There seem to be two schools of thought when it comes to customer segmentation. One group likes the "usage based" model where you can identify people based on how much they use a certain type of product or service. Pepsi for example might segment their consumers into "Superconsumers" who drink more than 9 cans of soft drink a day, "Liteconsumers" who drink only 1 a week etc. They can then do further analysis to see if there is a demographic grouping or attitudes that caharacterize these segments.
The other way (and not the only other way) is to have a "needs based" model. Here you segment the market based on underlying emotional or physical needs of consumers. For example, you might ask users questions to do with their health consciousness, length of their lunch break etc. Based on the responses, you develop "factors", underlying needs identifying by statistical correlation between particular responses. You can then "cluster" respondents into groups based on their affiliation with a particular set of factors such that they are as distinct as possible. You might then find that there is a segment out there around health consciousness who is prepared to put in the time to find drinks that meet their goals.
For sure, usage based segments are easier to measure and understand, and no one can really argue against them. You know how many drinks someone drinks. Proponents argue that there may be differentiating attitudinal characteristics of usage based segments and that they tie much more closely to organizational KPIs – Pepsi’s would be get everyone in the world to drink more soft drnks! But there are plenty of grey areas in needs that make it difficult to differentiate people. But I wonder if the usage based model is a cop out that does not really lead to much insight for marketing or product development.
For example, I think one big shortfall is in developing products and marketing services that consumers just aren’t familiar with yet. Take Spaces as an example. About six months ago, only 8% of people had heard of a blog let alone used one regularly. This is very different from email, where most people have heard of it and use it as needed – it’s a mature category. Knowing how much someone uses email and why can help drive usage. But knowing why early adopter bloggers blog doesn’t tell you how to meet the needs of the mass market that haven’t even heard of the category. For that, I think you need to go back to underlying needs of users that in some ways are independent of the solution you have in mind.
I hope we can stick to our usage based model for Spaces as it really helps us to understand the user needs much better and to develop a product and proposition that wows them.
