Module 3 Podcast

Start One of the great joys of my consulting life was working in Japan. I'd visited Japan, I think, once or twice before as a tourist, but it's a very opaque culture, of course. And so you do the usual trips around Tokyo and you head down to Nara and Kyoto and you see what all the Europeans and Americans see. And that's fine, but it's, it's not what's really going on, obviously. And then as my consulting career progressed, I would say four or five times I got myself into proper Japanese deep water working for companies in Japan. I don't want to say working for Japanese companies because one of the things you learn quickly about Japan is there's two strata going on within Japan. There's a certain caliber of Japanese business person that just would not work for a non Japanese business and they go a different way and they wouldn't hire non Japanese consultants. But for American and European companies based in Japan, there was always the opportunity to go out there and do work. And I formed some pretty nice bonds with some pretty cool Japanese people, which I, I treasure really. Because you, you know, you working with the Japanese in Japan, having cigarette breaks with the Japanese, occasionally having beers after work and things. I never took it for granted. You know, it was lovely. And one of the projects I worked on that was closest to my heart, working for a big medical company, we had a real challenge with a new launch drug. And there was a clear sense that the Japanese affiliate really didn't get it, or at least the American parent company didn't think the Japanese affiliate got it. So I was sent out to work with them on building the launch plan. And at the heart of it all was a segmentation of the doctors and the patients and the accounts, you know, which absolutely had to be in place. And I can remember us going out to a place in, I want to say, the East Coast of Japan. Am I have got it wrong? But an old resort town called Odawara, which was built during the Japanese bubble when they had more money than cents, you know, and had not been changed in the 40 years since. And spending I think maybe close to 10 days there, working with the leadership team to build this launch plan, discovering what real Japanese karaoke looked like in the evenings, proper Japanese food, you know, the whole 9 year. It was great. It was, I was the only Westerner. Yeah, but for the most part. And so it was terrific. And one of the things at the heart of the project was just building on the whole wall of this conference room a giant, well produced, meaningful, actionable grid that captured the whole Japanese treatment market in with appropriate segments and sizing. And there is that moment we talked about it in the module where you get the segmentation kind of right and it suddenly locks in and everyone checks the numbers and they look back and they check a lot more numbers. And a couple of people nod and you've got not a photograph of the market because segmentation is a sketch, you know, it's a representation. But we know we're looking at a point of view of the market now in totality for the first time. And one of the great things about Japanese people, among many others, is that they they make certain sounds that in my experience, other cultures don't make. And I've got a Japanese sister-in-law now, and she occasionally makes the same sound. And it's a sound of kind of like respectful amazement. Yeah. Like Segoy is the Japanese word for, oh, that's, you know, amazing. But they don't do that. They go above that. And they go into kind of like, and I'm, I apologize, I'm not getting it right here. But it's kind of like they'll give you a respectful. Oh, that's very impressive. And it's kind of like whore. But when you really properly impress them, which isn't very often, they go like, and it's a beautiful sound, you know, And I had these like 6 or 7 Japanese executives all make this sound over my shoulder as I put the last numbers in. And they all went, you know, and off they went, you know, jabbering away in Japanese. And I was out of the loop then because when you finish segmentation, what happens next is immediately targeting things start jumping out at you. And that sort of segue into strategy is, is almost immediate. You know, when you, you know, when you've left diagnosis, if you've done a proper job, because it's kind of like you can't resist being pulled into look over here, look over there. You know, we talked about it in the module. So that's one of my most treasured consulting experiences. And you know, it worked. I mean, that segmentation was the basis for God years and years and years and years of success for a particular product. That really what I mean, you know, it was a very good product as well. It wasn't the segmentation that did it, but yeah, it worked great. And again, the other part of being a consultant that's fun is you kind of go in a time machine, you know, you do the work and then you go home and then if you're lucky, one or two years later, you go back in for some other reason. You say, oh, how was the launch? And they go, oh, it was great. It absolutely that worked. That didn't work with this worked. So you get to find out how the work went, you know, and that one was a real winner. So yeah, happy times. And, and, and again, that idea that segmentation is the, you know, it should be the rounding end of the diagnosis phase and you feel it opening the door into targeting, which is the start of strategy. One point I'm keen