From a small business perspective, this is mandatory reading (viewing? Do you read an infographic?) Think of social media and how it currently fits with your business needs, objectives, and high level marketing strategy. Now rewind to five years ago and consider these same elements. Whoa! Like your business, (and your customers) consumer preferences and usage of social media (ahem, the social web) don’t stand still for a moment.

And for anyone shedding a single tear for myspace, I say good riddance!

Part 2 of a series regarding the mobile web…Enjoy!

Enjoy!

Fascinating stuff for us marketing and branding nerds. This article takes a few different pieces of well-conceived consumer research and lets us know what we (marketers) have long suspected – brands are purchased “tribally” to signal who we are, what we care about, and why we are unique.

The further finding the startling one, however.  It seems that the acts of purchase and consumption of branded products makes us “actually seem to believe (we) become like the brand image.”

Powerful stuff for you strategic branding types out there. Enjoy!

“Jeffrey Kalmikoff and Jake Nickell, the masterminds behind the hugely successful, crowd-sourced t-shirt design website Threadless, chart their changing working styles and mindsets throughout eight years of partnership. Their “Do-First Work Ethic” encompasses virtues like: staying scrappy, being 100% reactive to your community, embracing a DIY approach, learning from failure, and always (always) taking the first step.”

CLICK HERE

Uploaded part one of my whitepaper about Market Segmentation + Identifying your Target Market, turned into a branded vid,

and voila! Hope you find this interesting/useful!

What you’ll learn

To begin, I’ll provide an overview of brand engagement and its importance to your business. Then we’ll look at how the use of multiple media affects the impact of a communication effort in the traditional “broadcast” advertising world. All of this is precedent to presenting the 4 strategies for your small business to build brand engagement in the digital/social space. Whew! Ready?

What is brand engagement? Is it like a wedding engagement?

Actually,yes. Brand engagement is the quality and quantity of positive thoughts, emotions, and associations that consumers have towards your brand promise.  Just like your significant other, the strength of the engagement is tied to how positive these associations are. Weak associations make for a week engagement. (On the opposite end of the spectrum lies brand avoidance – the marketers’ equivalent to being left alone at the altar.)

Why is it important to build brand engagement?

Another way of looking at brand engagement is that it is the degree to which your target consumer believes in your brand promise. Hearing, understanding, and believing your brand promise are the prerequisites for brand engagement, and purchase. No engagement = no purchase. (The only exceptions are impulse purchases where no prior brand engagement exists. These scenarios are rare; the marketers’ equivalent of eloping.)

Just like ordinary relationships, the level of engagement in the minds of your target consumer will vary over time, and depends on:

• The frequency of contact (too little or too much contact is disagreeable)
• The length of contact (being curt or babbling on at length are perceived as negative)
• The quality of contact (depends on each party’s preferences. The content that is brought out during the contact should ideally be of interest to both sides – otherwise, it becomes a monologue, not a conversation.)
• The brand personality, voice, tone and manner. These are all elements of your brand that should be aligned with the needs, wants and expectations of your target market.

Where does your brand “touch” consumers?

Intuitively, it makes sense that the target segment(s) that you have selected for your small business should be presented with the opportunity to engage with your brand in a variety of ways over a period of time.  If one of your strategic marketing objectives is to build consumer engagement with your brand, (and it should be) here’s a 2 step “how to”:

• Identify all the “touch points” where your target consumer can or does come into contact with your brand. Even when you introduce the reasonable (and ever-present) constraints of budget and time resources, this should be an expansive list.
• From this list, select those touch points that are likely to have the greatest efficiency – meaning the largest impact at the smallest cost.  These are the touch points that will matter the most.

These touch points are not necessarily limited to traditional business to consumer advertising – in fact, quite the opposite. Your shortlist above may include:

• The appearance and conduct of your frontline customer service staff
• The hardcopy documents you present to clients or prospects
• Your business card
• Your answering machine message
• How you ask for the sale or ask for payment

A lesson from traditional brand building: The Media Multiplier Effect

Media planning theory proposes that within a tactical effort targeting a specific audience, the impact of any given media will be enhanced by the every other media; the sum impact being greater than that of each individual media itself.

This is called the media-mulitplier effect, and is utilized to varying degrees in the communication campaigns of all the top-100 global brands.  A great example of this is Apple, who used the MME approach when attempting to develop large-scale product awareness during the launch of the iPod. Integrated messages appeared in:

• TV
• Web display and animated media
• Print
• OOH and billboards
• Store-level promotion
• Everywhere else?

