they have already come to know, and they will also comment, but the most telling comments will be whispered behind your back.