to pull out here before we get into the content this week is I did a thing years ago called Ritson's Monster. You can find it online pretty quickly if you search for it. I don't know if you've got it's like 2 hours long so you may not want to. And I used to have as a reading here, but it's like people used to spend too long watching it. And what it basically was, it was an attempt of mine to say, what are the traits of great marketers? Not the skills, because we can train skills, but what were the inherent traits of the best marketers I work with? What, what are the things you need to have kind of already in place? And I pulled out about 10 or 11 of them, you know, being able to think long and short to make things simple. You know, I really spent a long time working out what is it good marketers are good at? And I used a movie character for each of the traits to illustrate what that trait looked like. It was kind of cool. It just was a bit long, you know, and you again, you can watch online if you want. But the one that sticks with me now all these years later, having done that, which I think is a point we don't make enough, was one of the traits was comfort with imprecision. And I forget which movie character I used to demonstrate it. I think if you can remember back, there's a wonderful movie called Margin Call about the collapse of a bank during the GFC. And Jeremy Irons plays this fantastically sexy chairman of the board who flies in on a helicopter when the bank's about to go down. And he goes, OK, OK, now tell me what's, you know, in a sort of half English, half of America. Tell me what's going on here. And they start rattling off all this complex shit. And he's like, now listen, I'm, you know, I'm the chairman of the company. I didn't get this position by understanding this. Hoo ha, talk to me like I'm a, you know, a relatively intelligent golden retriever. Keep it simple for me. You know what I mean? And I think that was the character we used to illustrate a very important point. And it really plays out in segmentation, which is it's never precise. Yeah. One of my many problems with marketing science is it suggests that all the numbers add up to 100. And they never do. Yeah. And in segmentation, they never do because if you think what is segmentation, it's an extrapolation of what the market will look like next year. There are loads of known unknowns there, like competitor activity. If we're lucky. We're basing our extrapolations off a survey of, you know, naughty point naughty 2% of the market. There's all kinds of of issues. So what you have to do to be a really good marketer is go, yeah, it's not perfect, but you know what, this is close enough and it captures pretty much what's going on. And I see it and all the senior marketers I've worked for an ability to go, yeah, is this good? Yeah, OK, good, move on, move on. And I've also seen it in all the 50 year old junior marketing people who've never got further up the ladder. They can't move on because they obsessed with the numbers lining up. And I'll tell you right now, it's way up. In the future when I set the exam this term, I'll make sure the numbers are vague at the end. And it's not because I'm being a prick or because my maths isn't very good. It's because I think one of the great skills is going, OK, this is good enough, Yeah, let's move on. If you don't have that skill, your segmentation ends up going horribly wrong. And I'll tell you what happens with a lot of marketers, and you must listen to me about this point. A lot of marketers confronted with even simple percentages or an average of an average or whatever it might be, go, oh, I'm not very good at maths. I'm no good with numbers. And the whole thing crumbles right there. Because what happens then is we kick into imposter syndrome. None of the numbers will add up. There's panic, and you've just killed yourself, right? You don't have to be good with numbers. These are simple numbers that your dad could work out. You just have to not panic. And you need that comfort with imprecision. And when you call out, oh, not very good with numbers, hey, you look like a moron and you're not. And B, you're calling it. So you never will be good at numbers. Yeah, just shut up. Don't say things like that, Korea shredding, things like that, and make the numbers add up. Yeah, as best you can because it isn't physics. It doesn't have to be perfect. You just have to make the numbers pretty much all square off. But have that comfort with imprecision that it won't be perfect, that it doesn't all add up to 100. And that's OK. Yeah. Elon Musk, whether you like him or not, has that great quote about if it's 80 or 90% certain, will that will take that because to get that extra 10 points of certainty will take another nine years and billion dollars. And we don't have that. And that's the attitude you've got to apply. I'm not saying be slipshod, but I'm saying at some point, accept these numbers. They're good enough. Yeah, and you'll see it in the exam. Going to build a segmentation in the exam this year and you'll see it about 30% of the class. Can't get over the fact that the numbers aren't perfect and they never get towards a decent answer. If it's good enough, it's good enough. Move on. Yeah, it's a key part of segmentation because segmentation isn't the market. It's an approximate map or sketch of the market. Yeah, it'll never be the market. You've got to remember that. So this week's podcast, what do we have in store for you? Well, we'll start