Essentially a textbook case of “broadcast branding,” the target consumer found themselves faced with the same integrated message from Apple in a variety of media for the duration of the (successful) product awareness/launch campaign.

Broadcast marketing is sooooo 1999. How do I build brand engagement now?

Usually recommended by media agencies to small and large businesses alike in the context of developing mass communications efforts, the media multiple principle holds true when the objective is building brand engagement in the digital space – and particularly on the social web.

4 Guiding Principles:

• The social web is where real people go to interact with each other. As such, they (i.e. the social web in aggregate) don’t really trust marketers.
• The social web won’t respond to a traditional marketing message or offer: you’re crashing the party if you try a sales pitch.
• Building engagement on the social web means building engagement with people.
• On the social web, you don’t have target customers: you have peers.

4 Strategies to build engagement with your brand on the social web

1. Be open to engagement.

You are looking to start a conversation with someone who may be interested in what you have to say. Running with the “real world” inter-personal relationship analogy, you won’t meet a romantic interest  by staying at home and hoping someone calls you. In short, you need to get out there – your brand has to have a presence on the social web.

How to do this: As mentioned above: On the social web, you don’t have target customers: you have peers. Identify the “social media” spaces where you are most likely to be approached for a social conversation by your peers.  The familiar examples:

• Facebook
• Twitter
• Blogs
• LinkedIn
• Flickr
• YouTube
• MySpace

Be open to being engaged:

Just because you got into the nightclub doesn’t mean you are on the dance floor. In your posts, tweets, and wall postings, make sure you make it easy for your peers to reach you.

How to do this:

• Make it clear that you are looking for comments or feedback on your recently posted content.
• When you receive a comment, whether positive or negative, say thank-you.
• Demonstrate transparency: use open, honest conversational language. Don’t put your brochure copy on your Facebook page.
• Speak to your peers directly. Use “you” not “our customers.”
• Share button: allows your peers to share your content with their peers. Getting mentioned on a blog is a highly effective and genuine way to increase brand engagement amongst your peers (and peer communities) on the social web.

Start talking about things people care about.

This is the old “ok, I’m on Facebook, now what?” conundrum that invariably takes brands out of their “broadcast message” comfort zone and encourages them to mingle. As discussed, this does not involve marketing messaging, sales pitches, or a call-to-action.  If you don’t know what to speak to your peers about, visit blogs or web discussions that they frequent. (You, being a peer, should frequent those online spaces as well. See point one above.)

How to do this: Identify the periphery conversations that your peers are having. Demonstrate that your brand is a valuable go-to for up-to-date info about topics that are relevant.  This will encourage blog and e-newsletter subscriptions, Twitter follows, and video views.

Example: You are a  Toronto-based organic catering service brand. You have secured a presence on the online web and have noticed that your peers are discussing the best place to get locally sourced organic tofu at a great price. Maybe you know of other places to buy this product that your peers would be interested in knowing about. Share this knowledge with them – no sales pitch, no mention of your services. This approach will be appreciated.

Connect across multiple digital spaces.

This is the media-multiplier effect of the pushy broadcast-messaging era evolved for the digital social space. Most social media tools allow interconnectivity .

• Your blog posts will automatically appear on your Facebook page and Twitter.
• Comments on your YouTube video are tweeted and posted on your wall.
• Your RSS feeds appear on your MySpace page.

The same relevant content and conversations you are having with your peers are dispersed and shared throughout the digital space, potentially engaging individuals outside your peer group.

Akin to WOM (word of mouth) communications strategies, increasing the scope of your brand reach on the social web serves to increase your “openness” to engage and connect with peers.

From this connection comes conversations, and from there a level of engagement previously not obtainable through mass-media interruption communications.

A fantastic story and super insight into the social web phenom.

Jack Dorsey: the 3 keys to Twitters Success

Social Media: viral video marketer circa 1859

That’s an impressive number. Ok, so the article which contains this factoid is from last year. To me, that means it’s not really news and I should be found at-fault for sending around antiquated information.

The age of the data does nothing to remove it’s impressiveness nor the “who only knows where they are now” factor.

I have heard many an early-adopter type tell me that online video, and YouTube video in particular, is the search engine of the next generation of social media addicts and social web crawlers.

