Thinking / Insights

Embrace Customer Complexity for Effective Segmentation, Targeting and Positioning

Maverick Intl Eyelashes Segmentation Targeting And Positioning June 2024

When building a brand or even reviewing your current market value and growth, how often do you examine the effectiveness of your marketing efforts – particularly how your segmentation, targeting and positioning practices result in quality leads for your sales teams?

We often meet potential clients falling into one of two main buckets here:

  1. Targeting a very niche persona, focused more on who the client feels their target customer is, and how that target customer can be served by purchasing with them.
  2. The dreaded "Spray-and-Pray" – chucking the kitchen sink at their intended market and praying that something sticks with a customer they think they want.

Both buckets have some merit, but neither is very lucrative in the long run – the first tends to make your 'target market' disappear relatively quickly, and the second tends to lump you with the 'spammer' label.

So, how can we better research the actual customer and design our service to actually serve their needs rather than push invented services to fill hypothetical gaps?

Embrace Customer Complexity

Back in 2021, the Harvard Business Review published a piece on failing start-ups, stating a terrifying statistic: more than two-thirds of start-ups never deliver a positive return to investors. In the piece, Tom Eisenmann suggests this is because the failing start-ups fall into two broad camps: getting involved with the wrong investors, or launching before proper market research is completed.

For most, it may seem obvious that research should be done before bringing a product or service to market. Still, lean start-up methodologies tout pushing out a minimum viable product (MVP) quickly and learning and iterating on the fly after that. This type of business can be problematic for several reasons, not least that the time and money you supposedly save by pushing out an MVP early is eaten up very quickly by fixing unseen problems irritating the very customers who may have purchased the finished result and are now disillusioned by your business practice.

Additionally, by not conducting proper market research in the initial service phases, you risk falling into one huge hole: confirmation bias. We know so much about confirmation bias and its potential risks for business, yet so many companies still fall for its charms – after all, who wants to admit that the business idea they've birthed serves no one and will make next to no money?

To avoid confirmation bias, organisations must change their viewpoint completely – your goal must be to prove that your potential customer base requires a service you can provide. But how do you go about finding those particular customers to begin with?

Make Sense of the Chaos

Market-oriented research presents you with a much broader, messier market landscape than you may have initially considered. To narrow your lens and hone in on your ideal customer, you'll need to understand and correctly apply segmentation to cut the market to particular focus areas and strategise based on your ideal segments. But at this point, you should still only focus on the market audiences, not on how you will engage with them.

Engage with any marketer long enough, and you'll undoubtedly come back regularly to the STP theory – this theory of segmentation, targeting, and positioning builds on the concept of brand competition and how businesses can rise above the competition. One particular quote from Kotler and Keller (2016, p.132) sums this up rather perfectly:

"A company discovers different needs and groups of consumers in the marketplace, targets those it can satisfy in a superior way, and then positions its offerings so the target market recognizes its distinctive offerings. By building customer advantages, companies can deliver high customer value and satisfaction, which lead to high repeat purchases and ultimately to high company profitability."

The key thing here is that the repeat purchases and profitability come after you have successfully:

  1. Segmented your audience into particular needs, defining characteristics, and buying ability (and, crucially, the particular players you will be competing with for their interest)
  2. Targeted their particular needs and designed your service to match or exceed expectations in this area
  3. Positioned your brand as the primary solution, distinct in its ability to solve the customer's needs

Solid Foundations for Lasting Strategies

Segmentation allows marketers and businesses to move away from reliance on averages – after all, an average representation can often be more misleading than helpful. Additionally, segments can help us to better choose the audiences that have the most potential for the desired result – for example, separating your existing customer base from the potential audience can help you to pinpoint what prompted their purchase, and design your marketing techniques to maximise your results based on that data.

One of my favourite examples of effective segmentation is Alfred Sloan's General Motors strategy – creating brands to service the segments he saw in the marketplace allowed him to position more luxury brands to those who could afford them while focusing more affordable brands on those first-time buyers or those with less disposable income. Note here as well that by segmenting his audience this way, his marketing and sales efforts didn't go near cannibalising his audiences – each segment was its own clear group with its own particular needs and wants. Sloan created a service that capitalised upon itself – once you were in the GM family, you could be upsold to the next run, and so on.