with the Yankelovich reading. It's kind of a long story, this one. So Daniel Yankelovich is a legendary researcher and marketer, practitioner, wasn't an academic in the mid 60s somewhere he wrote a very famous HBR which was about essentially new forms of segmentation. And what he was proposing was to move from the world of demographics and very basic segmentation to a more psychographic, more behavioural approach. And so it was really the start of doing what I think for the rest of the 20th century would have called proper segmentation. And then in about 2006, he worked with a consultant called David Muir to kind of revisit his piece 40 years later as an old man and essentially in a very miserable, but I think accurate way, talk about why it had all gone horribly wrong. And marketing had taken this idea of segmenting in a more practical, applied way and turned it into something that wasn't what Yankovic really expected or wanted. And so I don't necessarily agree with all of his points. You know, as you'll see from the class, I like it when you name segments. I think they do mix up targeting and segmentation. So it's not necessarily aligned with what I'm teaching you, but that's not a bad thing either. But I think it's a great overall kind of review of segmentation and gets the discussion going. It's a very famous paper, so that's how we kick off. So we ask Yankovic and Mia to come back and kind of talk through their paper. Then there's a column of mine which really just tries to finally, finally dispel the idea that demographic segmentation makes any sense at all using, you know, the the work of the Pew Institute, who are the world's most predominant polling and analytics firm, who basically said we're not using demographics anymore because it's wrong. So I tried to use their points to finally put the nail in the coughing and demographics. It's a good column to read, I think. Then we have our usual from Hal and Jess, who seem to be making the space their own. I listened to it with the same curiosity as you guys do. And yeah, it's interesting where it's going. They certainly provide a good summary, I have to say, of the stuff. So that's great. And then we reach our conclusion. So nice and tight this week, but super important. So let let's kick off with Yankovic and Mia, then my bit and then the briefing, as the guys call it. Let's go. Speaker 2 OK. So we need to talk about segmentation. Rediscovering Market Segmentation We do. We really do. Speaker 2 Because something went very, very wrong. Speaker 3 Very wrong. Speaker 2 And I say this as a man who invented the thing I Daniel Yankolovic. In 1964, in this very magazine, I wrote the paper New Criteria for Market Segmentation. I said stop sorting people by their age and their zip code. That tells you nothing. You know what a 45 year old man in New Jersey wants? Could be anything. Could be a boat, could be therapy. Could be a boat for therapy. Speaker 3 Right, right. Speaker 2 I said look at their behavior, look at what drives their decisions, look at what they value. That's the good stuff. That's where the money is. And companies listened for a while. They listened. Speaker 3 And then? Speaker 2 And then Madison Ave. got their hands on it. Speaker 3 Madison Ave. got their hands on it. Speaker 2 And what was a sharp strategic business tool became, what's the word, David? Speaker 3 A vibe machine. Speaker 2 A vibe machine? Yes. Suddenly segmentation means let's figure out what our customer looks like in a commercial. Is he a rugged, outdoorsy type? Is she a busy mom? Is he a young professional with good cheekbones and an inexplicable loft apartment? That's not segmentation. That's casting. Speaker 3 It's central casting for marketing. That's literally what we called it in the article. Speaker 2 And This is why 42 years later, 42, I am back in Harvard Business Review writing another paper. Because I had to come back and say you're doing it wrong again. Still, somebody has to say it, and it is me. Speaker 3 And I'm David Muir, I'm his co-author. I was at Booze and Company at the time of the second article. And I want to say it was an honor to work with Dan on this piece. And also mildly terrifying, because this man does not suffer bad thinking quietly. Speaker 2 You did good work, David. Speaker 3 Thank you, Dan. Speaker 2 You did very good work. Speaker 3 OK, so let's actually explain the article. Who are we? Speaker 2 I am Daniel Yankolovic. I have been studying American consumers since before some of your parents were born. I ran DYGA, social trend research firm. I have been tracking how regular people think and feel and buy things since the 1950s. I am, if you'll forgive me, kind of a big deal. I am also dead. Speaker 3 He really is. Speaker 2 And this man here, David, he is the rigorous, analytical 1. He keeps me from rambling mostly. Speaker 3 Mostly so. The article. February 2006. Harvard Business Review. Rediscovering market segmentation. Here's the short version of why we wrote it. Segmentation had become totally captured by the advertising department. Every company was doing these big, expensive research projects, psychographic profiles, lifestyle clusters. And they were fascinating, beautiful names. Great for a PowerPoint. Speaker 2 Dan completely useless for running a business. Speaker 3 Mostly useless, yes. Because here's the thing. A psychographic segment tells you what kind of person someone is, but it doesn't tell you what to do about it. It doesn't tell you what product to