So, riding a wave of enthusiasm, I’ve built a modest YouTube ad for my business.  Comments welcome, thank-you.

Just finished reading a

I think that small businesses should certainly be able to find some to-do’s and take-aways for their own strategic marketing plan. I agree with the majority of his advice, but felt motivated to post a retort to his comments on the social media space.

But first, the good stuff.

Go mobile!

The last section of his article is very relevant, in which he speaks to the importance of the mobile web for small business brands. This importance cannot be emphasized enough.

The growing interest in utilizing mobile marketing strategies and tactics is the direct result of the rapid acceptance and integration of personal mobile devices into the lifestyle of the North American consumer.

The iPhone, iPad (coming to Toronto at the end of May!) Android and all similar devices have changed the way consumers shop, communicate, and interact in the digital space.

For your small business: Arnold has good advice for you. “If you have a location-based business, start making your communications more mobile friendly so people can respond to your offers and information while they are on-the-go. Sending text-messages and e-mails with mobile coupons and snack-sized bites of product information are great places to start. Also, social media users are more likely to become mobile savvy than the average internet user, so make sure you have a presence on the most common social sites.”

Now, the not-so good stuff.

In the context of social media/the social web, Arnold comments: “The challenge for a small business is the same challenge facing any business: How do you get enough people to pay attention to your ads while they are busy uploading photos or conversing with friends?”

From my perspective, I think that the question raised above is slightly off the mark. As a small business owner or marketer, should it really be your primary objective to get people to pay attention to your ad on the social space? I don’t think that it is.

Why? I believe that it may be time for marketers to stop thinking of the social web as a media, in the same way we think of television, radio, out-of-home and print.

Now that the social web has shifted from early adopter niche acceptance to widespread, mainstream usage, it looks less and less like a “traditional” media.

That said, much like so-called traditional media, the social web has space for sale. From a measurement standpoint, your brand presence on the social web can be observed, monitored, recorded, and quantified at a very micro level, to the chagrin of marketing analysts everywhere.

The social web, like traditional media (and even similar to the overall digital space we call the internet,) can be treated very much like a traditional media and inserted into the strategic marketing plans and communication/tactical plans of many brands.

This is where Arnold, like many marketers and entrepreneurs, could benefit from taking a different perspective regarding how consumers interact with brands on the social web.

For any brand seeking to engage a target audience in the social-digital space, it’s important to shift your thinking away from the “interruption marketing” mindset of traditional media and move towards the “conversation” based approach of the social web.  Recommend Seth Godin’s blog for more on this approach.

My last post used a “party” analogy to portray the consumer expectations and behaviour on the social web.

BUY COCA-COLA

As the host or hostess of a cocktail party, you would not put up a large poster in your living room expounding the benefits of Coca-Cola.

As a brand manager for Coke, you certainly would not expect your guests to begin interacting with the brand. They will see it – so your cost-per-impression metrics may be superb – but your consumer engagement will likely erode into the unprofitable wash of brand avoidance.

As a marketer, why do this on the social web?

My advice for small (and large) brands who want to use the social web to build genuine engagement:

Host a party. Use the social web to create a space for consumers to engage in your brand on their own terms.

Don’t put up posters: Consumers don’t want to be interrupted here. They want to mingle.

Don’t crash other peoples parties: It’s rude, and ineffective. Put out an olive branch and hope for an invite.

Say something interesting: Don’t stand in the back by the spinach dip. Just like a bricks-and mortar party, if you have nothing interesting to say, no one will want to speak to you. Be creative.

Ok, that’s it for now. Thanks for reading.

A good digital strategy begins with an understanding of the four basic categories in which a brand or business can position itself: “paid” (advertisements), “earned” (getting mentioned in a blog) “owned” (your own website), and “shared” (social media such as Twitter and Foursquare).

From the perspective of a small business brand or start-up, this is sound advice. Like all good marketing plans, the simplicity and clarity of this four-point approach encourages the engagement ofanyone seeking to find a place for their small business brand in the digital space.

The fact is that integrating a strategic digital marketing strategy into the overall marketing plan for, say, a home-based business, should now be the first step in engaging a target audience with a new brand – not the last.  The primary attraction for most entrepreneurs the low-cost, high reach/high impact nature of social media. That’s called no-barrier-to-entry, folks.

