segmentation_old school or still cool

1Copyright © 2016 The Nielsen Company

SEGMENTATION: OLD SCHOOL OR STILL COOL?

2 SEGMENTATION: OLD SCHOOL OR STILL COOL?

SEGMENTATION: OLD SCHOOL OR STILL COOL?Segmentation is the process of combining households with similar

behaviors, wants and needs to achieve higher marketing efficiencies.

Can segmentation, which many view as an old-school marketing tool,

still be relevant in today’s digitally connected world?

Absolutely. Segmentation indicates WHO your best customers are and

WHICH consumers you should focus your marketing efforts on (current

or new). It helps to understand WHAT your best customers are like—

what they buy, what their attitudes are toward a category, and what their

current lifestyle behaviors are, including media choices. Uncovering

these characteristics shows you HOW to best reach them and informs

your messaging so you can make more impactful channel decisions.

Segmentation is still used by marketers today much like it was 40 years

ago because it’s extremely effective at maximizing marketing campaigns

and budgets. In the past four decades, the need to do more with less

hasn’t changed for marketers. In fact, it has become more important as

you have more messages and channels to compete with. If you are still

wavering as to whether you think segmentation is still cool, consider

what you may be missing without it, because it:

1. Delivers Results. By truly understanding your customers, you can

deliver the right message to the right customer in the right manner,

helping reduce waste and improve response rates in every channel.

2. Enables activation and new acquisition. Segmentation provides

you with information about your consumers – your target markets,

growth markets, niche markets and even segments to avoid. Unlike

custom segmentation schemas built by clever marketing consultants

that you cannot take action on, syndicated segmentation can be

used to find more customers by being applied to direct mail lists,

online ad targeting and more.

3. Is optimal for multi-channel marketing. Businesses still need

to optimize ROI on marketing and location spend (by varying

channels). Since segmentation is actionable, it provides marketing

optimization via linkages to multiple measurements (surveys,

panels and profiles) to identify the best message for each consumer

group and can provide direction on which media channels are

preferred.


LEARNING FROM PAST MISSTEPSThere are countless examples throughout history where companies

jumped to make a decision without truly understanding their best

customers first. As you might assume, these campaigns didn’t produce

desirable results. They wasted money, and ultimately had a negative

impact on the brand.

Back in the fall of 2010, after building its brand on an iconic logo for

two decades, one apparel retailer made a perilous change--one that

lasted just two days. It changed its iconic logo with classic lettering

to one that it thought was more modern, hoping the new look would

appeal to a younger, more hip crowd.

But while the brand sought to broaden its customer base, it had the

opposite effect. In fact, the change was met with quick and sweeping

backlash from loyal customers who appreciated the brand’s classic,

basic style. Losing its best customers was not the company’s intention,

and this drastic change could have resulted in much worse than just a

short-term brand-marketing headache.

This misstep represents this retailer’s misunderstanding or failure to

consider the wants and needs of its best and most loyal customers.

While disruptive marketing messages and new product innovations can

be successful, they’re doomed to fail without a solid understanding of

what makes your best customers uniquely yours.

4. Has evolved. The premise of segmentation hasn’t changed but

the application has evolved tremendously over the years to better

represent the complexity of the U.S. consumer landscape. With

so many new big data assets at Nielsen such as wealth, lifestyle

behaviors and tech adoption, you are able to optimize your efforts

based on true behavior drivers to capture more opportunity and

weed out consumers not worth the expensive marketing efforts.

Great segmentation, optimized for the right behaviors, will help you develop more impactful campaigns and create more opportunities for your business now and into the future.


WHY IT WORKS: UNDERSTAND THE UNIQUENESS OF YOUR CUSTOMERSDeveloping a deep understanding of your customers helps you make

informed business decisions, optimize product mix, and reduce the risk

of costly product innovation failures.

To maximize marketing dollars, it’s vital to look beyond demographics

to see at the complete view – attitudes, behaviors and engagement

to gain a better and more complete understanding of the consumer.

Viewing data through the lens of segmentation can provide this

complete view.

For segmentation to add value, it must be used throughout an

organization. As such, it must not only be powerful—that is, provide

measurable lift, be stable, reliable, and extendable—but it must also be

descriptive, meaningful and relevant.

To accomplish this, a segmentation system must have three essential

components:

• A means to assign segments to customer, survey, or other

consumer data sources.

• Provide counts on-the-ground (for example, counts of households

by segment by geography).

• Access a library of behavioral profiles that describe and document

the segments’ product purchase, lifestyle and media preference,

as well as tactical linkage to third-party databases required for

execution—from mailing lists to media measurement panels and

across the digital landscape.


UNDERSTAND YOUR CUSTOMERS MORE EFFECTIVELY WITH SEGMENTATION

GREATEREFFICIENCY

MAKE SURE THE RIGHT MESSAGE REACHES THE RIGHT AUDIENCE

THE MORE YOU KNOW ABOUT YOUR CUSTOMERS, THE EASIER IT IS TO FIND NEW ONES JUST LIKE THEM

GROUPING CUSTOMERS AND PROSPECTS BASED ON SIMILARITIES HELPS YOU PROMOTE THE PRODUCTS AND SERVICES TO MEET THEIR NEEDS

PUT A PERSONAL TOUCH ON YOUR COMMUNICATIONS TO INCREASE LOYALTY

SMARTER PROSPECTING

PERSONALIZEDOFFERS

INCREASEDENGAGEMENT

While every application of segmentation data may not require all three

elements, it can’t be effective as a marketing integration tool unless all

three are present. Assignment of segments to consumers would seem

instrumental to any system, but there needs to be multiple methods

for doing so—in some cases you may have detailed household data, in

others only an address, or sometimes just a ZIP code.