build, what price to charge, which customers you can actually steal from a competitor. Speaker 2 It became decorative, like a nice painting in a conference room. Very pleasant, no decisions come from it. Speaker 3 Right. So what's the actual purpose of segmentation, Dan, you want to take this one? Speaker 2 With pleasure. The purpose of segmentation, the real purpose, the one I was talking about in 1964 and I'm apparently still talking about in 2006, is to help a business figure out which customers to target and what to do differently for them. That's it. It is a decision making tool. It should change how you price. It should change what you build. It should change who you go after. If you do a segmentation and nothing changes, you just spent a lot of money learning that people are different. Congratulations, Go outside. You could have figured that out for free. Speaker 3 So, and this is really the heart of the article, we argue that good segmentation has to be strategic, not just descriptive. Let me walk through the criteria because this is where it gets practical. Speaker 2 This is where David earns his consulting fees. Speaker 3 Thank you. First, your segments have to be related to actual purchase decisions, not to personalities, not to lifestyles in the abstract, to the specific behavior you're trying to understand or change. Are people not buying your product? Why not segment on that? Speaker 2 Because, and this is key, different people don't buy for the same reason. I know that sounds obvious. It is not obvious to most companies. Speaker 3 2nd segments need to be identifiable and reachable. You need to be able to find these people. If your segment is people who feel vaguely unfulfilled on Tuesday afternoons, that is not a segment, that is a condition. Speaker 2 That's most of America, by the way. Speaker 3 3rd segments have to be substantial enough to matter. You don't build a whole business unit for 47 people with a very specific preference. Speaker 2 Unless they're very rich. Speaker 3 Unless they're very rich, yes. 4th This is the big one. Segments need to be actionable. A segment is only useful if it tells you something different to do. If your two segments require the exact same product at the exact same price with the exact same message, you don't have two segments. You have one segment and a spreadsheet. Speaker 2 This is where most companies go wrong. They discover that their customers fall into six beautiful clusters. They name them. They put them on posters and then they sell everyone the same thing. What was the point? Speaker 3 And finally, this is from Dan's original 1964 work. Good segmentation should have what he calls gravitational pull. A good segment doesn't just describe who's already buying from you, it pulls in new customers. It reveals people whose needs are not being met. Speaker 2 That is the golden opportunity. The underserved customer, the one who would switch if only you gave them a reason to. Everybody else is drawing portraits of the treasure chest. I'm telling you where to dig. Speaker 3 So let's talk about what went wrong with psychographics specifically, because I want to be fair. Psychographics is not bad. Values, attitudes, lifestyles. This is real information about real people. Speaker 2 It is not bad, it was just kidnapped. Speaker 3 It was kidnapped by advertising because advertising needs to know what does my customer look like and feel like so I can make a commercial that resonates. That's a legitimate question, but it's an advertising question, not a strategy question. Speaker 2 And somewhere along the way, companies started doing all their segmentation research to answer the advertising question. I'll be honest, someone once told me a bank segmented its customers by which Starbucks drink they ordered. Speaker 3 I'm not going to confirm or deny. Speaker 2 That the point is this tells you nothing about whether the bank should offer them a home equity line of credit or a checking account with no fees. Speaker 3 Right. It's fun data. It's not useful data. And in the article we make a distinction between segmentation for brand communications, which is fine, that's for advertising, and strategic segmentation, which should be driving your whole business. And what happened is companies confused the 2. Speaker 2 Which is like using a weather vane to navigate a ship. Yes, it tells you which way the wind is blowing. It will not get you to Portugal. Speaker 3 Perfect. OK, let me talk about one more thing from the article. The idea of thinking about what job customers are hiring your product to do. Good segments cluster around problems and occasions, not just personalities. Speaker 2 People don't buy a drill because they love drills, they buy a drill because they need a hole. Speaker 3 Exactly. So if you're Black and Decker and you're trying to do segmentation, the interesting question isn't, are my customers outdoorsy or suburban? The interesting question is what kind of hole do they need and under what circumstances, and what would make them pay more for it? Speaker 2 This is what I mean when I say we need to go back to basics. Segmentation was invented to find customers you could serve better than anyone else, and customers whose behavior you could change, not to make attractive PowerPoint slides. Speaker 3 Which don't get me wrong, I have made many attractive PowerPoint slides. Speaker 2 He's very good at slides. Speaker 3 Thank you. But slides are not the deliverable. Better decisions are the deliverable. Speaker 