Unlike traditional media, inaccessible to many start-up ventures due to prohibitive costs and messy entanglements with creative and media agencies, the social web is highly accessible: free, open and based on a two-way conversation, not a one-sided sales pitch.

Consider the above four digital marketing strategy “positions” as your roadmap to arriving at a home for your small business brand in the digital space.

In my last post on this topic, we explored the different methods by which a small business can divide an overall potential market into distinct segments, based on variables such as geography, demographics, psychographics, and market needs. We also reviewed the key rules that define what is (and what is not) a true market segment.

So you’ve found a bunch of market segments. What’s next? Given that a total potential market (or “universe”) can contain multiple unique customer segments, out task now is to identify which of these segments are most attractive in the context of our business or brand. This process is called Target Market Identification.

Your goal: is to select, from all of the segments you have identified, the segment or segments towards which you will direct marketing effort. (Marketing effort usually means directing investment, i.e. dollars.)

Choosing your target segment strategically: the 8 steps to success

It’s not always obvious which market segment(s) you should pursue. Here is a list of 8 key steps that will help you choose.

1. Measure the size of the segment
2. Measure the degree of need + demand within the segment
3. Measure the current growth + potential growth of the segment
4. Determine the age + sustainability of the segment
5. Review seasonality + elasticity of demand within the segment
6. Determine how well the segment fits with your brand promise + brand positioning
7. Observe the number of competitors serving the same segment, + their position relative to your brand
8. Consider your business resources against the market segment

Sound complex? Not really. Lets get started:

1. Measure the size of the segment

This is your first step and sets the stage for all other target segment identification considerations. Measuring the number of potential customers who meet the segmentation criteria will help you determine:

a) The feasibility of the segment. If your segment is too small to profitably pursue (even with a niche strategy) then it should not be considered a target segment.

b) The proportional size of the marketing investment ($$$) you wish to direct to the segment. A larger segment (meaning more potential customers) will in most cases require a greater marketing investment, and vice versa.

Getting back to our familiar example of Toronto Organic Star Catering, who have identified, amongst others,  a potential B2C (business to consumer) target segment using geographic, demographic, and psychographic segmentation as follows:

Geographic: Live in the Toronto Area

Demographic:

Gender: 60% female

Generation X predominate (born 1965 to 1979)

University degree or higher level of education achieved

Employed

Newly married or in long-term relationships

Higher than average household income

Psychographic: Vegetarian, vegan, and/or organic food preference and/or locally sourced food preference. Potentially higher importance placed on health/diet considerations vs. other segments.

There are several resources that our catering brand can turn to in order to measure the size of this segment:

Statistics Canada

PMB (Print Measurement Bureau) statistics

Wikipedia, Google Scholar blogs, and other web resources

Measuring the size of a target market segment is rarely an exact science; for a small to mid-size business owner with potentially limited resources, this may be even more the case.

The important thing is to arrive at a well-researched and comfortably accurate estimate of the number of customers within this segment, and compare it with the size of other segments identified. Then ask: “Does this segment represent a large enough number of potential customers to justify investing marketing resources?”

Moving ahead with our example, Toronto Star Organic Catering has determined that in most North American cities, approximately 25% of the population is vegetarian or vegan and a recent Foodland Ontario consumer research paper (fictional) indicates that approximately 15% of consumers in Toronto and Ottawa attempt to incorporate locally sourced foods as part of their regular grocery shopping.

Our catering brand has worked out that with all geographic, demographic and psychographic criteria considered, the segment size is approximately 200,000 consumers. From a needs-based approach, the total size of this consumer segment will of course be smaller given that our brand offers catering services only.

2. Measure the degree of need + demand within the segment

Do they want to buy what your selling? It’s a fundamental question for any small business marketer. That said, estimating the demand within a segment can be as easy as asking yourself:

Can your product or service deliver something of value to the segment better than the competition? Are you meeting an unfulfilled need or want of the target segment, or providing them a unique solution in a way that the competition does not?  If the answer is yes, than you have evidence of demand within the segment.

How to measure demand:

For small business owners, there are several ways to estimate demand without relying on expensive research and complex statistical analysis (although these are obviously superior if you have the resource dollars.)

