From mass to niche. The change of consumption models and market segmentation [MARIUS LUICAN]

Source: AdPlayers

“Any customer can have a car painted in any color they want, as long as it’s black.”

(Henry Ford)

All for one and one for all: mass production and consumption

We shall begin with a retrospective exercise. We are at the beginning of the 20th century, during an important stage of Europe’s and the United States’ economic reconstruction, in which large populations having the same level of education begin migrating from rural areas to enormous urban centers. Detroit becomes the heart of the automotive industry development, having Henry Ford as a pioneer in the car production. We are witnessing not only a production revolution, but one of an entire consumption model.

We are dealing with large masses of population, with a similar set of characteristics, who possess the same package of needs, driven by the same motivations. At that time, society was promoting simple life goals: making one’s living through hard work at one or even two jobs. For the average worker, eating was far from an occasion of enjoyment, but a simple way to keep their head above water. People wanted to eat fast, plenty and tasty not driven by a personal need situated at the top of the pyramid, but for the purpose of having the strength to work.

What was then the response to these needs? The breakthrough of brands like McDonald’s has ticked most of the boxes and offered a satisfactory response to people’s needs: accessible to large masses of population, quick ordering and preparation, good enough taste to release dopamine. Everything was good, fast, dynamic. Under the arches of the McDonald’s logo, the American dream so longed for and necessary for the hopes of a society out of a World War was eventually fulfilled. Those mutual standardized desires meant that, at that time, marketing, communication, and the sales process were working relatively similarly regardless of the product or service.

In the past, brands were guiding the consumer’s identity construction, while telling the following story: “You are Marius, but if you smoke this cigarette, you will become stronger, braver and ready to work. Just smoke a Marlboro.” This narrative shows nothing but the fact that the benefits were drawn from the brand to the consumer, and the consumption of that product would define the individual one way or another.

Customers and products: target segmentation and communication direction

We are now returning to a society that not only has overcome the Fordist model of mass consumption but does not stop becoming increasingly fragmented. Nowadays, the brand’s target population is extremely segmented, thus products and services must respond to incredibly diverse packages of needs and motivations. In addition, besides the multitude of consumer niches, what in the industry is called the customer decision journey has undergone significant changes. If in the past, we were dealing with a predictable path marked by standardization and uniformity, in which the worker expects to find the desired product in the same place, on the same road to work, every day, today, the consumer imposes new demands. He wants to find the product online, at the store on the street corner, in the mall or in the hypermarket. Today, talk about diversity and mobility. Today we talk about “anytime, anyway, anywhere.”

Thus, we can see how not only the consumption model has changed, but also the direction of communication. Communication is no longer from the brand to consumer. With the advent of social media, there was a “shift”, so it moved from consumer to brand. Now, the brand is looking for tribes, those segments of population to which it must learn to communicate. The brand must learn and speak their language and especially, it must understand their behavioral patterns. Brands need to overcome the paradigm in which they are the ones shaping the consumer. Today, only through their brand identity, they no longer manage to complement that of the individual, but rather must make efforts to align theirs with the consumer. Companies need to do an imagination exercise. They should put themselves in two children’s shoes who are just getting to know each other at the playground by saying: “Hey! Do you like dolls too? Cool then! Let’s be friends!” In marketing, the playground is the market, the dolls are the consumer’s preferences, and the child’s voice is the brands.

All types of products and services are facing more and more target segmentation and have to deal with an increasingly fragmented audience, convinced of their own realities. The economic and political crises we have gone through, the current health crisis – all of these are turning these segments into increasingly antagonistic entities. One tribe hates another, and at some point, they no longer identify with their own characteristics, but with their ferocity against a common enemy.

The answer: Big Data

As a result, in this paradoxical Churchill exercise, what we know for sure is that the vehicles generating products and services – multinational companies – are growing at an ever-accelerating pace, delivering results globally, while the target is becoming increasingly fragmented. The question is: how do we calibrate ourselves according to the different types of target? Here comes into play: Big Data.

Big Data and, consequently, social networks manage to profile (to segment, as we researchers call it) to the lowest levels. At that point, they become the only tools perfectly adapted to the high degree of segmentation.

The problem often occurs in the case of Romanian entrepreneurs and large companies that fail to adapt their marketing strategy to current realities. Even today, managers are looking for universally valid and applicable solutions for the “majority”, when the “majority” has become, in fact, a sum of distinct minorities, a sum of niches. We notice that, especially in the field of services (banking, retail, malls, fitness industry, etc.) communication solutions and platforms still seem to be general, trying to deliver “a one-size-fits-all product”. Today’s reality, instead, show us that people want different sizes for different preferences. Therefore, the focus of entrepreneurs should be on solutions, not on a single solution.

Therefore, the online space becomes the answer to the dilemma. Whether we are talking about eMAG, in the local business environment, or about the giants – Facebook, YouTube or Amazon on a global scale – their success has been ensured by the enormous ability to target the public based on personalized profiles. By collecting and analyzing data about diverse consumers, they are able to learn and respond to these diverse needs of tribes. They found the way to communicate “brick by brick”.

Now the question arises: If we are not Facebook or YouTube, what do we do? If I own a gym in the neighborhood, I have a monthly newsletter, a few hundred subscribers and thousands of former subscribers, what can I do? Did you think for a second that that newsletter could be adapted in 8, 10, 15 different ways? The newsletter can be built depending on the segment you are addressing to and depending on the barriers that prevent the customer from re-subscribing. Did you think that you already have all the data “in-house”? All you have to do is to know how to use them. And to start using them. The commercial discourse must always be the answer to the client’s needs.

We will not get rid of Big Data, just as we did not get rid of the steam car. Adaptation is the key to successfully transcending change. How? Keep your fundamental brand identity, but let the tribes speak. Listen to them. Build the message with them.