Market Segmentation: How Much Choice is too Much Choice?

Today's class focused on better understanding market segmentation, targeting, and positioning differentiation (STPD).

Marketers believe that strong upfront research about consumers (which leads to segmentation which leads to targeting which ultimately leads to positioning differentiation) is one of the keys to marketing success. After thinking on a deeper level about the benefits of market segmentation however I ask myself... How much choice is too much choice?

 

"Market segmentation is based upon development on the demand side of the market and represents a rational and more precise adjustment of product and marketing effort to consumer or user requirements." (Smith 1956)

 

So basically (according to this definition) consumers today expect every need to be met and there is a constant need to adjust a product based on ever-changing demands. High demands to some would imply that we know exactly what we want. I think however that we know everything that we don't want and expect someone else to figure out the other parts for us. This has ultimately led to a smorgasbord of options and too much choice. I went to Staples recently and had a choice of 50+ new staplers (don't they all do the same thing?!)

After watching Barry Schwartz's TED Talk on "The Paradox of Choice" I would agree that consumer's high demands today are a vicious circle and no matter how hard we as marketers try to cluster, segment, target, position it will NEVER be good enough.   

 

http://www.ted.com/talks/barry_schwartz_on_the_paradox_of_choice.html

A few points really hit home in this video...

1. High expectations are the root cause: high consumer expectations are the enemy.
2.  Consumers are no longer "pleasantly surprised": no matter how hard we try performance will be
     mediocre at best (mainly because of the high expectations).
3. High expectations lead to greater customer dissatisfaction: contrary to what we may believe about
    more choice giving us more freedom and ultimately more happiness the choice is overwhelming
    and shopping is often a daunting process today. We should all think minimalistic-ally
    (think of Apple's success).

One of the biggest downfalls of the human mind is that we are constantly seeking improvement. When will we decide that is enough is enough and reach a sense of "self actualization"? Lets all live a little more simply- the secret to happiness is low expectations!- well at least realizing that maybe things were better when they were worse and we could all experience a few "pleasant surprises."



 

Marketing Myopia: does it still exist?

my·o·pi·a   [mahy-oh-pee-uh] 

noun

1. Ophthalmology . a condition of the eye in which parallel rays are focused in front of the retina,objects being seen       
    distinctly only when near to the eye; nearsightedness (opposed to hyperopia ).
2. lack of foresight or discernment; obtuseness.

3. narrow-mindedness; intolerance.

After discussing the article "Marketing Myopia" with my peers it was evident that despite Levitt's warning of marketer's nearsightedness (myopia) back in the 1960's there are still modern day examples of marketing failures due to a lack of vision.

In the original article, Levitt mentions industries and products such as the railroad, corner grocers, oil for kerosene lamps, etc. After class discussion, it was clear that although the industries and products may have changed marketers still fail to realize the downfalls of too narrowly defining their products/industries. While many today blame the failures of certain products to changing consumer tastes it appears the underlying reason appears to be an inability to shift ahead of consumer trends. In reality, making the realization that change is coming before the change occurs is what enables success.

Although I am only 22 I have already seen hundreds of shifts in consumer preferences. 

The 90's were a great time to be a kid and the products reflected the joys of childhood. From purple ketchup to Big League Chew that made you feel like a baseball all-star nearly everything I ate as a child had some element of fun. Today however, children don't quite experience the same fun with their food. Yes, there are still Spongebob shaped Spaghetti-Os and chocolate flavored cereal, but there are obvious changes. Look at the following article for example:

http://www.buzzfeed.com/daves4/things-from-you-childhood-that-are-extinct-now

Part of the reason these 90's kid childhood favorites may have become extinct is due to the rising concerns of diet on health and the change in the amount of information available to us today about healthy living. With a little more vision rather than falling prey to production pressures and not really listening to what consumers want perhaps some of the products mentioned in the above article would still be around today (with more of a health focus of course).

The argument that marketer's should realize a change in culture is occurring before it fully surfaces in order to achieve future success does seem valid, but then raises another question...

What causes the consumer shifts? Like a "which comes first the chicken or the egg question" I wonder whether new products cause dramatic shifts in pop culture or shifts in pop culture cause the product offering shifts. 

In all reality, the answer to this question is that a very fine line exists and a mixture of both different influences (new products/ change in pop-culture) probably exists. Look at when Apple first introduced the I-Phone for example. Trends in pop-culture around the 2007, release date expressed a need for faster performing, higher quality, futuristic devices (as humans we always want more and full satisfaction is hardly ever met). Apple capitalized on this pop-culture desire for some magical device that would encompass all of these needs. We can look at the original I-phone product release as a result of pop-culture shift NOT product offering shifts influencing cultural norms. 