1. Count up the number of competitors you are aware of: businesses do not swarm to serve the needs of tiny, dying markets. Where there is smoke, there is fire.
2. Google it. Punch your product or service category into the big G and see how many results come up in the Sponsored links section. How relevant are they? Are the organic search results mostly commercial enterprises?  Try Google maps to pinpoint competitors in your local geography. Or go old school and open the Yellow Pages and count the number of ads for competitors whose messaging and offers speak to the target segment.
3. Call a competitor. Ask them how business has been.
4. Visit Facebook pages for competing brands. No fans? hmmm.
5. Statscan.com and industry Canada websites: provide a wealth of industry specific information, including revenue trends by category.

3. Measure the current growth + potential growth of the segment

Is the segment growing? Is it stable? Is it shrinking? If so, at what rate year over year? Look back over a mid-to longer term (5 to 10 year) historical timeline. Consider if Future Shop or Best Buy  had not looked at huge potential growth in the home theatre segment upon the introduction of large-format plasma TV screens? Or conversely, if they had not measured the alarming erosion of consumer demand for the VCR upon the introduction of affordable DVD technology?

Back to our catering brand, Toronto Organic Star Catering who have researched things well:

Geographically: Population in the Greater Toronto Area and the Metropolitan Toronto core has been increasing steadily, year over year, for the past 15 years.

Demographically: The demographic profile of the segment has been relatively stable over the past 10 years, with a notable increase in university completion as the highest level of education attained.

Psychographically: Our catering brand has found that due to changes in consumer preference, there has been a marked and significant increase in the number of consumers preferring locally sourced and organic foods, and a slightly less positive trend in the number of consumers who identify as vegetarian or vegan. The profile of these consumers also dovetails well against the demographic profile of the segment. Good news for our catering brand!

Remember: Even if the size of the identified target market segment is currently a good fit with your business infrastructure and marketing mix, you should not assume that this will always be the case and vice versa. The segment may be shrinking down to a niche size that your business has no appetite for, or may be expanding beyond your resource capacity to service properly.

4. Determine the age + sustainability of the segment

Is this segment sustainable? Does this matter to you? Perhaps your business supplies the latest Christmas fad toy to Sears Canada. The needs segment for your business, parents of wishful children who want this specific gadget or toy, has most likely been around for about 3 months and will vanish into oblivion on December 26. If a stable and sustainable segment is what you seek, for your brand, you will not find it in trend or fad demand segments.

For Toronto Organic Star Catering, whose brand promise is “Make your event perfect. Naturally” the segment identified above is in the growth stage. It has been in the past 5 years that demand for organic/locally sourced or vegetarian/veggie food has expanded outside of its niche to the mainstream, particularly amongst younger people.

So is the segment sustainable? Toronto Organic Star Catering wants to devote marketing resources towards a segment that is sustainable and relatively stable or growing over a 10 year time horizon. It seems likely that high-level consumer perspective son sustainable living, healthy living, and sustainable consumption will help bolster demand in our catering company’s brand promise over the long-term.

5. Review seasonality + elasticity of demand within the segment

Similar to sustainability considerations, the seasonality or elasticity of demand within an identified target market segment over a short timeframe (within a year, for example) may in turn impact the timing of investment in promotional efforts, stock purchasing, pricing or distribution models and logistics.

For Toronto Organic Star Catering, the target segment under consideration shows seasonal demand fluctuations as impacted by wedding season, holiday party season, and stable demand trends for birthday parties and baby showers.

6. Determine how well the segment fits with your brand promise + brand positioning

In other words, can you provide value to the segment? Of all of the segments you revealed during the market segmentation process, your brand promise will most likely be a stronger fit with some over others.

If there is little or no alignment, you may want to review or revise your market segmentation process or your brand promise. Or select a different segment that works better with your brand reality.

7. Observe the number of competitors serving the same segment, + their position relative to your brand

For new brands and small business managers, this process if often done by instinct, or may even be the trigger that initiated the business start-up from the outset.

For example: If you are a small bottled cola brand, you will need to map out your brand’s competitive space, your marketing mix, and realistic opportunities against segment Goliaths Coca-Cola and Pepsi, along with private label brands. Consider Cott. beverages. Despite the appeal of it’s plucky-underdog approach (and not disagreeable profits) it’s a bit like pitting a tricycle against a Harley Davidson.

