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To Label Me is to Negate Me (Sometimes): The case for occasion-based segmentation

Posted by Peter Cronin

Wed, Aug 29, 2018

beer

One of my favorite lunchtime routines is to walk from my office over to the Trillium Brewing Company in nearby Seaport to grab a 4-pack of their current small-batch, limited-time, freshly brewed double IPA.

As far as Trillium knows, I’m an “Epicure”—a beer drinker characterized by my ardor and appreciation for craft beer.

During the summer months, I occasionally stop at BJ’s Wholesale Club to get a 30-pack of Corona (along with a couple of limes) because I like to have something to offer guests when hosting a cookout. In these instances, I’m looking for value, but not necessarily the cheapest option because quality and image are still important to me. BJ’s might consider me your average “Cost-aware Enthusiast.”

Every year on my birthday, which typically coincides with the start of March Madness, I stop at my local beer store to buy a six-pack of Samuel Smith’s Oatmeal Stout. They probably consider me a “Sports Oriented” beer drinker.

So, who am I? A beer snob, a deal-seeking but conscientious host, or a sports fan?

The answers are “all of the above” and “it depends.”  

In some categories (like beer) the same person may experience a variety of needs in any given time and make different choices based on those needs. Segmenting people by their dominant motivation/need risks majorly oversimplifying reality.

To understand opportunities for growth in categories like this, a better alternative is occasion-based segmentation. Rather than segmenting people into groups, occasion-based segmentation considers multiple use occasions instead of just one. As you can see from my example, I’m more apt to purchase one type of beer over another based on the occasion (e.g., time/day, who I’m with, what I’m doing).

Occasion-based segmentation is particularly successful when anchored in the psychology of habits. When a behavior is rewarding, we tend to repeat it. The more we repeat it, it eventually becomes a habit. For many people, drinking beer is habitual. Take my backyard BBQ, for example. Throughout the summer, I repeat the cycle of having friends and family over, eating good food, drinking Corona with lime, and feeling relaxed, restive and connected. This occasion has all the key components of a habit: my craving (motivation) to host triggers a routine of good food and drink that results in feeling connected (reward). Feeling connected makes me to do it again.

When we ask people about their occasions at CMB, we also ask what motivates these choices and to describe the rewards—including the emotional and functional outcomes. These inquiries become the base of the segmentation. 

Segmenting your market by usage occasion can be a powerful source of insight about your consumers. By linking brands to occasions and understanding the psychological needs and emotions that drive choices, marketers can position their brands to be the preferred choice. They can tailor messaging to each occasion to build engagement, preference and loyalty.  

Brand managers at The Boston Beer Company, AB InBev, MillerCoors, etc., should be less concerned about whether I’m a “High Impacter,” a “Macho Male,” a “Trend Follower,” or a “Chameleon.” Classifying me attitudinally will dramatically underestimate the complexity of my buying habits. 

Instead, understanding the core types of beer drinking occasions (and the driving psychological needs and emotions of each), how much volume each occasion represents, and which groups of people over-index on them, can enable marketers to make informed decisions on where and how to focus their messaging, promotions, and product development efforts.

Peter is a brand guy who is fascinated with understanding how others see the world, and an equal opportunity beer drinker who refuses to be labeled.

Learn more about segmentation and market strategy:

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Topics: research design, quantitative research, brand health and positioning, market strategy and segmentation

Secret Segmentation Schemes: From the Backstreet Boys to JetBlue

Posted by Will Buxton

Wed, Nov 22, 2017

segmentation abstract.jpg

I learn something from every project I work on, and the sizable segmentation initiative I’m managing right now is no exception. The client is an incredible partner, and the work is challenging and rewarding—the trifecta! As a result, I’ve found myself more and more consumed with segmentation analysis and it’s begun to creep into my non-CMB life (doesn’t it always work like that??). Segmentation schemes are being implemented all around us, here are a few examples:

