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[mobileYouth] Is it time to rethink customer segmentation?


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[mobileYouth] Is it time to rethink customer segmentation?

  1. 1. Is it time to rethinkcustomer segmentation?OverviewLast week we established 3 reasons why youth are important to your business.Now you have the business case, how do you start to manage the youth market?Before we jump into segmentation, let’s first look at youth market. A good a placesas any is to start with music because if you want to understand young people today,look at the changes in the music industry:■ Musical genres like “rock”, “pop” and “world music” have become irrelevantGet mobileYouth’s latest report:The End of Customer SegmentationFind the most relevant insights on youth mobile marketing:
  2. 2. ■ Successful artists like Jay-Z, Madonna and Bowie transcend genres■ Success has moved from servicing a genre to joining the dots between themMusic is an analogy for identity and, therefore, a powerful insight into marketing.Consider these points in terms of marketing:■ Market segmentation has become irrelevant■ Successful brands like Red-Bull, Apple and Amazon aren’t defined bysegment■ Success is about defining your own tribe of followers and connecting the dotsbetween this diasporaShawn Carter’s StoryShawn Carter is a true American rags-to-riches story. Born into a poorneighborhood in Bedford-Stuyvesant, New York, Carter, through a series of shrewdbusiness dealings, amassed a net worth of $500 million by his 40th birthday.You may better know him as the 17 time Emmy award winning hip-hop artist Jay-Z,ex president of Def-Jam and Rocafella records. His music empire knows no bounds– from clothing to movies to courting the paparazzi with his celebrity wife Beyonce.When he sat down to interview with Steve Forbes and Warren Buffet (yes you readthat right) wearing a tailored suit more Savile Row than Brooklyn you could havebeen forgiven for thinking that this was a kid straight out of the Hamptons and Yalerather than Brooklyn. Except for one detail, Shawn Carter is black.Find the most relevant insights on youth mobile marketing:
  3. 3. “There is no Black or White music anymore”For Carter, he tells the story of a young black man, hustling the streets but if youlook at the industry data, between 65% and 85% of hip hop fans are non-black.(sources: Soundscan, SMLG, MRI). Without the white kids, rappers like NotoriousB.I.G and Busta Rhymes, all who attended Trenton High with Jay-Z would simplyhave been niche artists rather than multi-millionaires. A recent Soundscan reportconcluded that “as much as 70 percent of the paying (and downloading) hip-hopaudience is white kids living in the suburbs.” Hardly the projects in Brooklyn.After a recent gig at Arizona State University, Jay-Z issued a press statement thatsaid “there is no black or white music anymore, just good and bad music” pointingto the blurring of lines in a once heavily demarcated musical genre. How can hip-hop be the sound of the ghetto the president be black and the nation’s most popularhip hop artist (Eminem) be white?■ Traditional music marketing offered and black & white view of the world■ Demographics used to be an effective tool for predicting behavior but notanymore■ The shared themes that connect people across demographic and genre aremore predictive of behavior and attitudeFind the most relevant insights on youth mobile marketing:
  4. 4. Traditional segmentation is brokenBusiness-wise, Jay-Z makes sense. What of those fans who were teens back whenJay-Z went solo at 26 almost 15 years ago? Do they suddenly turn over to “easylistening”? No, he keeps telling the story but he grows up with them.It’s a challenge industry faces every day – segmentation. If you look at therecording industry’s sales by genre, Rock accounts for the majority of all sales,followed by Pop and R&B. But, according to the RIAA, there are only 10 genres,including anomalies like “easy listening”, “new age” and “world music”. You onlyhave to check Wikipedia to see the market reality – Wiki lists200+ genres ofelectronic music alone.■ The whole music industry used to be organized around genre but now thisDNA is changing■ The industry has lost control of the definition, now customers decide ongenres■ Genres are becoming so fragmented that they are becoming useless formarketing purposesGenres fall apartThe modern customer is an anomaly. French teens close down Charles de Gaulleairport to herald the arrival of a K-pop band. Female Indonesian soccer fans floodtwitter during the world cup. Bollywood pop artists like Daler Mehndi find fan basesFind the most relevant insights on youth mobile marketing:
  5. 5. in Korea. A middle aged hip-hop superstar from Brooklyn sits down with the sage ofOmaha (aka the richest man in the world)?As Steve Forbes himself said, “You two are unique even though you are in differentspheres”. Both a genre of one yet more similar than traditional marketers wouldcare to think.Connecting the dotsThe anomaly exists only in the eyes of the traditional marketer – one who holds onto the idea of segmentation. Women don’t want pink phones. Female technologyenthusiasts want to connect with other technology enthusiasts, not other females.The differences within traditional demographic segments are far greater than thedifferences between them. When a 17 year old Filipino female student and a 45year old American marketing executive both love Jay-Z, segmentation becomesirrelevant. No more “we’re different here”.Traditional marketing bases categorization around how customers relate toproducts, modern marketing needs to base it around how customers relate to eachother. Modern marketing needs to move beyond demographics and psychographicsand look at connecting people through the shared stories that are meaningful totheir lives.Segmentation serves no purposeSegmentation isn’t useful to the customer (who searches in “Rock” on iTunes orSpotify) and offers little to the brand (more segmentation does not lead to moreFind the most relevant insights on youth mobile marketing:
  6. 6. accuracy). What becomes relevant are the stories that these artists and brands tell.In this case, that of an underdog trying to get ahead in the world. The only marketsleft are the markets of one, connected by themes that transcend traditional barriers.■ More segmentation does not lead to more accuracy■ Customers no longer rely on segmentation for discovery or identity, they turnto each other■ The emotional stories and themes that connect people are replacingsegmentation as the most predictive and useful way of organizing marketingMoving beyond segmentationSo why do we segment in the first place? According to Wind and Cardozo (1973)segmentation “involves appropriate grouping of individual customers into amanageable and efficient (in a cost/benefit sense) number of market segments, foreach of which a different marketing strategy is feasible and likely profitable.”Segmentation is a byproduct of the industrial process. We segmented markets tofor management and efficiency. Like advertising, segmentation is the symptom ofan information problem, of an era of scarcity and shelfspace rather than digitalabundance.This isn’t 1989 anymoreNow, however, the Pepsi Generation is over. This isn’t 1989 anymore. Likeadvertising, segmentation becomes increasingly ineffective. Of course,Find the most relevant insights on youth mobile marketing:
  7. 7. segmentation will be around for a long time yet. But consider why. So, do you investyour skills and knowledge in a ship destined to sink or one with a future?■ Segmentation is a product of the industrial era■ Many interests are built on segmentation (e.g. job titles, departments, internalreporting) so many interests will try to defend the idea of segmentation andprevent change rather than do what’s right for the business or customer■ Segmentation will still be around in years to come but, like advertising, itseffectiveness is already in declineThe future lies in connecting the dots between these diffuse digital diasporas – thefans that sit across segments and the advocates that transcend demography. AsJay-Z said on his Forbes interview, “I didn’t focus on any particular demographic, Ijust focused on telling my story.”Find more articles like this by signing up to our newsletter onhttp://www.mobileYouth.orgFind the most relevant insights on youth mobile marketing: