Commentary
Segment Shmegment: Slicing And Dicing The Boomer Cohort
- by Matt Thornhill , March 22, 2010
The problem, of course, is that most segmentation schemes have little value to most marketers. They are too general, and while interesting, are not actionable.
Fundamentally, segmenting any audience starts with the immutable facts: age and gender. Age reveals two important components -- the generational cohort of the consumer and his or her physical and cognitive development.
Generational cohort is important because the time and place in history in which someone matures, or comes of age (ages 10 - 20 or so), the events they experience -- world events, political, societal, cultural -- affect their worldviews and values. It's what makes Boomers different from their parents, and from their children.
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Physical and cognitive development is important because as we age we continue to change and evolve. Boomers at ages 46 to 64 are different physically and mentally than when they were 26 to 44 years old. For example, all Boomers have begun experiencing changes in their vision, hearing, mobility, flexibility and other physical changes. And, Boomers at this age are becoming less concerned with acquiring more material things and are seeking out more and better experiences. This "middle age" stage of life brings with it the acceptance of the potential reached so far and a more realistic view of what can be achieved.
Age, therefore, must be the foundation of any segmentation scheme that you put into action. But, it isn't where you end. It's where you start.
Choice Factors
The next two levels of a more successful segmentation scheme are rooted in choices made by consumers -- Life Stage and Life Style. Actually, one has considerable influence over their life stage -- married, single, parent, working, retired. Some stages are outside control, but how much one embraces or rejects the life stage affects one's behavior (caregiver, grandparent are two life stages that some embrace and others reject).
Nonetheless, knowing the consumer's life stage is critically important in determining potential consumer behavior. Do they have kids? How old are the kids? Do they still live at home? Are their parents alive? Are the parents in good health? Does the consumer work? Retired? Obviously, each life stage comes with its own set of wants and needs.
Similarly, understanding the life style and socio-economic status of the consumer is important. How are they living their lives? What are their interests and activities? Understanding their chosen life style reveals much about their consumer behavior, but not the whole story.
In most segmentation schemes, the big "aha" comes by overlaying consumer attitudes on top of the four stages we've built so far. But marketers will be better served by first inserting transactional data into the mix long before looking at attitudinal differences. Actions speak louder than words.
Follow the Money
You should mine your purchase data to see who buys. That's because in order for segmentation to be of value in the board room, where money is king, you better understand which customers make you money and which ones don't.
For example, if analyzing purchase data tells you that 80% of sales come from 20% of your customers, guess whose attitudes you'll want to better understand? Segment that group to learn about their attitudes and perceptions, and then turn your attention to the remaining customers to determine which could become better customers, and who in your prospect universe fits that model best.
The bottom line is the bottom line for any successful segmentation scheme. If you start, and finish, by looking at purchase activity -- and not attitudes -- you'll be well on your way to creating a segmentation scheme for Boomers that will work for your company or organization. And in your board room as well.
Everything else is just talk.
I guess you just have to keep repeating yourself if you represent the boomer market. So strong is the "senior" stereotype in our culture that advertising just reflects, rather than challenge it. Imagine rows of bottles simply labeled Jam or Jelly. Another situation ripe for segmentation!
Thank you; good points. Given the multi-cultural population here in the US that the 2010 Census will confirm, don't forget to also look at ethnicity, language preference and assimilation to get a better picture of boomers. There are significant differences.
Peg North
www.EthnicTechnologies.com
Solid marketing advice from Matt Thornhill! I also echo the sentiments of my colleagues Barrett and North. Since the Boomers represent such a large span of ages, backgrounds, ethnicities and lifestyle choices, to market to them as one lump segment is just plain foolish. And to make assumptions on preferences before purchases is also misguided. We all know that what a customer says she likes is not necessarily what she buys.
Boomers can be categorized the same way as the market did before we were labeled. Education and income are still stalwarts of purchasing decisions. Go from there.
I don't see any difference in this assessment than from any other "generational approach".
What am I missing- assessing the life of a target consumer and then speaking to them, seems to be the norm.
What I'd suggest is missing is that this generation more than any other harbors the philosophical idealism of its youth and is frustrated that none of that came to pass.
So, look at other determinants as well. A friend of mine introduced me to "Cultural Creatives" a few years back, sort of a small (50 million strong) segment.
Its possible that we marketers are tooooo smart for our own good- hoping to define narrow segments when actually the segment is much broader than you'd think.
Both the Honda Element and the Scion B which were targeted to 18-34 year olds, were originally purchased by 52 year old males. Huh? Yep, a beautiful case of segmentation of advertising. Perhaps recognizing who had disposable income for a new product might have helped regardless of age!
I'm not sure that this essay is based on actual practice in the mature consumer space. While it is a basic segmentation 101, it doesn't provide much insight into the mature consumer landscape. We have been creating segmentation products for this consumer for more than ten years. It is complex and requires deep consumer understanding based on sound research. In most cases it requires proprietary analysis for the client's industry. We start with generation/cohort but move quickly to demography, affluence (our own model), health status, and lifestage (also our own model); then we funnel this information through a values funnel based on our proprietary values-based research. From that we posit consumer behavior. It is a model that works and has worked for many years. It is both insightful and actionable.
I asked our direct marketing expert to comment on this post and describe her approach: "Starting and ending your segmentation with purchase activity is interesting but it does not get to the motivations behind the purchase and how consumers will interact with your brand/product. You must look beyond the purchaser activity to their willingness to recommend, willingness to try new things and market size. Segmentation strategies often identify a target group who buys your products; but they may not recommend, do not try new things or have a very small market potential. How does that grow the business? A segmentation should identify your low hanging fruit (based on current consumers) and even that may not be where your largest growth potential is. If you ignore the consumer behaviors/attitudes you will overlook a possible new consumer group that you were not serving to the fullest potential; that is lost revenue. You may as well save your money and just do a database profile of your existing lead/customer base.
Lori:
Your are correct: this is basic segmentation 101. The only point is to inform marketers that they should first consider consumer behavior for their specific product and their category, instead of some general, vague segmentation scheme based on generation, age, attitudes and such.
Too often marketers don't tie marketing back to results. This post is simply trying to remind them to do that in 600 words or less.
Good luck with your new (old) venture. Our hope is that marketers realize they need help and turn to firms like yours.
We have found a way to segment boomers online by demographic, psycho-graphic and geographic. Navigate Boomer Media represents the top 116 baby boomer websites with 112 million unique visitors per month with over 1.8 billion page views. If you want a boomer who fly fishes in California, we can target them. Want a boomer who crafts in Arizona, we got them. How about a boomer woman who is upscale, educated and vibrant - we can reach them. We offer full campaign transparency and real time metrics to our advertisers and marketers.