Thursday, March 25, 2010

Feeling Lumpy?

I am.

And it's not good.

The kind of lumpy I'm referring to is where you're lumped into a group with a bunch of others due to something that you have in common.

When I turned 50 in December, I started getting junk mail for retirement centers. It's gonna be at least 10, more like 20 years before I'm ready for them. And in the meantime, all they are doing is annoying me.

This is from Mediapost:

Segment Shmegment: Slicing And Dicing The Boomer Cohort
Many marketers have realized that today's Boomer consumers are still worthy of their attention, so now they are scrambling to find the best segmentation scheme. That's because they want to determine which specific parts of the large Boomer cohort are their best prospects.

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.

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.

Boomer Project founder/president Matt Thornhill is an authority on marketing to today's Boomer Consumer. He has appeared on NBC, CBS and CNBC, in "BusinessWeek," "Time," "Newsweek" and "The New York Times" and countless others. Matt is also the co-author of the business book "Boomer Consumer." Boomer Project is a marketing research and consulting firm and has done work for Johnson & Johnson, Lincoln Financial, Samsung, Hershey's Foods and Home Instead Senior Care. Reach him here.

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