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Doug
Anderson
EVP, Research and Development
Spectra
Marketing
On attitudinal surveys, your category's consumers tell you
they care about health issues and what their family eats and
that they often seek out healthy and nutritious foods. Nevertheless,
at 12:30 on a Tuesday afternoon, with a load of hungry, screaming
kids, the minivan surreptitiously pulls into a major fast
food chain for kids meals all around. Forty-five minutes later
in the club store, what goes into the cart reflects those
health-oriented attitudes as long as the assortment, price,
in-store promotions, shopper's checking account balance and
the now merely boisterous kids cooperate.
Were your consumers lying about how they feel about fat, sugar
and preservatives? In all likelihood, no. They told you what
they believe. Moreover, if you were to ask them again, they
would tell you the same thing. They do want to shop, eat and
live in a certain way. However, the chain of events that tie
attitudes to actual purchases is long and can break at any
point in the consumer's purchase decision process, for any
number of reasons.
The keys to successful consumer segmentation are to: understand
the entire purchase decision process, from deeply held core
attitudes, to need states, to choice of channel, to final
purchase; and to account for as many of these factors as possible
in the segmentation process. To effectively segment consumers,
marketers must understand all of these factors, not in isolation,
but together in a full, 360-degree view of consumer behavior.
By tying attitudes, need states and purchase occasions together,
marketers can begin to understand why certain items end up
in the shopping bag while others gather dust on the shelf.
Understanding Consumer Dimensions
Spectra's proprietary segmentation model, the Consumer 360°,
helps marketers understand each of these factors independently
as well as how they interact with each other along the path
to product purchase. By unifying the disparate consumer data
sources within a common segmentation framework, the Consumer
360° process cuts across all of the layers of the consumer's
purchase decision process to help explain actual consumer
behavior. This holistic approach allows marketers to understand
their consumers by segmenting across the entire purchase decision
process [See chart 1]. The Consumer 360° model is based
on Attitudes, Demographics, Need States and Purchase Occasions.
Attitudes—Attitudinal
data provide a deep look into consumers to help marketers
understand why they do or do not purchase particular products.
Marketers can use it to understand how consumers see products,
not how we want them to see them. The problem with ending
our consumer segmentation exercise here is that there are
many steps between these core beliefs and product purchases.
For many reasons, these core beliefs may or may not be reflected
in purchases.
Demographics—We use demographics to account for structural
constructs in the consumers' world that impact how they purchase
products, including demography, seasonality, climate, location,
etc. Of these, the most vital to understand is often demography.
High- and low-income households, large families and singles,
young and old, etc., regardless of how similar their attitudes,
needs and channel selections may be, do not often buy the
same products for the same reasons. A single set of beliefs
and a simple product need may lead an upscale single thirty-something
to purchase one product and a middle class family to purchase
another.
Need States—The next layer in the purchase decision
process contains what we call need states. In effect, these
describe what the consumer is trying to accomplish with a
particular purchase. Need states can override attitudes or
they can reinforce them. Consumer segmentations built purely
on needs can easily miss underlying motivations or demographic
factors that may tie different purchases together.
Purchase Occasions—Purchase occasions describe when
and where a consumer buys a product. The channel options available
at the time, product assortment, price and how the brands
are shelved all interact with the need the consumer is trying
to fulfill, their demography and core beliefs. As with attitudes
and needs, if marketers only think about consumers' in-store
behavior, they will often fail to understand how consumers
got there and what they're trying to accomplish.
Good consumer segmentation must account for as many of these
factors as possible, creating segments that cut across the
deeper layers in the purchase decision process.
A 360-degree Case Study
First, let's begin by exploring how consumers think and feel
about a category—the innermost layer of the Consumer
360° process shown in chart 1. The results can be expressed
as a segmentation of consumers, grouping them solely based
on attitudinal data. Next, consumer profiles are created based
on attitudinal segmentation [See chart 2]. An ideal way to
marry the deep consumer understanding that can come from attitudinal
data to accurate purchase information is to conduct a survey
within the ACNielsen Homescan panel itself, linking the attitudinal
data to purchase information on a household basis. The case
study that follows uses an attitudinal survey conducted against
the panel.