  • Airport food: Whether you’re the solo business traveler minutes away from missing your flight or the parent who gets their kids to the airport 3 hours early, there is an eating experience designed for you. The sit-down restaurant didn’t magically land next to the grab and go; restaurant options and placement are carefully cultivated to cater to all unique traveler types. Airport dining options are developed to provide an option to high-yield customers—paranoid parents and late travelers alike.
  • The Backstreet Boys: I was blessed to attend a Backstreet Boys concert (get off your high horse) at Fenway Park last summer. Throw Nelly and Florida Georgia Line into the mix and you’ve got yourself an unexpected synergy of musical talent. While my wife and friends argued over who their favorite BSB member is, to my right two cowboy-boot-wearing Gen Z-ers rolled their eyes in anticipation for Florida Georgia Line. Meanwhile, the guy in front of me lamented for the bygone days of “Hot in Herre”. I’ll admit on paper it seemed like an odd pairing, but this concert was in fact a carefully curated experience meant to cater to a variety of consumers.
  • Vacations: My wife and I tend to take the same beach/relaxation vacation every year, because as with most couples, “it’s what we did last year". But when JetBlue announced a partnership with UTrip, an AI-powered personalized itinerary travel platform, I thought I’d take a peek and see how it all worked… maybe it’d recommend we shake things up for 2018’s Buxton Bonanza. The gist is you answer a handful of questions about preferred types of travel activities (relaxation versus hiking, street food versus three course dinners, etc.) with the end result being a “traveler profile”. It’s a personalized experience designed just for you. Since we are, in fact, considering switching up our annual trip and going to Europe—trading little umbrella drinks for red wine—I chose Croatia as my destination of choice on the app and was immediately presented with a week-long personalized itinerary of activities, restaurants, and accommodations based on feedback from travelers with a similar profile as myself.

One of the joys of working in insights and for our incredible clients (not the Backstreet Boys) is in noticing how data is being turned into decisions all around us. As we head into the holiday season, take a look around and consider the vast amount of data, the advanced analytics, intensive qualitative research, and the thoughtful analysis that went into making every decision.

Will is a Project Manager II on the Financial Services team. He one day dreams of hosting a TV show with Chip and Joanna Gaines.

 

Topics: customer experience and loyalty, market strategy and segmentation

OMG! You Won’t Believe the 3 Things Segmentation and BuzzFeed Quizzes have in Common!

Posted by Amy Maret

Wed, Aug 31, 2016

19t0cg.jpg“Which Starbucks Drink Are You?” “What Role Would You Play in a Disney Movie?” “Which ‘Friends’ Character Are You Least Like?” These are the deep existential questions posed on websites like BuzzFeedand PlayBuzz. My Facebook and Twitter feeds are continuously flooded by friends posting their quiz results, and the market researcher in me can’t help compare them to the segmentationwork that we do at CMB every day.

So let’s take a closer look at a few of the basic concepts segmentations share with Buzzfeed quizzes and learn why I’m not too worried about losing my job to BuzzFeed writers just yet:

  1. You answer a predetermined set of questions. In the Starbucks drink quiz, you might be asked to identify your favorite color or your ideal vacation spot, even though these questions have nothing to do with Starbucks. At CMB, we focus on the product or service category at hand, we make sure we include questions that measure real customer needs. That way, we know our final solution will have implications in driving customer behavior. It’s much easier to see the relevance of a solution when the questions we ask have face validity.
  1. You are assigned to a group based on your answers. While I don’t know exactly what happens on the back end of a BuzzFeed quiz, there must be some basic algorithm that determines whether you are a Double Chocolaty Chip Frappuccino or Very Berry Hibiscus Refresher. However, as far as I know, the rules behind this algorithm are entirely made up by the author of the quiz, probably based on hours hanging out at their local Starbucks. When we conduct a market segmentation study, we typically use a nationally representative sample, which allows our clients to see how large the segments are and what true opportunities exist in the market. We also ensure that we end up with a set of clearly distinct segments that are both statistically solid and useful so that our clients can feel confident implementing the results.
  1. Each group is associated with certain traits. When your quiz results pop up, they usually come with a brief explanation of what the results mean. If you are an Iced Caramel Macchiato, for example, you're successful, honest, and confident. But, if you are a Passion Iced Tea, you are charismatic and hilarious. As a standard part of our segmentation studies, CMB delivers an in-depth look at key measures for each segment, such as demographics, brand preference, and usage, to demonstrate what makes them unique, and how they can be reached. We tailor these profiles to meet the needs of the client, so that they can be used to solve real business problems. For example, the sales team could use these segmentation results to personalize each pitch to a particular type of prospect, the creative team could target advertisements to key customer groups, or finance managers could ensure that budgets are being directed towards those with whom they will be most effective.

I’ll be the first person to admit that personality quizzes are a great way to waste some free time and maybe even learn something new about yourself. But what’s really fun is taking the same basic principles and using them to help real businesses make better decisions. After all, a segmentation is only useful when it is used, and that is why we make our segmentation solutions dynamic, living things to be reapplied and refreshed as often as needed to keep them actionable.

Amy Maret is a Project Manager at CMB with a slight addiction to personality quizzes. In case you were curious, she is an Espresso Macchiato, would play a Princess in a Disney movie, and is least like Ross from Friends.