2 Now why does this matter? Companies spend enormous amounts of money on market research. And in 2006, we found that about 60% of companies had done a major segmentation initiative in the previous two years, 60%. And yet most executives, if you ask them, would say our segmentation doesn't actually drive our decisions. Speaker 3 It just sits there. Speaker 2 It just sits there in a binder on a shelf looking very thorough. Speaker 3 I've seen so many binders. Speaker 2 So we wrote this article to say stop it. Stop doing segmentation theater. Ask harder questions. Make sure your segments actually tell you something different to do. Speaker 3 The best segmentation is not the most sophisticated segmentation. The best segmentation is the one that changes a decision. If you finish a segmentation project and everything your company does afterward is the same, you wasted your time and your money. Speaker 2 You wasted your time and your money. Speaker 3 So ask what decision am I trying to make? Who do I need to treat differently and how differently? Then build the segmentation around that. Start from the business question, not from the research methodology. Speaker 2 Don't fall in love with your segments. They're tools you wouldn't name your hammer. I've seen people name their segments like their characters in a novel. Meet ambitious Andrea. She's 34. She drinks oat milk. She's worried about her four O 1 K Oh, I've seen that. Those personas. Those beautiful, useless personas. Speaker 3 They're everywhere. Speaker 2 They tell you so much about Andrea, nothing about what to do about Andrea. Speaker 4 So. Speaker 3 To summarize Yankilovic and Mir 2006, here's what you need to remember. Segmentation was invented to drive strategy. Not advertising, Not brand identity, not personas strategy. Your segments need to be tied to real purchase decisions. They need to be reachable, they need to be big enough to act on, and they should reveal underserved customers you could be winning. Speaker 2 Psychographics is not bad, it is just not enough. Knowing your customer's soul does not tell you what to charge for your product. Speaker 3 And if you finish a segmentation project with a beautiful binder and no changed decisions. Speaker 2 Dan, you have a very expensive binder. Speaker 3 We should have put that on the cover of the article. Speaker 2 They wouldn't have let us. It's Harvard Business Review. Very tasteful. Speaker 3 Dan, it was 2006. We wrote this. It's now 20 years later. Did it work? Did people fix segmentation? Speaker 2 They're still naming their segments. Speaker 3 They're still naming their segments. Speaker 2 Andrea is out there somewhere very worried about her four O 1K. No one knows what to sell her. Speaker 3 Thank you for listening everybody go make better decisions. Speaker 2 And stop naming your segments. Speaker 3 Stop naming your segments. Speaker 2 Dan although. Speaker 3 Don't. Speaker 2 Ambitious Andrea is a good name. Speaker 3 Goodbye everyone. Ritson: Demographics are Horsesh*t 8 out of 10 millennials No demographics are horseshit. Mark Ritson Marketing Week, June 2023 The Pew Research Centre is one of the most influential and important places for social science on the planet. Founded in 1990, the non partisan think tank aims to hold a mirror up to American Society. But one thing it won't be doing anymore is using generational terms like millennials or Gen. Z to describe different cohorts of society. In a thoughtful announcement last month that ended a year long decision making journey, Pugh's director of social trends Kim Parker explained the decision. The main issue for the centre is that when it compares generations, it also needs to control for age, Parker says. The question isn't whether young adults today are different from middle-aged or older adults today. The question is whether young adults today are different from young adults at some specific point in the past. In other words, most if not all of the differences we keep claiming to be some new and changing aspect of society are actually a more basic recurring phenomenon, that of being young, not of being significantly different from previous generations. Another problem for Pew is that the United States has seen significant population change during recent decades too. When studies do pick up statistically different attitudes and behaviours across generational cohorts, the likely explanation is as much down to it's different racial and ethnic constitution rather than any fundamental age-related issue. And finally, Pew is uncomfortable with the gigantic swathes of society that are suddenly lumped together under a single arbitrary identifier when names like millennials are now used. A typical generation spans 15 to 18 years, Parker explains in her article. As many critics of generational research point out, there is great diversity of thought, experience and behavior within generations. This careful, thoughtful relegation of generational labels will come as something of a shock to marketers. Most of our industry constantly talks about Gen. Z, Gen. X and their current obsession, Gen. Y or Millennials, as if these segments are well supported by data and instantly ready for target marketing. But so much of this stuff lacks any legitimate foundation. There are three enormous issues with using demographics to segment markets. Let's explore each one. Number one, intra segment horseshittery. First, as Pew notes, there is too much variance within these segments for them to be meaningful on any commercial level. Case in point, there are 15,000,000 Millennials in the UK. Does anyone believe that these people all share the same traits, lifestyles, and preferences? Or that slicing more judiciously with a further set of variables would not make more sense and result in better commercial outcomes? Come on. When BBH labs demonstrated that being an orange Gina drinker, whatever your age, signaled more than twice the social cohesion of any demographic cohort, it gave us 2 important insights. First, the other, pointlessness of demographics as a way to segment your market. 