There are lots of things that make a difference when it comes to getting value from your shopper data, but the single biggest differentiator between lackluster analysis and insight-driving work is shopper segmentation. Segmentation lies at the heart of all good marketing, and shopper marketing is no exception. But why should shopper marketers bother with creating bespoke shopper segmentation models? Most shopper market research agencies have their models which they share with their clients. Many retailers have their own models too, and prefer their suppliers to use these. Why go to the trouble of creating a bespoke shopper segmentation models?
Agency shopper segmentation models are generic
Most shopper segmentation models developed by market research agencies are generic: designed to work across loads of different categories. One hopes that it is a generically useful model, but it was built to work for everyone, not just you. It’s a good starting point, don’t get me wrong, but how do we know that their model is the best one for you? It might be, but we don’t know. To be ‘the best’ the shopper segmentation model would have to be based on what it is you are trying to achieve. The shopper segmentation would need to take into account your consumer strategy. And (unfortunately) the only way to guarantee that the model is the best for your business is to be prepared to test and try loads of different segmentation approaches to see which ones add value. Unfortunately, most agencies don’t do any of these things – they use a generic model (and we know this because we see loads of agency reports!)
Retailer build bespoke shopper segmentation models, so why shouldn’t brands?
A second thought – if generic models from agencies were the best way of segmenting shoppers, why is it that most large retailers have their own bespoke model? Maybe they know something we don’t! Retailers build their own shopper segmentation models because they want to understand they shoppers, and to identify which of these shoppers they will target which which strategies. They know that their shoppers are different to other retailers, and their strategies are different too, so it stands to reason that a standard shopper segmentation model isn’t going to be optimum. If retailers need a bespoke model, why wouldn’t brands want a bespoke model too?
Retailers build bespoke shopper segmentation models to serve their business
So why shouldn’t brand owners just use the retailer’s model? After all, the retailers will want us to use that language when we present, so doesn’t it make life so much simpler? Again, practice suggests that this doesn’t work well, and for two reasons. Firstly, that the retailer’s segmentation model is built for their business, not yours. It is built to help them hit their objectives, and align with their strategies, which are not the same as yours. Retailers are looking across multiple categories, not just yours. Retail shopper segmentation models should not be used to drive a brand’s shopper strategy; rather, they should be used in selling and executing (customer language is always useful in a selling presentation!)
Bespoke shopper segmentation leads to competitive advantage
These models are useful, and are a step forward from thinking in terms of a homogeneous, generic shopper, but unfortunately, standardized models rarely create competitive advantage. If marketing guru Michael Porter is correct, and “the greatest opportunity for creating competitive advantage often comes from new ways of segmenting, because a firm can meet true buyer needs better than competitors or improve its relative cost position,” then relying on a standard model created by an agency, or using a model that was designed to support another organization’s competitive advantage, is perhaps not the best idea. If you think your brand could benefit from a new way of looking at your shopper data, and that a unique shopper segmentation might help, please get in touch and we’ll share some case studies showcasing the power of shopper segmentation.