Traditional, demographic-based customer segmentation no longer serves companies that seek to provide people with the best possible product and service innovations and customer experience. With rising uncertainty and more freedom of choice than ever, consumer decisions are increasingly motivated by individual values.
Traditionally, customer segmentation has been based on demographics like age, sex and location. The theory goes, if you’re a 35-year-old woman living in Helsinki, certain things will appeal to you based on those characteristics. A 70-year-old man living in Rovaniemi, on the other hand? A completely different kettle of fish, with different interests to match.
This looks nice and neat on paper, but real life is more complex than that. Two Helsinkians of the same age, gender and income level might live as neighbors and still have completely opposite tastes, thoughts and feelings about the products and services they prefer. That’s why over-reliance on demographic segmentation can lead you astray and make you miss out on potential customers who are just waiting for an opportunity to love your product.
Values, not demographic details
This is where motivation-based segmentation comes in. By looking at the values that motivate people in their everyday lives, we get a much more sophisticated picture of their needs. Gone is the need to rely solely on the determining power of home address and birth year.
Motivation-based segmentation leads us to where the real demand is – where the realities of everyday life clash with people’s desire to consume in a way that aligns with their values. This is an opportunity to create growth by helping people bridge the gap between their loftier motivations and their real-life struggles.
For example, the Informed Consumer study, conducted by us here at Kuudes, identifies nine archetypal, value-based consumer groups. These include the Dreamers, curious individualists burdened by the abundance of choice, and the risk-averse Bystanders who are prudent with their finances but can be persuaded with a good bargain. The Devoted are willing to sacrifice their own pleasure for the common good, whereas the Unconcerned value hedonism and effortlessness in everything they do. All of these groups span different ages, genders and other demographic variables, while sharing the same values that motivate their behavior and inform their choices.
Of course, digging up this information takes more effort than segmentation based on simple demographic data. However, motivation-based segmentation offers a more profound and therefore longer lasting foundation for innovating new product and service concepts and developing your business. Understanding what motivates your audience on a deep level will help you speak their language even as trends change and times get tough.
I’m motivated, now what?
If motivation-based segmentation sounds like it could benefit you (and I’m almost certain it could!), contact my colleagues in Kuudes to talk more about finding growth in the right segments for you.