How to measure this:

1. List your competitors, and identify their brand promise and UBP.
2. Consider and itemize (using geographics, demographics, psychographics, etc.) which segment of your overall market each brand serves (or targets) primarily. A good way to do this is reverse engineer the messaging within their communications material, which given enough consideration will often reveal their target audience (i.e target segment.)
3. Consider and itemize any of your competitors secondary target markets.
4. Now do the same for your brand (you should have already done this homework before reaching this point in your strategic marketing plan; if you haven’t, please return to GO and do not collect any profits.)
5. Is there overlap with your segment? If so, to what degree? If many of your direct competitors target the identical segment primarily, you are considering competing in a hyper-competitive segment that may require more resources on your part (or a more dynamic and innovative marketing mix) to extract profits.

For Toronto Organic Star Catering, research in the Toronto area indicates 4 other competitors; particularly 2 catering companies that offer organic and locally sourced food choices primarily for corporate functions and galas. Almost all the competing caterers in the area offer vegetarian options, however only a few present this feature as a prominent benefit that would speak specifically to this segment. More good news for our catering start-up brand!

From a purely brand standpoint, it is also important to measure your brand promise, Unique Buying Proposition, and marketing mix against competitors. This includes a review of the degree  and intensity of promotional noise (i.e. share of voice) your brand will have upon targeting a segment of potential customers.

8. Consider how your business resources will hold up in attracting and retaining the market segment

The target segment you select should be well aligned with your business resources. If not, how much operational change would be required to develop a marketing mix and business infrastructure that would best meet this segments needs?

For example, our Toronto area catering company does not have the resources to meet the demand of many destination weddings; their ability to deliver their brand promise is hindered by the availability of locally soured produce, vegetarian options, and organic food in, say, the Bahamas.

Completed all 8 steps? Congratulations, you now have a target market! My next posts will help you decide what to do with your target market (which is where the fun begins.)

If you have any questions about strategic market segmentation or target market identification for your business, you can contact me at:

cōjent. marketing + communications.

cojent.marketing@gmail.com

416.768.6056 (Toronto)

twitter.com/cojentmarketing

The secret branding weapon! These brands have a strategic competitive advantage: Helvetica typeface

After identifying your strategic business objectives the next key element of your marketing plan is market segmentation and identifying your target market.

TARGET is another brand that leverages strategic market segmentation to their advantage. They also know that Helvetica is the best typeface in the world.

This post will speak to market segmentation, and my next post will speak to identifying your target market. There is a difference between the two processes; and here’s a short explanation.

Market segmentation is the process of dividing a population of consumers (your “universe” or “total market) into smaller groups.

Identifying your target market is the process where you identify which of these segments are the most attractive for you, i.e. the segments whose needs and wants your business will be best able to satisfy. Looking at it another way, these are the customers most likely to appreciate your brand promise.

Strategic market segmentation for your small business:

Start with your total market, or “universe”: this is the overall population of potential customers who could potentially have a need for the product or service that your organization provides.

Apply a broad perspective: depending on the nature of your business, your total market could be a B2C (business to consumer) or B2B (business to business) universe. In some cases, there may be elements of both. I’m going to use a fictional example whose universe contains both B2B and B2C potential.

Toronto Organic Star Catering, (a start-up which provides organic and locally sourced catering services in the Toronto area) is developing their strategic marketing plan and is beginning their market segmentation process.

This enterprise starts with a large total universe. Potential customers could include Toronto area businesses of all sizes: (event planners, wedding planners, large corporations) in addition to individual consumers (for parties, family events, showers, etc.) as well as niche customers (political events, funeral receptions.)

To provide context, we’ll consider that Toronto Organic Star Catering have done their preliminary marketing planning. The brand will operate with two distinct strategic marketing plans: one for the B2B market, and one for B2C. For this segmentation exercise, they wish to focus on the business to consumer market only.

They have also done their homework in developing a UBP and a brand promise. Their unique buying proposition is their ability to provide fresh, only locally sourced, organic, and/or vegan catering services. Their brand promise is “Make your event perfect. Naturally.”

Just like your business, our organic catering brand needs to start dividing their universe of possible customers into segments of potential customers.  There are a number of ways to do this; most organizations will deploy several strategic market segmentation tools or criteria when identifying possible market segments. Here’s a list of the most frequently used:

1. Geographic target segmentation: identifies the geographic area where your potential customers are. This can be as large as “Global” and as small as a set of specific postal codes. For our fictional catering brand, let’s say that the Greater Toronto Area is the maximum drawing area for potential customers based on the resources of the business. This also fits nicely with their locally sourced food positioning.