However, fast forward five years to 2012. Apple continued to release faster and better performing models of the iPhone (3G, 4, 4G, 5, 5S, 5C), and Apple believed they were still ahead of the pop-culture curve providing customers with a product they were not even aware they wanted. Recent reviews of the iPhone's latest model argues however that Apple has fallen short of consumer demands and continues to push a product with few differences comparative to old models and has not met customer expectations. This example perhaps demonstrates the other side of the question that product offering shifts (the iPad, newer iPhone models, Apple TV, etc.) which all cater to the old pop-culture demand of fast, easy, and futuristic technology products no longer meets consumer needs and are not influencing cultural norms as they once did. 

Other companies have started to capitalize on Apple's missed mark. Some commonalities still exist with cultural desires then (in 2007 with iPhones original debut) and now (iPhone 5S's somewhat failed debut) people are still asking for faster, high quality, and high-tech devices but we also want MORE. What that "more" is still appears to be somewhat unclear, but Samsung and companies such as Manilla and Coin seem to be gaining lots of positive traction by focusing on human's innate desire for convenience. Most of these products further stress ease of customer use as well as the notion of having everything "all in one place". 

Manilla: http://www.youtube.com/watch?v=bg8xGA68QJI

Coin: http://www.youtube.com/watch?v=w9Sx34swEG0  

def·i·ni·tion [def-uh-nish-uhn]: The act of making definite, distinct, clear

How does the rest of the world view marketing?
(a blanket statement for the societal norm):

Marketing degrees are often seen as the fall-back or sometimes "fluffy" degree that business students who "just can't handle" real business classes choose to take so they can have a shot at any type of employment after school. Of course, that is different here at Kelley, but still most people have a skewed view of marketing majors simply because they think the degree is something everyone on the planet already has an understanding of.

However, everyone else on the planet perhaps forgets or misunderstands that marketing is actually much more complex and is comprised of many more levels than simply marketers are the people that sell me things, make commercials, tell me how much what I want costs etc.  The HBR article "Marketing Myopia" as well as our first class discussion further solidified the importance and complexity of marketing as well as offered a new way to look at marketing as a whole. 

Consumed by the Definition

Our lives are consumed by definitions and limited by the fact that everything is more tolerable when there is a black and white answer. Innately as humans we seek comfort in the fact that we can reach a correct answer and follow a logical path. In many ways marketing is the epitome of "the gray area" as it stretches our tolerance to uncertainty. 

While many appreciate definitions and the "definite, distinct, clear" way of looking at life we should not always limit ourselves by focusing on a single end goal/output/solution. "Marketing Myopia" in summary makes this exact point and this was the most important takeaway I had from this reading. The article discusses how a narrow scope is often the downfall of once "growing" industries. 

The reoccurring theme of the article for me was despite the fears raised by uncertainty the key to success in any industry and business is embracing change a fearing not uncertainty, but instead one's inability to deal with the change. Change is inevitable. Business is a game where those prepared for the changes will likely come out on top as change in inevitable. 

Preparing for Change

As one of my biggest takeaways from the article was that change is the only sure thing in the world of business and with change comes new opportunity for growth I decided to think a little more about how change can be combated. 

As far as I know, no one has the ability to predict the future. I am certainly not a fortune teller. However, a logical approach to change allows for a higher certainty of future success. The most "risky" endeavors in today's business world usually yield the highest returns as the investments are seen as uncertain. The question I have when thinking about this then is what kind of strategies for change are companies today most inclined to implement? 

Is it... 

a) A cover all my bases approach and invest in places that look promising- maybe its better to waste money here and there but at least I'll survive the change mentality. 

In the news today an announcement was made about Toshiba investing in a UK nuclear venture NuGeneration. Was this decision made based on heavy research or more of a gamble to cover the bases for the future? http://www.bbc.co.uk/news/business-25740203

b) Take the option less chosen and potentially come out on top (thinking of companies that have really take a shot in the dark or been taunted only later to be deemed the biggest success stories of our time *cough* Apple 

c) A more reactive approach to change and the less risky where the company changes only after first movers have seen high returns and success. To these companies the pay off is not worth the risk perhaps. 

"Marketing Myopia" most definitely got my brain working. The alternate view to the more traditional product pushing type reputation marketing is giving warns us all of the dangers of adhering too closely to a single goal or definition. Perhaps a clear vision of what is coming next/ or what we think the customer wants is not always the most desirable. Instead companies and marketers especially should embrace uncertainty in order to avoid complacency and remain nimble. 

Looking forward I would love to learn more about the evolution of strategy and how management has had to shift to meet the demands of change. A somewhat deep thought, but certainly thought provoking: 

Is the foundation of our society (a capitalistic driven culture) going to be the very downfall of some U.S business? 

Pushing products is no longer a successful strategy and instead a loosely defined concept and solution to satisfy a customer need is more pertinent. After all, as "Marketing Myopia" reminds us the Model T was not invented because someone asked for a car, it was invented because someone asked for an easier means of transportation. I don't love Chipotle because I asked for an amazingly fast, delicious, burrito bowl to be made but instead someone a few years back said they were hungry and Mexican sounded good!