While some may proclaim the demise of segmentation, recent market trends suggest otherwise. The aftermath of the COVID-19 pandemic has led to supply chain disruptions and a reduction in product varieties, challenging traditional notions of segmentation. However, the notion that segmentation always equates to more choices is being reevaluated in light of consumer preferences and the practical challenges of delivering personalized experiences.
Research indicates that consumers may not necessarily prefer endless variety, contrary to the long-tail theory popularized by tech writer Chris Anderson. Furthermore, many digital marketers struggle to deliver one-to-one personalized experiences, highlighting the limitations of excessive segmentation. Recent statements from industry leaders, such as Macy’s CEO and Newell’s CEO, underscore the idea that consumers may not notice or desire a vast array of product choices.
However, this does not mean reverting to Henry Ford’s Model T approach of limited options. Rather, it suggests that the answer lies in finding the right balance of variety. Retailers, like Walmart, have previously experienced the pitfalls of cutting down too much on product variety, emphasizing the importance of finding a middle ground.
The skepticism towards segmentation is not entirely new, as dissenting voices have questioned its efficiency as a marketing strategy for decades. Scholars like Larry Gibson advocated for choice modeling over segmentation, challenging the conventional wisdom of marketing textbooks.
In recent years, Byron Sharp’s critiques of segmentation have gained traction, advocating for mass marketing based on broader commonalities rather than narrow segmentation. However, the increasingly fragmented marketplace, characterized by diverse demographics, localism, and cultural differences, poses challenges to this approach.
Big brands have successfully navigated this complexity by embracing a quilt of growth, stitching together diverse segments with unique connections to the brand. Rather than seeking uniformity, successful brands leverage the distinctive characteristics of each segment to foster connections and drive growth.
Looking ahead, the future of segmentation lies in mastering granularity rather than pursuing illusory commonalities. Advancements in technology, particularly artificial intelligence, offer opportunities for marketers to engage with consumers at a more precise and scalable level.
In conclusion, while the pandemic may have prompted a reevaluation of segmentation strategies, the essence of segmentation remains relevant in today’s diverse and dynamic marketplace. The key lies in striking the right balance between variety and relevance, leveraging technology to deliver personalized experiences at scale.