UNDERSTAND THE UNIQUENESS OF PRIZM® PREMIERIn the retailer example, segmentation could have helped the company/brand understand why its customers purchased clothing with them and the key messages that were likely to resonate with them. Similarly, segmentation can help businesses across industries to discover and understand their best customers and then inspire them with the right message. While segmentation is still cool and essential in today’s fragmented marketplaces, not all segmentation systems are equal.

Nielsen PRIZM Premier and our latest custom segmentation approach, Segmentation on Demand, are Nielsen’s newest segmentation innovations.

Much like PRIZM, PRIZM Premier defines every U.S. household as one of 68 demographic behavior types or segments to help marketers discern those consumers’ likes, dislikes, lifestyles and purchase behaviors. By including new measures of wealth and technology adoption, this new model better represents today’s busy, connected consumers, giving marketers a better understanding of who and how to best reach their target consumers.

For brands who need more customized segmentation, Nielsen’s Segmentation on Demand is designed for the uniqueness of an individual brand.

We work with you to define the inputs that are important to your individual business and best represent your consumers. By employing our proprietary segmentation data and methodology techniques, we are able to design your custom segments, unlocking the power of a PRIZM Premier-like system, but built specifically for your business for the highest level of marketing actionability.

Even though the retailer spent considerable money to change its logo

to something more edgy and modern, segmentation could have shown

the company that its best customers did not want edgy and modern

fashion. They appreciated and shopped at the retailer for its classic,

basic and casual feeling and style. Altering this image to something

trendy and modern suggests that the company did not understand this

about its best customers. And the change to a more hip, modern logo

alienated the very people that The Gap needs most.


WHAT MAKES PRIZM PREMIER POWERFUL, ACCURATE AND TRUSTED?

GRANULARITY AT THE HOUSEHOLD-LEVELPRIZM Premier is available at the household level, as well as ZIP+6, ZIP+4, and Block Group, providing a seamless transition between household-level segmentation and traditional geodemographics. Having the ability to downshift to the household level makes it possible for marketers to move effortlessly from market planning and media strategy to customer acquisition and retention using the same language to describe their consumers. Household targeting provides the highest level of accuracy for acquisition campaigns, resulting in higher lift (response) and ROI.

INNOVATIVE DRIVERS IN TECHNOLOGY AND HOUSEHOLD ASSETS The PRIZM Premier model has added two new factors: Technology Behaviors and Income Producing Assets. These groundbreaking new drivers reveal how technology behaviors influence your best customers along with their level of liquid assets and ability to spend. Recent changes in technology have transformed how we consume—it’s essential that it should also be reflected in how we define and describe our consumers.

LINKAGES TO LEADING SURVEYS, PANELS AND MOREPRIZM Premier links your customer data with hundreds of Nielsen’s own demographics, syndicated survey data and panels, plus a variety of industry data sources, enabling you to understand, find and engage your best consumers in enumerable ways. These linkages provide an unparalleled 360-degree view of your consumer and enable more efficient tactics in direct marketing (direct mail lists) and online marketing (digital ad campaigns).

FLEXIBILITY TO FIT YOUR BUSINESS NEEDSAny customer file, list or survey can be coded with PRIZM Premier to better understand your opportunity segments. If you don’t have a customer database, we can create consumer profiles for you from our collection of syndicated consumer surveys and marketing insights, giving you the power to maximize your marketing.

A HISTORY OF PROVEN SUCCESSNielsen has a long, proven history leading segmentation innovations dating back to 1976. PRIZM Premier builds on this record of success by combining the latest in Nielsen’s own proprietary models and unique consumer insights from an array of consumer measurement sources. The end result is a segmentation system that outperforms our previous leading segmentation system, PRIZM, with clients seeing up to 9% greater campaign lift. Depending on your campaign size, this could translate into thousands of dollars in marketing savings per campaign and even more in revenue resulting from the higher response rates.

9% GREATER CAMPAIGN LIFT.19

76PRIZM® PREMIER DELIVERS:


CONCLUSIONSegmentation is still cool and that’s why it’s a core competency at

Nielsen. It helps you get the most out of your marketing dollars by

focusing marketing spend on your most valuable customers and enables

you to find more like them. It’s likely that as this need remains consistent

for businesses, segmentation will remain a leading tool in the modern

marketer tool box as well.

To learn more about finding your unique opportunities online and offline

with segmentation, click here or visit www.mybestsegments.com to find

out your segment using the ZIP code Lookup.

http://www2.nielsen.com/nielsen_segmentation


ABOUT NIELSEN Nielsen Holdings plc (NYSE: NLSN) is a global performance

management company that provides a comprehensive understanding

of what consumers watch and buy. Nielsen’s Watch segment provides

media and advertising clients with Total Audience measurement services

for all devices on which content — video, audio and text — is consumed.

The Buy segment offers consumer packaged goods manufacturers

and retailers the industry’s only global view of retail performance

measurement. By integrating information from its Watch and Buy

segments and other data sources, Nielsen also provides its clients with

analytics that help improve performance. Nielsen, an S&P 500 company,

has operations in over 100 countries, covering more than 90% of the

world’s population.

For more information, visit www.nielsen.com.

Copyright © 2016 The Nielsen Company. All rights reserved. Nielsen and

the Nielsen logo are trademarks or registered trademarks of CZT/ACN

Trademarks, L.L.C. Other product and service names are trademarks or

registered trademarks of their respective companies. 16/10200

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segmentation_old school or still cool

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