Maverick Intl Eyelashes Segmentation Targeting And Positioning Mid Post June 2024

Design for Success

So, how can you design for success with segmentation? I had the pleasure of joining the Marketing Mini-MBA run by Mark Ritson last year, who detailed a dedicated process for defining your segments – the Meaningful x Actionable grid. This grid helps you to lay out exactly what you need to understand about your audience:

  1. What's meaningful to them
  2. How you can measure those meaningful factors
  3. How to collapse variables into similar groups (without stereotyping)
  4. How to value the segment (are you spending time on audiences that can't afford your service?)
  5. Is there any spillover between your segments (e.g., is Segment B influenced by Segment A's decisions or buying power?)

So, how do you then use this information to target those who need your service? Sophisticated mass marketing is a viable option and works very well as a brand awareness methodology. However, it can be far too expensive for the average company to see positive returns on their efforts. As a result, most companies will target dedicated segments that they know their solution can help (and will be interested in said solution) and then expand as the business grows. A well-known example of this "value creation and capture" is Airbnb – the initial plan was to target those visiting conferences in towns sold out of traditional accommodation options.

Targeting, in any sense, should come once you know your target market – otherwise, you'll fall into the "spray-and-pray" category quickly. That's not to say that targeting wider audiences is a bad plan – generally speaking, you'd want at least one brand awareness strategy targeting your defined segments and those who exist in more expansive but similar segments. However, brand awareness campaigns have a very different target action to lead generation, and that also needs to be factored into your overall goals – should you spend your marketing budget on reaching an audience that might be interested in your service, or should you focus on those who may simply need convincing that yours is the brand for their particular need?

Design Your Message

I spent a weekend recently at a friend's hen party (this may seem like a tangent, bear with me) and witnessed several of my friends becoming frustrated with their false lashes – they were too far over and tickling their nose, the glue was drying too quickly, the corner wouldn't stick down quite right, so on, so on. But we all felt that the eyelashes completed the look we were going for – it just wasn't the right product for what we needed: we wanted to enjoy the night, not worry our lashes would drop off in the taxi or into a drink.

So, in a market that wants to temporarily enhance their features without the accompanying headache, how does your product stick out? By creating magnetic lashes that may be more expensive but eliminate those issues. Then, how do you stick out against the various competitors that have also produced the same solution? You appeal to your dedicated customer persona – whether that's me, who wants the easiest thing to apply (without a finicky applicator), or one of my friends, who wants the lashes to be accompanied by glittery magnetic eyeliner. And you'll still want to be aware that these girls are friends and are likely to be influenced by the other in their choices (see the meaningful x actionable grid being pulled in?).

Your message, therefore, needs to be designed to match the needs of the customer you're aiming to reach. Whether that's a B2B or B2C customer, your audience is unique and should be treated as such. You'll need to understand exactly what your brand stands for, how that applies to your target segment, and how to reiterate and reinforce it to your target customers. It's a means to an end – the messaging that gets your customers in the door, that prompts them to take that step towards becoming a confirmed customer (or repeat customer as preferred).

All in All...

The market, consumer, customer, and even marketing itself are continuously changing. There are any number of different theories and methods to prescribe to, and various theories get updated as the world changes and moves on.

STP, as a theory, is sound and helps to quantify and structure our marketing efforts, detailing steps that allow us to go back at any given time and tweak, test, and change our plans to suit the changing customer landscape. Given the ebb and flow of various customer needs and interests over time, the worst thing a marketer or business can do is tenaciously hold on to their original marketing plan and strategy, so ensuring your team regularly reviews and restructures this strategy to match customer needs will help you to maintain and improve performance over time, which is always the end goal for businesses, no matter what product or service you provide the market.

For expert insight and direction on applying STP to your marketing plan, get in touch with our Marketing team at Maverick today. Our team has helped a wealth of companies improve their market position, performance, and conversion rate over time and would be happy to discuss options to suit your unique needs.


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