2. Demographic target segment: This is the most frequently used tool to identify market segments, and also has the largest number of potential variables.  Defined as the statistical data set of a population, demographics create a robust “portrait” of the segment. In strategic marketing, common demographic identifiers include:

Gender

Age, median age

Generation (Gen X, Gen Y)

Education (highest level attained)

Marital status

Household income

Ethnicity

Language spoken at home

Religion

Number of children

Employed/Unemployed

For Toronto Organic Star Catering, demographic profiling will be most useful with the business to consumer market. More on this later.

3. Psychographic target segment: This tool identifies the IAOV for a population: acronym for Interests, Activities, Opinions, and Values. Brands utilizing this segmentation tool look for commonalities in the IAOV within the total market and divide it into segments on this basis.  For example, vegetarians and vegans, are individuals who believe in the benefits of a diet that minimizes or avoids animal-based products.

This opinion or value system differs from individuals who eat animal-based products and are therefore a different segment of our brand’s total geographic market (Toronto.)

Toronto Organic Star Catering has identified this psychographic variable as a key segment of the overall “catering” market in Toronto. We can then go back and identify some fictional demo and geo variables that could describe the “veggie” segment of the market.

Gender: 60% female

Generation X predominate (born 1965 to 1979)

University degree or higher level of education achieved

Employed

Newly married or in long-term relationships

Higher than average household income

In addition to the  geographic variable which identifies the segment as residing in the Toronto area.

Now, back to our list of strategic market segmentation tools:

4. Needs based target segment:

Divides the total market for a product, service, or brand into segments based on the unique needs of each group. For example, Nokia cameras may recognize that the total market for one of their products, cameras, can be divided based on the needs of the end-user.

Some consumers have a need to take occasional pictures during family events and outings with friends. For Nokia, this segment’s needs may be answered by a compact, simple to use and inexpensive camera that takes mid-to high quality pictures.

Another segment of consumers may need a need to take a large volume of very high quality photos in a professional or semi-professional setting, such as fashion portraits for a modelling agency.  Nokia may answer the needs of this segment with a multiple-feature, high quality camera that forgoes simplicity and compact size and sells at a higher price point.

For Toronto Organic Star Catering, needs segments could be identified as follows:

Needs Segment 1: needs fast, inexpensive organic or veg catering services for a small last-minute event. This segment may need immediate service (24 hour turnaround) and does not require a wide variety of food options to be available.

Needs Segment 2: needs a large variety completely vegan food options for a wedding 6 months from now. This segment may need reassurance that the quality of the food is optimal and that the presentation will be top-notch.

Other segmentation tools include:

5.Usage segmentation (low, medium, high volume users of a product: example beer.)

6. Lifestyle Segmentation: Similar to psychographic segmentation, this criterion identifies groups of consumers based on their lifestyle choice, example condo dwellers, marathon runners, young professionals or motorcycle enthusiasts.

7. Industry Segmentation: (B2B): divides the total market for a product (say, a blast furnace for steel production) by industry: the auto industry, the building industry, and the aerospace industry.)

8. Technology adoption segmentation: (early, joiners, majority, laggards)” This segmentation is popular amongst app developers, mobile marketers, technology brands and brands engaging audiences in the social media space.

Segmentation rules: follow them!

Strategic Market Segmentation: the golden rules

Dividing your overall market into segments, even when using the tools outlined above, is not an ad-hoc exercise: like all strategic marketing concepts, there are some rules that you should follow. Especially for a small business start-up, it is critical to respect these rules as you divide up your universe.

The strategic market segmentation rules:

1. There must be similarity within the segment: The segment should inclusively demonstrate similar needs and wants, the same profile, same geography, same usage behaviour, same industry, etc.

2. Each segment should be mutually exclusive: Each segment must be different according to the key criteria, such as geography or demographics. If the segments overlap, that overlap represents a segment.

3. Segments must be quantifiable: you have to be able to count the number or estimated number of customers within the segment.

4. Segments should be large enough to be profitable: if your segment is too small to be realistically relevant to your business, it’s not really a segment. (Alternatively, it could be a niche segment that you can address through a different marketing mix.)

In my next post, we will have a look at the second phase of this process: identifying your target market or markets from the segments you have identified.

If you have any questions about strategic market segmentation for your business, you can contact

cōjent. marketing + communications:

cojent.marketing@gmail.com

416.768.6056 (Toronto)

twitter.com/cojentmarketing

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