Because the underlying
survey was conducted against the Homescan panel, Spectra can
directly measure current levels of consumption for the brands
within the category. Chart 2 shows consumption indices (total
U.S. = 100) for the two key brands in the category, as well
as for the aggregation of all private label brands and all
other brands.
Both of the major brands, ABC and XYZ, are consumed most heavily
within two of the attitudinal groups. If the segmentation
were to end here, we would believe that ABC and XYZ competed
directly with each other for the same consumers. Based on
this assumption, we could develop product positioning and
targeting strategies for our brand. But would we be making
the right choices?
By adding an additional type of segmentation to the one based
on attitudes, we can weave in another part of the story. Along
with the creation of the attitudinal segmentation, the key
component of a Spectra Consumer 360° analysis is the creation
of a customized demographic segmentation, a custom Spectra
Grid. This new Grid reflects the unique consumption profiles
of the brands included in the analysis, as well as key attitudinal
dimensions that were uncovered. This custom Grid provides
a detailed view (typically 4060 unique consumer segments)
of consumer behavior for the analysis. From this detailed
view, we aggregate larger, more relevant consumer segments,
either from a category view (i.e., across all brands), or
from the specific view of a single brand.
Besides providing a clear view of consumer types and behavior,
the Spectra Grid is targetable because it also ties directly
to every household, store trading area and media audience.
In contrast to the attitudinal segmentation, which is only
targetable through message or positioning, the Spectra Grid
segmentation is directly targetable across all marketing tools.
By combining these two types of segmentation, we literally
get the best of both worlds.
We perform this analysis by crossing the attitudinal segmentation
with the Spectra Grid to create a consumption profile for
brand ABC [See chart 3].
In this case, the
custom Grid has been collapsed to six key consumer segments.
Chart 3 shows that brand ABC appeals to two of the attitudinal
groups, but is only strongly consumed within two of the Grid-based
groups (Affluent Suburban Families and Major Metro Elite).
By examining the consumption patterns of other brands in the
category, as well as detailed information on other behaviors
(both within CPG and across other categories), the client
can begin to hypothesize why their brand only appeals to particular
demographic groups within the key attitudinal segments. For
example, we can begin to ask:
- Is price more of an issue for some groups than others?
- Are there different needs across the demographic groups
that our brand doesn't meet (i.e., more convenient packaging)?
- Are there different competitive sets in groups where we
do well versus those we do not reach?
By examining the consumption profile of the other key brand,
XYZ, within the same framework, we see that although ABC seems
to share consumers with the same attitudes as XYZ, they reach
quite different consumers demographically [See chart 4]. Brand
XYZ appeals to Greenbelt Empty Nests and Heartland Families—consumer
groups with below average ABC consumption.
We can also track
purchases through another level of the purchase decision process
by using a channel-based sourceof-volume analysis to examine
how these different consumer groups shop across channels.
By first collapsing the key demographic groups for the two
brands, Spectra creates a unique channel profile for each
[See chart 5]. Brand ABC's weakness in the mass merchandiser
channel may help to explain why it does not seem to appeal
to all consumers within the key attitudinal segments.
Turning
Insights into Action
The Consumer 360° process brings the consumer into the
center of all of a marketer's strategies and tactics. This
approach allows marketers to identify opportunities and focus
marketing dollars by executing targeted trade, consumer promotion
and advertising. Further, the segmentation lays the foundation
for more advanced analytic applications. For example, these
segments can be used to:
- Cluster stores for category management applications
- Develop brand positioning and ad copy
- Create a targeted marketing campaign by directly targeting
television and print advertising
- Reach individual consumers via CRM programs
- Understand differences in market structure from consumer
segment to consumer segment
- Use the market structure analysis to create store-cluster
based assortment and space plans
- Conduct a Consumer Marketing Mix analysis to understand
return on investment by mix element
- Create focus groups that include only key consumers
For a marketer to
succeed, every element in the marketing mix must work together.
Core positioning must be communicated clearly and to the right
consumers. Those consumers must be able to find the product
where and when they want it, in the right form and package
size, and at a price that matches the expectations they have
about the product's benefits. To execute in this way requires
the entire manufacturer organization, marketing, consumer
promotion and sales to think about consumers in a consistent
way—through the same segmentation lens. With a fully
rounded 360-degree view of consumer behavior, marketers will
discover that when it comes to consumer understanding, the
whole is greater than the sum of its parts.
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