Download our latest report: The Power of Social Currency, and let us show you how Social Currency can enable brand transformation:

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And check out our interactive dashboard for a sneak peek of Social Currency by industry:

Interactive Dashboard

Topics: Chadwick Martin Bailey, research design, market strategy and segmentation, Market research

Getting Your Customers Beyond Price

Posted by Cara Lousararian

Tue, Mar 15, 2016

online_shopping.jpgCall me lazy or call me smart, but I now do nearly all of my gift shopping online. Shopping online is easy, but it also brings up a whole new question around loyalty to specific brands and retailers. Five to ten years ago, I felt like getting the best price/deal was more important to me than shopping for specific brands or at specific retailers. Maybe it’s because I’m older, earn more money, or buy for more people (hello, in-laws!), but I’ve started considering other things than just price, such as:

  • Return policy timeline. A 2 week return policy doesn’t cater to the super-organized planners (like me) who want to buy presents well in advance
  • Ease of returns. A gift that can’t be easily returned is an inconvenience, so I look for retailers with hassle-free returns
  • Product warranty or guarantee. Sure things break, but I definitely don’t want my recipient to pay for a replacement

Because you can’t feel, touch, or smell products that you buy online, other factors play a much more important role in the decision making process—I’ll pay a higher price for something just because I know the store and its policies are convenient for me and those that I’m shopping for. We’ve all gotten that ugly sweater without a gift receipt. No one wants to be “the bad gift giver” (sounds like a Seinfeld thing, right?).

Two retailers who get my business, despite the higher price tag, are Nordstrom and L.L. Bean. Here’s why they have my loyalty:

  • Last Christmas, I participated in a Secret Santa gift exchange with my husband’s family, and I was assigned my husband’s 25-year-old cousin. While I could have just bought him a Patriots t-shirt, I wanted to be more creative and thoughtful. I went to Nordstrom.com because of their superior return policy—they take anything back at any time. This allowed me to take more of a gamble on choosing his present because he could easily return or exchange it if he didn’t like it.
  • My sweet rescue dog, Nala, has an obsession with trying to “soften” her bed (i.e., paw at it repeatedly with her sharp nails). I’ve had her for 6 years, and I have lost count of the number of beds I’ve had to buy to replace ones that she’s ripped to shreds. I took a look at L.L. Bean’s dog beds because I know the store’s return policy and product guarantee rivals most other stores. I had a bit of sticker shock when I realized I would be spending $200 on a bed for my dog, but the extra expense was worth it knowing that I can return or exchange the bed at any time for I know that L.L. Bean will stand behind the product and will replace it at no additional cost to me. 

Online shopping has made it easy to switch brands/retailers with the click of a button, and this undoubtedly has an impact on customer loyalty. In this world of information overload, it’s becoming harder and harder for brands and retailers to truly differentiate their offerings, especially when they lack a captive audience in their physical store locations. 

This is where discrete choice modeling and/or segmentation can come in handy—especially when there’s a need to dive deeper into uncovering purchase drivers outside of price—since most consumers will tell you they want all of the product’s bells and whistles for the lowest possible price. At CMB, we spend a lot of time in the up-front design phase, as well as in the analysis phase, combining the art and science of research to help bring the customer journey to life. This is where proper questionnaire design trumps speed as we strive to keep the story and research insights at the forefront. 

How are you prioritizing customer convenience and experience?   

Cara is a Senior Research Manager at CMB and plans to buy stock in Nordstrom and L.L. Bean after reviewing her recent credit card transactions.

Our new Consumer Pulse study explores Millennial attitudes and behaviors toward banking and finance.

Download the full report here!

Topics: customer experience and loyalty, market strategy and segmentation, retail research

New Study: Busting Millennial Banking Myths

Posted by Megan McManaman

Thu, Mar 03, 2016

Why does MasterCard want to replace your password with a selfie? How did Venmo become a verb? Why did JPMorgan Chase's CEO fret about Silicon Valley's start-ups to investors last year? Part of the answer lies within the attitudes and needs of that much talked about generation. . .Millennials. As part of our self-funded Consumer Pulse research, CMB partnered with leading venture capital firm Foundation Capital to explore how and why Millennials are helping redefine the banking industry

In this new report, insights include:

  • Millennials are not a homogenous group. We conducted a segmentation of Millennials, revealing five distinct personas with varied brand preferences, attitudes, and behaviors 
  • Most Millennials still use traditional financial products and services. Just over a third of Ambitious Adopters and Financial Futurists—the most forward-looking of the segments—say they’re most open to non-traditional financial services. 
  • Millennials place considerable importance on finance apps and tools. Asked which apps and tools they could not live without, Millennials mention financial tools and apps at the same rate as apps used for texting and messaging.

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 Download the full report here!

Topics: infographic, financial services research, millennials, Consumer Pulse, market strategy and segmentation