The 5 Consumer Segments Every Brand Should Understand

Part 1 of a 2-part series

Strategists and planners have long recognized the benefits of directing products and communication towards key audience segments. It’s no secret that aiming your message at the masses minus any key insight to help some group connect with your message is a good way to blow your budget without having anything to show for the effort. But how do you decide who to talk to?

Paralyzing effect of too many choices

There are plenty of models to wade through. You could start with Jungian archetypes as a foundation and search for the balance between your brand archetype and your consumer archetypes. You could use a Myers-Briggs Type Indicator or DiSC profile, or maybe even the nine Enneagram types to deep dive into your audiences. You can dive into the behavioral subsets, or geographic, demographic, psychographic samples. You could add filters of age group, lifestyle, income, section of the country or world, background, life stage, shopping habits, and so much more.

You could. But should you?

Simpler may be better

I have found that when I’ve tried to discuss this kind of approach with the average brand or marketing manager not already well versed in the concept, they get frustrated and aim for something simpler. Worse still is when I’ve worked with a brand that insisted on spending the money on an expensive study only to get a report back that was so complicated that few in the company wanted to use the results in their daily activity.

Brand foundation tools that people don’t use are a waste of company resources and may actually cause well-intentioned staffers to go off on their own directions not out of any desire to damage the brand but to simply get something done.

I think there is a way to frame the audiences for almost any brand, whether B2B or B2C, so that internal groups can begin to make progress on how to innovate and communicate with people the brand personnel know intuitively.

I think we need to get to strategic tools brands will actually use.

Primal behaviors

After being involved in consumer and customer segmentation studies for more than 20 years and in dozens of categories, we took a look at unifiers and differentiators in the various studies and came to recognize that at the root of all the studies are five essential, what I’ll call primal, behaviors.

Think of these as how we each are hardwired and not necessarily influenced by external factors. The five primal behaviors are: Value; Practical; Performance; Prestige and; Experiential.

Before I break them down let’s set a few ground rules:

First, people may very well float between different behaviors depending on categories or balance two behaviors at the same time. That doesn’t create hazy profiles. Instead, it helps clarify the emotional continuum most of us move through seamlessly every day. 

Second, these behavioral groups aren’t meant to be the exhaustive psychographic profiles. They serve as a base on which each brand can build common understanding of who they want to pursue and how to speak to that group. Run your volumetric, market size and market impact studies. Just don’t think you can’t make any progress with innovation and marketing communication without them. You can, and many brands do so every day.

Five Behavior Types

Value:

This group looks for a deal and considers themselves savvy shoppers. They can’t imagine paying full price for an item when they could just as easily get the same item or something very close to it for significantly less somewhere else. (think TJ Maxx’s Maxxinistas). It doesn’t mean they want to compromise on quality. They don’t. They would rather search for coupons and bargains for the kind of quality they would like to have instead of rushing to conclusions and spending money unnecessarily.

Practical:

Practicals want reliable products and services that live up to their promises. They look for function over form. They are willing to give up style points in favor of products that do a job very, very well. Many of my engineer friends and family fit in this category. They’re the first to check for manufacturing details and can tell me all about the product specs. For example, Practicals can tell you whether that Kenmore product you like is made by Bosch, Whirlpool, Samsung or Jenn Air. Why would this matter? Because Practicals pride themselves on knowing the details.

Performance:

This group can sometimes be the other end of the continuum for Practicals in that they look for function WITH form. They want products that work, but they also want the style points that can come with it. This is a big point for the Performance group: style matters. For example, while the Practicals might choose a Ford F-150 pickup truck for its towing capacity, durability and proven track record, they often draw the line on the extras that make the truck look or feel better to riders. Not the Performance group. They would also choose the F-150 for the durability and track record, but they would consider the upgrades, from 10-speed automatic transmission on a high output, twin-turbocharged, 450 horsepower, 3.5-liter EcoBoost engine to driver-assist technology and an integrated SYNC system to keep all their devices connected. All that technology just has to make the truck perform better.

