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Bye bye market segmentation and target marketing

Professor Steve Carter, Professor of Marketing

Faculty Blog

Ten years or so ago, academics were extolling the techniques of market segmentation and target marketing (not to mention the third leg of the triumvirate, 'positioning') as the basis of long-term competitive advantage (see Marketing course Modules 7 and 8).

Recently, this doctrine has come under serious threat. Classic segmentation techniques like socio-demographics have been supplemented by the more avant-garde techniques of 'lifestyle', aided and abetted by advancements in database and social media analytics. So we now have, for example, 'Millennials', 'Generation Z' etc, defined by their behaviour and habits, the former shamefully often described as 'having little attention span, butterflies and an I-want-it-now mentality'.

But, my recent research with my Malaysian colleague has shown that although 'Millennials' for example do display stereotyped characteristics, they change - often rapidly - over a short period of time. With it 'new language' and new forms of communication emerge also, so that now marketers are having to do with a 'state of being' rather than a 'state of behaviour' - the classic foundation for segmentation and positioning.

The challenge is whether marketers can a) sufficiently, quickly capture and describe these new evolving 'states of being' and then b) implement a segmentation strategy based on these characteristics before they disappear. The answer? Collective intelligence!

As the MIT Center for Collective Intelligence, USA, put it: 'people and computers connected so that - collectively- they act more intelligently than any individuals, groups, or computers have ever done before'.