The Art of Understanding Audience Segments in the Digital Age

Jul 5, 2016

The process of dividing your target audience into segments based on their needs, attitudes, and usage is a practice as old as market research itself. But in the age of big data and the availability of countless characteristics about millions of users, it’s getting more difficult to fit customers into neatly targeted boxes. The growing prevalence of versatile products, multi-sided platforms, and digital distribution means that consumer or user groups intersect in ways they didn’t before. And though monitoring digital activity may reveal such overlap, it will take a combination of qualitative and quantitative research to act on those insights and ensure your messaging resonates with the right audience.

The following are just a few examples of when cross-functional, agile market research methods will help you not only recognize how consumer or user attributes interact across segments, but how to convert that knowledge into effective marketing avenues.

Segmenting Users of Multi-Sided Platforms

The surge of ecommerce has resulted in a number of what economists refer to as “multi-sided platforms:” sites that rely on two or more separate sets of customers. One well-known example is Etsy, an online marketplace that caters to buyers, sellers, creators, and even curators. Etsy must address the needs of these multiple segments simultaneously, noting that while a user may register as a seller, they are highly likely to make purchases from the site as well.

In order for multi-sided platforms to ensure that these various segments are satisfied with their overlapping experiences, they would do well to take advantage of the integrated consumer insights at their disposal. For example, a marketplace like Etsy could investigate the shopping experiences of buyers as well as sellers in order to understand what improvements could be made to Etsy from both ends. Multi-sided sites must keep in mind that their vendors are consumers or users of the platform as well, and simultaneous agile research of all segments can provide holistic insights with the speed that ecommerce demands.

Designing Your Product Marketing for Cross-Segmental Appeal

Segments are critical to market research because they allow a business to quickly find and interact with the target audience of a particular product or category. But while some companies say they’re doing segmentation, they’re really just dividing their market based on superficial data or internal assumptions. It’s crucial for businesses to focus their segmentation efforts externally and remain open-minded, incorporating a customer-oriented approach that repeatedly validates quantitative numbers with a qualitative story, which can reveal a broader appeal than internally predicted.

By incorporating design thinking into their quantitative and qualitative research, the consumer brands insights team at a major grocery retailer gained a greater understanding of their newest product’s versatility and engaging features, allowing them to optimize its appeal across multiple consumer segments. By engaging consumers in their product development process early and often, the team was able to think outside the typical segmentation box, going beyond a cursory analysis of demographics or purchase history. Learn more about how design thinking helped this team develop greater empathy for more consumer segments in this blog.

Defining Growth in Terms of Segmentation

Of course every brand is looking to grow, but not every brand thinks to apply these efforts to their segmentation process. Breaking into adjacent markets is tougher than it looks, but the intersection of digital distribution channels and affordability of online market research to optimize such efforts makes it a far more feasible reality. By simply expanding your online language offerings or modifying a proven product to fit the needs of unaddressed audiences, you can quickly expand the appeal of your product or service across new audience segments.

But in order to appropriately assess new and adjacent markets, brands cannot simply re-segment their old market space. Beyond merely recognizing an untried segment, a brand must be able to repeat its old market success with new consumers or users. In order to do so effectively, exploratory research into the habits, practices, and preferences of specific audiences in a new market space will offer more intimate knowledge of these similar yet untapped segments.

Segmentation is such an inherent aspect of market research, product development, advertising, etc., that its evolution with the digital age cannot be ignored. For an example of how a flexible iterative approach to exploratory research helped a marketing team at Caribou Coffee discover and reach new segments of the growing market, read the case study below.

Written By

Nicole Burford

Nicole Burford

Digital Marketing Manager

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