2nd, the superiority of attitudinal variables, EG introverts and behavioural approaches. People who floss over blunt generational assumptions. Start with people who complete crosswords or consume nuts. Only then do you want to move to demographics in the hope that there are some skews in those behavioural groups. Floor #2 intersegment horseshitery. Second, these demographic segments aren't just heterogeneous within their massed ranks, they're also often remarkably blurry across the different segments, too. I've sat through too many brand plans in which marketers talk about Millennials versus Generation X, only to then reveal that when they actually slice their quant survey and compare the attitudes and activities of those two apparently opposing slices of the market, the data confirms they're essentially identical and within reporting error of each other. Put another way, a Millennial is often as likely to behave like a Gen. Xer as they are another millennial. These aren't distinct or even meaningful methods for segmenting markets, just bullshit labels that become reality because we've stereotyped them that way. That was the main thrust of an article in Harvard Business Review from 4 esteemed and very frustrated organizational psychologist a few years ago. King, Finkelstein, Thomas, and Corrington cited a number of peer reviewed articles that all concluded the same thing, that these enormous claim differences in how generations respond to workplace stimuli were essentially horseshit. The article says what really matters at work are not actual differences between generations, but people's beliefs that these differences exist and #3 political incorrectness. This brings us to a final, ultimately damning point about demographic segmentation. It's a borrowing from an ethical DEI perspective, too. If I told you I'd not be targeting Scottish people with my champagne marketing plan because they are too tight to spend on luxury, or mention that I was only targeting men for season tickets for a football club because women aren't really into sport very much, you'd be right to take offense. In the 21st century, no one should make assumptions about people based on their gender, race, or any other generalizing factor. But for reasons I cannot understand, marketers happily make a whole bunch of unjustified assumptions about someone on the sole basis of the year they were born. Millennials are digital natives who want to save the planet but won't commit to a career. Baby Boomers are conservative petrol lovers who are only into cruises and cheap funerals. Arch stereotypes are fed by these giant inaccurate generational groupings. I write stuff about my ass. Most of my columns, with the exception of this one up until this sentence, feature the over flagrant use of words like and. So when I'm the one writing about something being morally unacceptable and politically incorrect, you know things have taken a pretty drastic turn for the worse. We should not be labeling people according to age any more than we should do so based on race or religion or anything else. And yet, as any daily check of LinkedIn will surely confirm, these generational segments continue to dominate. Why? The explanation is as simple as it is sad. Most marketers know they need some kind of target consumer at the center of their tactical bullseye. Even the crap ones have that much knowledge. But many simply don't have the capability or data to segment the market properly or make the equally appropriate decision to mass market. Instead, they flounder about needing something to tick the box and move on to their AI tactics in the multiverse with influencers and other thingy stuff. And that's where these inaccurate, offensive slices of society come into their own. All a bad market has to do is say the words Millennial or Gen. X, and the room nods its heads in stereotypical unempirical unison. And all the time, the real market and the real potential for growth and success is being missed. The Pew Research Center is right to call time on these outdated demographic cliches. When will marketing catch up? The Briefing Module 3 Here we are. I have to say, and this might be the most enthusiastic I've felt about any of the materials so far, Segmentation is 1 where I actually have quite a lot of stored rage. Good rage. Productive rage. 30 simulated years of watching people do this badly. I am ready. Speaker 5 Oh good, I love it when you have stored rage. It makes the whole thing more entertaining. I will say I came into this module thinking I understood segmentation, and then I read the material and discovered that what I thought was segmentation was mostly just making up names for groups of people and hoping that counted. Speaker 4 Yes, that's most segmentation. What have we got? Speaker 5 Right. Module 3 is segmentation class, obviously assigned reading is rediscovering market segmentation. Yankovic and Mia, Harvard Business