The Power of Segmentation: Unlocking Marketing Success

According to Mark Ritson, the marketing industry is wasting its time in three areas: segmentation, targeting, and positioning. During the opening session of Our Website's Festival of Marketing today (5 October), the Our Website columnist and founder of the Mini MBA expressed that segmentation of audiences is "pointless." He pointed out that marketers often include a section on segmentation in their plans out of obligation, but as the rest of the plan progresses, it becomes clear that segmentation serves no purpose other than to fulfill a checkbox requirement.

Targeting

The effectiveness of digital display ads was examined by agency Ladder on behalf of Money Dashboard, a financial management app. The findings revealed that the most straightforward ad performed exceptionally well in all audience segments. This served as proof that the finest advertisement for one audience is, in fact, the finest for all audiences. Moreover, the speaker contended that the majority of segmentation, around 80-90%, is not suitable for its intended purpose.

He then discussed the rapid changes in the field of marketing, particularly in the area of targeting, emphasizing the diminishing returns. He acknowledged that the industry had been obsessed with exclusionary marketing techniques, especially during the 2000s. However, the long-term consequence of this obsession is the realization that highly targeted campaigns come at a significantly higher cost, making it more challenging to effectively reach the desired audiences.

Since then, he contended that the industry has swiftly shifted towards a more mass market strategy for targeting. This acknowledgement arises from the understanding that it is significantly more economical to address a larger audience for the purpose of brand development. However, he mentioned that due to limited budgets, certain compromises must be made.

He stated, "None of you possess sufficient funds to accomplish it. Our approach should be to penetrate the market, not only due to our belief in segmentation but also because we cannot afford otherwise. The additional challenge lies in targeting... everyone for the brand, while also focusing on segmentations for activation at the initial stage."

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He highlighted the strategies employed by Tesco, which utilizes a combination of wide-reaching above-the-line promotional campaigns to maintain its brand presence, and targeted offers through its Clubcard to engage specific customer groups. "None of you possess sufficient funds to carry out such endeavors. Our approach is to carve out a niche in the market, not just because we believe in segmentation, but because we cannot financially sustain otherwise."

Additionally, he emphasized the significant disparity between brands and the agencies they collaborate with when it comes to identifying target segments. Referring to a study, he revealed that following a pitch meeting, approximately two-thirds of brands express confidence in identifying their target audience, whereas only one-third of agencies share the same level of confidence.

Positioning

Ritson's ultimate argument was for the marketing industry to break free from convoluted positioning strategies. He bluntly stated, "If you desire greater success, the next year demands a fundamental shift in positioning. It's evident that all of you have completely lost sight of the essence of positioning."

He contended that no brand possesses genuinely distinctive characteristics and that dedicating efforts to achieve differentiation had been "the greatest 50-year futility in which we engaged... we made it the focal point of marketing" despite evidence demonstrating consumer indifference.

He acknowledged that marketers, immersed in their profession and constantly contemplating the brands they promote, naturally assume consumers harbor the same level of interest.

Start saying less things, say them much more often, say them to everyone. Say them across different media, say them with 60% of your budget, say them with better creative.

Mark Ritson

He contended that viewing the connection between purpose and profit as childish and naive simplifies the concept of differentiation. "We've missed the point with purpose. The essence of purpose is that it comes with a cost... we pursue purpose because we genuinely believe in it. Unfortunately, good intentions have led us to an incorrect assumption that consumers share the same sentiments about our brand and its significance in their lives. The truth is, no one really cares about your brand."

However, instead of perceiving this as a drawback, he suggested that marketers who acknowledge this reality have the freedom to explore more impactful marketing strategies. He dismissed the notion of 'wear out,' arguing that consumers' eventual exhaustion from excessive exposure to marketing messages is merely a product of marketers' unwarranted anxiety.

He pointed out KitKat as a prime example of a brand that has effectively maintained its market share by consistently adhering to a specific approach. The brand has successfully conveyed its key message, "Have a break," through all its communication channels, establishing a strong presence in consumers' minds.

He recommended a strategy of simplicity and frequency: delivering fewer messages but with greater repetition, ensuring they reach a wide audience through various media platforms. Allocating a significant portion of the budget towards these messages, accompanied by compelling creative content, is essential, as relying solely on advertising, which is the least impactful touchpoint, may not yield optimal results.

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According to Ritson, brands must prioritize consistency in their messaging for a minimum of 20 years. In line with his belief that the marketing industry is undergoing a significant shift, Ritson emphasized the need for the industry to abandon outdated practices from the past two decades in order to effectively engage with consumers.