Prestige:

Stepping up one more notch is the Prestige group. This group would prefer to stay out of discussions about F-150s because while Fords may have a proven track record, they don’t have the badge and talk value the Prestige group craves. They like having stories to share with others about the brands and products they choose. Why have a regular wristwatch when you could have a Breitling or Patek Philippe? Why just have shoes when you could have shoes by Jimmy Choo, Brian Atwood or Stuart Weitzman? This is a group who prefer the best of the best in categories that matter to them, from clothes to oral care, restaurants to technology.

One key note here is that having money isn’t always a big factor. The Prestige group are willing to compromise in some categories in order to have what they want in categories they care about. We all know people who have gone into debt to afford a lifestyle that fits their desire for the best.

Experientials:

Everyone has a friend who is an Experiential. They like variety, colors, textures and change because, well, why not? Style matters. A lot. Engineering matters, but not nearly as much. This is not to say they don’t like quality. They do. But they are willing to compromise a little on quality if that compromise means they could have two items for about the same price, as in having both a red and yellow handbag for $X+ versus only a red handbag for $X. In doing research for a pet food brand, we found this consumer group sought variety in diet for their dogs and cats because they found it hard to believe their pets would enjoy the same thing every day. In oral care, this consumer buys a different color toothbrush and with different textures each time because she gets bored with the one she’s used for the last three months and is now ready for a new color.

Upon this foundation we build

These five groups form the essential foundation of an actionable segmentation plan almost every company or brand can build from without waiting for the million dollar study. We use them in workshops to rapidly get executives, engineers, marketers, chemists, designers, biologists and plenty of others on the same page and universally understanding that we can’t talk to everyone and certainly can’t talk to them the same way if we ever hope to connect personally.

In my next article, Making the Five Consumer Segments Work for Your Brand, I’ll break down some of the influences you can use to narrow these primal behaviors to fit your category.

Six Critical Factors in Winning Against Private Label

In the not-too-distant past, private-label products were discussed in the same hushed tones reserved for topics not suitable for public consumption. Consumers didn’t really want to tell anyone they bought private label, the generics of the retail world, and let on that they were willing to compromise. National-brand managers relegated private-label products to the bottom of the category shelf set, allowing a tiny portion of share to be taken by this awkward cousin—but never really took them seriously.

But in the economic crash of 2007–2009, the world of private label changed dramatically. Retailers like Tesco, Sainsbury’s and Morrisons led the way by developing private-label brands instead of individual products. By some reports, as much as 54% of Sainsbury’s sales, and 41% of Tesco’s sales, come from these owned brands.

These retailers also recognized that (in many cases) using a national brand equivalency (NBE) strategy, where one simply knocks off the aesthetics of the best-selling national brands in each category and places their product to the immediate right of said brand with a price 40% lower, wasn’t gaining any loyalty.

The private-label trend caught on globally, from Loblaws of Canada to Walmart, Target, Kroger, Aldi, Wegmans, H-E-B, The Home Depot, Lowe’s … the list goes and grows on. A 2013 Nielsen Homescan study showed private-label brands in the US make up an average of 23% of total dollar share in supermarkets, 20% in club, and 18% in dollar. And now, Amazon is actively building its own private-label group, with plans to offer a considerable amount of owned, branded products across hard and soft goods.

A 2013 Nielsen Homescan study showed private-label brands in the US make up an average of 23% of total dollar share in supermarkets, 20% in club, and 18% in dollar.

So what can national brands do to compete in a world where they don’t control the retail space, shelf set or pricing structures? It’s a tough question to answer, but there are a few opportunities out there for brands willing to take on the challenge.

1. RECOGNIZE THE QUALITY OF PRIVATE LABEL

Sometimes we run into brand managers who scoff at the idea that private label might be a real competitor. Or, perhaps even worse, relegate private label to the lowest tier of the category set and figure that only consumers looking for a cheap product at a cheap price will choose it.