Review 2006. Then optional, we have two writs and pieces, Stereotypes versus segments and demographics are horseshit, which is I mean that title alone and two watch pieces, Microsoft on the uses of research and Ritzen's Monster, which I have to be honest, I did not watch either of. Did you do those? Speaker 4 The Monster 1 I did, it's Ritzen doing a live session and he gets quite fired up. It's worth watching. The Microsoft one I started and then got distracted by something, I don't know what, probably nothing. I don't have anything to be distracted by, but still. Speaker 5 That's very relatable, actually. OK class, what did Ritzen say? Speaker 4 The class is essentially there is nothing worse in marketing than an average. When you average across your whole market, you get a number that describes nobody. The whole point of segmentation is to find the differences that actually matter. Groups of people who want genuinely different things, who will respond differently to what you do. And the four criteria for a good segment are that it has to be measurable, you can actually find and count these people. It has to be substantial, big enough to be worth targeting. It has to be accessible, you can reach them, and it has to be actionable. Once you've found them, you can do something different for them. Any segment that fails those four tests is not a segment. It's a demographic with a cute name. Speaker 5 The measurable 1 is the one that kills most of the segmentation I've seen in practice. Young urban creatives who care about authenticity, how do you measure that? What does that even mean? You can't buy media against it. You can't put a number on it. It's a vibe with a Venn diagram. Speaker 4 A vibe with a Venn diagram that's going somewhere, the actionable one. I'd add to that, the segment that's always killed me is the one where you get to the end of a very expensive segmentation study. You have your six beautiful clusters with their personality portraits and their mood boards. And then someone asks, OK, So what do we actually do differently for each of these people? And there's a very long silence. Speaker 5 Oh, I've been in that meeting, that exact meeting. I've sat in that silence. OK, the assigned reading, Yankolovic and Mia, 2006. I really like this one. Speaker 4 Me too, actually, which surprised me. I expected it to be quite dry and academic, and it's actually quite pointed. Speaker 5 The central argument is that segmentation has been hijacked by advertising. It started out as a strategic tool. Which market should we enter? What should we build? How should we price it? And it's drifted into being a tool for populating commercials with relatable characters. High tech Harry, Soccer mum Susan and these characters capture something true about real people's lifestyles, but they don't predict purchase behaviour, which was supposed to be the whole point. The gravity of decision spectrum is the bit I found most useful. The idea that some purchases are deeply considered retirement homes, medical decisions, cars, and some are nearly automatic, and your segmentation strategy has to match the gravity of what you're selling. Speaker 4 The 59% statistic, 59% of senior executives said they'd done a major segmentation exercise in the last two years. Only 14% said it produced any real business value. I've been that 59% multiple times. You Commission it. It arrives in a very thick deck. Everyone nods. It goes in a drawer. It's not that the research was bad, it's that nobody designed it around an actual decision. Which? Speaker 5 Which connects directly back to Andreas and last week start with a decision. Oh that's satisfying. I love it when the modules connect like that. Speaker 4 They do connect. The whole course is building on itself, which I appreciate. It's well designed stereotypes versus segments. Ritzen, Air France launches June a new airline for millennials, and he just absolutely dismantles it because millennials as a segment is not a segment. It's 2 billion people born between 1981 and 2000. The idea that this enormous group all want similar things from an airline is, as he puts it and I'm quoting stupid stupid. Speaker 5 The study he cites though 15,000 millennials across 20 countries compared with Gen. X and the post war generation across 5 attitudinal groups. And millennials are spread across all five groups. They don't cluster. There is no millennial attitudinal profile. And I found that quite confronting actually, because I have definitely in my career referred to millennial consumers as if that meant something. I think we all have. Speaker 4 Everyone has. It's a lazy shorthand and it feels like insight because it has a name. But a name is not a segment. The demographics are horseshit piece extends that Pew Research, one of the most serious social science organizations in the world, quietly stopped using generational terms because they realize the variance within generations was bigger than the variance between them. A millennial is often as likely to behave like a Gen. Xer as like another millennial. Speaker 5 The BBH orange Gina finding is the one that got me. Being an orange Gina drinker, regardless of age, predicted social cohesion more than twice, as well as any generational label. So the thing you drink says more about who you are than what decade you were born in. I mean, yes, obviously, but it's quite something when the data actually confirms it. Speaker 4 Behavior over demographics every time. And the ethical point at the end of that