"Even Sophisticated Mass Marketers Need Targeting" is the title of a column by Mark Ritson, scientist and marketing columnist, published in Marketing Week following his sabbatical. The article discusses the tension between mass and segmented marketing, a subject that remains highly relevant. Ritson explores the concept of "Sophisticated Mass Marketing" (as defined by the Ehrenberg-Bass Institute), which challenges an industry trend towards excessive segmentation—dividing markets into often arbitrary subgroups and, in doing so, limiting reach to only a fraction of the potential market.
The article includes insights from Marc Pritchard of P&G, who advocates for a broad reach for FMCG brands, aiming for 90–100% reach rather than the more common 50–70%. But does embracing a mass marketing approach mean excluding segmentation?
"No, certainly not", says Edwin Rietberg (Data Strategist & team lead Research & Insights at dentsu Benelux). Reaching the entire population is just as inefficient as dividing the population into too many segments that are too small. The matter is more nuanced, as the marketer must first answer the following short but complex question: who is in the market for your brand or product and who is not? This is actually the same question you must answer if you want to apply any random segmentation model at all. Sometimes the answer can be relatively simple, for example: all beer drinkers aged 18 and over. However, this raises an additional question: should we not take all alcohol drinkers as a volume target? After all, we do not want to exclude wine drinkers as potential switchers. Hence, it can add complexity as more variables come into play, for example the momentum; current users, switchers/entrants, future entrants, and current users who want to turn their backs on your brand.
In short, sophisticated marketing does not exclude targeting; on the contrary. In this context, the term ‘sophisticated’ refers to the marketer first identifying the potential in the market in order to arrive at a definition of the ‘entire’ population. At dentsu, we also speak of the "volume target" or "audience" when referring to sophisticated marketing. In fact, that is a first step towards segmentation as well. Step two is a more practical matter one must consider: namely, can you afford a mass marketing strategy? Only the big brands are able to do so; the rest are forced to divide the market into regions, sub-segments as part of the entire segment, propensity audiences (the likelihood of the individual to buy the product based on certain characteristics) or other segmentations.
Research from the UK shows that almost two-thirds of British brands cannot clearly explain who they are targeting and who they are not. We believe the situation is similar in the Netherlands. After all, targeting is not a goal in itself! First, determine who your potential target (sophisticated or volume) group is. Once you have determined who that group is, you need to ask yourself if there is a good reason to segment this group any further. Good reasons for further segmenting include:
• The segment you are operating in is a (niche) segment with homogeneous customers who have the same needs and characteristics;
• The segment is too small for a mass marketing approach;
• The budget is too limited to reach the entire volume target group;
• The volume target group is too diverse and consists of multiple homogeneous subgroups, each with their own needs, wishes, behaviour, and/or media usage;
• The volume target group is divided across different language areas;
• And there could be more reasons.
Equally important as defining and segmenting your volume target group is considering the implications of segmentation for your daily business operations. Clear and detailed profiles of the groups within your segmentation are necessary to provide you with input at the following levels:
Marketing strategy: Are the segments large enough in numbers and value to make them profitable from a marketing perspective? Do not lose sight of the volume target group. In almost all cases, the growth objective (sales or market share) is formulated on the total market. And that objective can only be achieved from the total market and not from the sum of the segments, which do not add up to 100% of the volume target group.
Communication strategy: Do you have enough information about the differences in needs and wishes of the segments to be able to offer them a message that is relevant to them? Segmenting and then offering everyone the same message doesn’t make sense. And do you have the resources or capacity to create separate assets for each group? A quick calculation: with 4 segments and a media plan with 5 channels, you already have 20 different assets. Not to mention that you want to serve different messages in each phase of the funnel.
Media strategy: Do I have enough information about the media behaviour of my segments to reach and activate them? Many segmentation studies provide too little insight to base a balanced media plan on. Let alone that you can activate the segments directly digitally.
At dentsu, we have given this much thought and adjusted our tools accordingly. Our global consumer research, named CCS, enables us to create segments from different starting points. In our consumer research CCS we can create segments from different starting points. These range from first-party data / customer databases, customer-specific segmentation research (including Motivaction or WHIZE segmentations), socio-demographic, psychographic or lifestyle segmentations and more.
For these segments, we can create a complete profile with more than 15,000 attributes, including lifestyle elements, the consumer journey, and the path-to-purchase within a segment. Moreover, we create a very extensive media profile on which we can build the media strategy in our strategic planning tool. The circle is complete when we activate the segments via Merkury, no matter how extensive these segments are qualitatively—directly online on different platforms or via our proprietary tool DV360 (see picture below).
Inspired? The end of the year is approaching, so now is the perfect time to take another look at your target groups.
If you would like to know more, contact Edwin Rietberg (Data Strategist & Team Lead Research & Insights at dentsu Benelux).