This line of thinking is horribly flawed. Private-label products and brands have made huge strides in quality over the last 10 years, with many of the manufacturers who support private label proudly touting the superiority of their products versus national brands. First Quality Enterprises of Great Neck, New York regularly conducts independent tests to certify that their diapers and incontinence products perform as well as or better than any national brand. Aldi recently ran an ad calling out Pampers in a head-to-head comparison with their Mamia brand.

When private-label brands can match, or claim to match, national-brand quality standards, it’s time to recognize their power and plan accordingly.

2. GET TO KNOW YOUR BUYERS AND CONSUMERS

Most retailers build their private-label brands through in-store conversion. They spend few resources educating consumers on the values of their brands or trying to build relationships with consumers before they enter the store. This is where national brands hold the first advantage.

National brands must know the people who shop for and consume their brands and products very, very well! I’ve worked with brand managers that noted their consumer audience as “builders” or “homeowners” or “moms.” That kind of vague reference won’t get you anywhere. You must dig to understand not just the demographics of the people buying and using your products, but also the psychographics behind why they make their choices. To do this, I recommend getting out and talking with people face to face, in homes, in stores, wherever they gather or shop for or use your products. Sending out an online survey will never get you into the hearts and minds of your consumers. You must engage them personally.

3. CREATE STRONG BRAND EQUITIES

Make it easy for your brand zealots to discover, locate, purchase and recommend your brand and products to other like-minded fans.

I’ve been playing acoustic guitar for more than 35 years. Around 20 years ago, I came across the Taylor guitar brand out of El Cajon, California. I was drawn to the quality of the guitars they made, and the distinctive headstock made it easy to spot others playing the brand from a distance. The brand published a newsletter that looks and reads like a high-end magazine, and shipped it free to everyone who owned a Taylor guitar. These newsletters shared stories about how the brand sourced woods, built different guitars, incorporated technology in the building process and more.

They also built their brand community by using popular artists to play at local guitar shops where fans could get their hands on the very guitars being played exceptionally well by these artists. This collection of information and identifiable equity elements has helped Taylor become the number-one acoustic-guitar brand in the US.

4. BUILD EMOTIONAL CONNECTIONS

Studies continually show that consumers trust national brands at a level that far outweighs their private-label counterparts. The power of Coke’s long history of brand storytelling, from unique shape language to the color red, polar bears, Santa Claus and teaching the world to sing, makes it virtually impossible for store brands to compete on anything but the lowest performance measures.

When national brands focus on product function only, they open the door for private label to take away market share. Most consumers want an emotional connection to the brand. Give it to them.

5. INNOVATE AND LEAN FORWARD

Private-label manufacturers by their very nature race to catch up to national brands, which is why national brands must work twice as hard to change the game. This means national brands must stay in touch with consumers and market trends to see what people want now, and how their preferences are changing, so they can anticipate change and get ahead of it whenever possible.

Steve Jobs recognized that anyone could make a phone, but only Apple could make an iPhone. He looked at a category replete with lookalikes and created a new platform that shook up the entire mobile phone universe so much that a once-dominant player like Nokia, which had gotten lazy in its innovation cycle, saw market share fall from a high above 50% in 2007 to just 3.5% by the third quarter of 2012.

Offering new versions, flavors or varieties of the same old products never has and never will be considered innovation. Consumers get confused by too many line extensions and default to the products they know and love anyway, so do yourself a favor and reach beyond the extension into true innovation.

6. USE THE ENTIRE MARKETING MIX TO YOUR FAVOR

Because consumers have an emotional connection to and therefore predisposition to purchase national brands, it is the responsibility of the national brands to do everything in their power to embrace those passionate consumers. This will never happen in one clean, concise manner. It involves strategies in pricing, placement, product assortment and promotion. Finishing this experiential journey with excellent customer service, trade relations and sales support increases the likelihood that your brand will be able to compete against the strongest private-label challenges.