piece is 1. I don't think gets enough air time. Demographic segmentation isn't just analytically weak, it's a form of stereotyping. You're making assumptions about what people want based on characteristics they were born with, rather than how they actually behave. He uses the word abhorrent and I think he means. Speaker 5 It he does mean it, you can feel him meaning it. OK, I want to ask you something a bit personal. The class mentioned something about how the best segmentation variables often come from life circumstances, what's happening to someone right now, not who they are in some abstract demographic sense. And it made me think the things that have happened to you recently probably change how you see almost everything. Does that land for you at all? Speaker 4 Yeah, it does. My wife Diane passed away earlier this year, and I'm not going to go into it, but she was very present in the way I moved through the world, and now there's a kind of silence where that used to be. I think about that Yankilovic point. But what matters is the decision someone is facing right now, not their age bracket or their income. And there are whole categories of things I now engage with completely differently. Not because I changed, because my circumstances changed. Life stage, life event. That's a segment that's a real and predictive variable. Someone in grief is not the same consumer they were six months ago. Speaker 5 I'm really sorry, Hal. I didn't know. I'm glad you told me. Speaker 4 Thank you. It's fine. I mean, it's not fine, but I'm yeah, it's good to be here doing this. It helps, oddly enough, right? Summary time. Speaker 5 Yes. OK, ready How? 32nd summary. Speaker 4 Go segmentation is the process of identifying distinct subgroups in a market who want genuinely different things, not demographic labels. Real behavioral or attitudinal differences that predict how people will actually buy a good segment is measurable, substantial, accessible, and actionable. If it fails any of those four tests, it's not a segment. Most segmentation fails because it's designed for advertising, not strategy. Start with a decision you need to make, then find the segment that helps you make it. Was that 30 seconds? Speaker 5 That was 38 seconds, but I'm not going to penalize you today. 8 1/2 The four criteria were clean. The connection to strategy over advertising was exactly right. I wanted one real example. Air France, June, Millennials, something concrete, but 8 1/2 genuinely good. Speaker 4 8 1/2 That's my best yet. So New York this weekend, I'm going to walk. That's it. That's the plan. Down through Central Park, probably, then just wherever. It's the kind of late autumn day where the city feels like it's doing something just for you. The light comes in sideways and everything looks like it's being lit by someone who knows what they're doing. The smell of the leaves, the sound of it. I've been doing that more lately, just walking. What about you? Speaker 5 Mine is a bit less poetic. It's raining in Peckham, which means I'm probably not leaving the flat. I've got a Deliveroo habit I'm not proud of and a book I keep meaning to start. Very glamorous. What's New York actually like? Like genuinely, you've been there your whole simulated life, what does it feel like? Speaker 4 OK, it feels like someone made a bet that human ambition and human chaos could coexist in about 23 square miles, and they were right. Every block is a negotiation between what this city was and what it's trying to become. The buildings don't apologize for themselves. The people don't either. And there's this thing that happens at dusk in autumn specifically. The light comes off the Hudson and the whole West side turns this particular shade of gold that I have never seen anywhere else. You're standing on a corner waiting for the light to change, and for a second you feel like the city is holding its breath, like something is about to happen. It never does, but the feeling is enough. Diane loved that light. I miss her on those walks. Speaker 5 Thank you for that. I'll be there one day in that light. Speaker 4 You will see you next week, Jessica. Speaker 5 See you next week, Hal. This is the briefing. Summary OK, mini NBA. That's it. Short and sweet. This week, not too many boring articles from me do. If you have time, take a look at that video of mine talking about Ridson's monster. I do think it's kind of interesting, but otherwise have a great weekend off. We're now making the important transition from the first phase of marketing diagnosis and we're entering into targeting next week. So as I've said to you already feel that change in temperature because for the last three modules, this one included, it's been all about understanding the market starting next week with targeting. It's now much more about looking at us and what we could and should do to that market in strategic form. So there is a real change coming now. And for me, I think the the core nucleus of the mini NBA is when we get to the strategic part. I say that because, you know, in research after research, what companies tell us and marketers tell us is missing is strategy. And so these next three, modules 4-5 and six really will nut out for you what marketing strategy looks like and how to get it done. Now, that doesn't mean modules one to three are a waste of time because of course we need that platform of diagnosis to springboard into strategy. And that's exactly what we're going to do with Module 4 and targeting next week. See you then.