| "body"> | | | | together" segmentation systems were the only |
| Imagine a retailer in the process of determining its | | | | systems available to target consumers. Now, |
| advertising and promotional strategy for the next | | | | armed with more intelligent data on the spending |
| year. The retailer knows that there are millions of | | | | power of households, we can single out those |
| potential customers, but knows too that not all of | | | | "birds" with the most potential to respond to a |
| them are the right targets for their brand. So, | | | | specific branding message and to buy a particular |
| how can a retailer - or any marketer for that | | | | brand. So while everyone else is following the |
| matter - identify the right targets for their brand? | | | | flock, marketers utilizing more granular information |
| Traditionally, marketers have relied on | | | | will be increasing both their efficiency and |
| demographics - age, income, geography. But | | | | effectiveness in customer acquisition, |
| these characteristics can lead them astray. | | | | development, and loyalty. |
| To get a clearer picture, let's look at two, | | | | How can our retailer integrate this powerful data |
| seemingly similar, households: | | | | on spending power into its advertising and |
| Household #1 has an income of $90K. A married | | | | marketing strategy for the next year? |
| couple between 35 and 54 years old, with two | | | | Let's go back to our Two Households. |
| children, they own a home in the suburbs. Ditto | | | | Household #1 (the big spenders) is watching TV. |
| for Household #2. | | | | They see a commercial and take immediate note |
| They sound alike but behind closed doors, these | | | | of a new model for a premium brand. Then they |
| families are really quite different. So how can the | | | | check the weather online, and they see an ad for |
| retailer tell the difference between these two | | | | the premium brand. Finally, they get their mail and |
| households? | | | | low and behold, it's a direct mail piece for the |
| What if the retailer also knew that Household 1 | | | | premium brand they are looking for. |
| exhibits high spending behaviors: they own a | | | | Meanwhile, Household #2 (the value conscious |
| Cadillac Escalade, they took a luxury cruise in the | | | | family) is watching TV, but their focus is on an |
| past 18 months, and that they remodeled their | | | | entirely different set of commercials than |
| kitchen to the tune of $100,000+. Meanwhile, | | | | Household #1, even though they are in the same |
| Household 2 shows low spending patterns: they | | | | "cluster." They also check the weather online, but |
| recently purchased their home, they have | | | | they see different ads than the first household. |
| payments on a Toyota Camry, and they shop at | | | | And when they open their mail, there is notice of |
| WalMart. Demographically similar but their | | | | a sale at their local department store. |
| purchasing patterns are dramatically different. | | | | So much for John Wanamaker's comment that |
| Household 1 will likely be attracted to more | | | | half of his advertising is wasted - he just didn't |
| premium brands and have more sophisticated | | | | know which half. Today he could figure it out. The |
| financial services needs. They might even be | | | | fur department would be marketed to one group, |
| seeking new sources of credit to support their | | | | lower-priced sportswear to another. This second |
| purchasing habits. Household 2 on the other hand, | | | | group would be notified of sales. The first group |
| is likely to prefer more moderate brands. Their | | | | would be the first to know about new jewelry |
| debt is likely to be lower and brand takes a back | | | | shipments. |
| seat to price. | | | | The implications of this information for brand |
| Now that's actionable information. | | | | marketers - from retail to financial - are huge. |
| But marketers would never know it based on | | | | The bottom line is that there are differentiating |
| traditional segmentation. | | | | factors that are not identified by standard |
| Clearly, even the best marketing models fall short | | | | demographic selects. Just think what brand |
| when they rely only on income and other | | | | marketers could do with more intelligent data on |
| demographics. To make the most of their | | | | the spending capacity and propensity of |
| budgets - and to build their brands - marketers | | | | consumers! |
| must look at information that provides a deeper | | | | This information is available today and can be |
| understanding of consumer needs, wants, | | | | used to create more successful marketing |
| propensities, and ability to purchase. Financial | | | | campaigns, more targeted advertising strategies, |
| assets, such as stocks and bonds, as well as | | | | and a stronger brand. It is the information that |
| home equity and transaction history mean a great | | | | successful marketers will use to distinguish |
| deal in terms of a consumer's ability and | | | | between price-conscious customers and those |
| propensity to buy in specific product categories. | | | | that value name brands. With this information |
| And, more importantly, this information has great | | | | marketers will discover those prospects with the |
| meaning in terms of the types of brands and | | | | discretionary funds and the interest to buy their |
| brand messages to which they respond. | | | | products. This is the information that will help a |
| In the old world, "birds of a feather flock | | | | company succeed. |