If you’re trying to segment your market in the traditional way, what you may be looking for would be groups of consumers sorted out in such a way that their likenesses and differences are displayed and highlighted.  The variable which determines the likeness or difference between those groups and its importance is the segmentation variable. A trivial segmentation variable, just for example, could be hair color in the Tampa Bay Area. However, after having segmented the customers into groups, it is reasonable to assume that you would expect to use the data gathered. If you have decided to target a certain segment, you would need to perform marketing activities that will appeal to this segment, or else, to communicate some kind of enticing message to it. In other words, you would have to define what describes the customers in that segment, beyond your segmentation variable, and also, what makes them different from consumers in other market segments. The characterization of a segment is a task that is not the same as defining your segment. It is merely the next step.

So where did this idea, on which the conventional segmenting method is based, come from? In the distant past, and in traditional societies, the people’s behavioral patterns were very much modeled by their affiliation to a certain gender, a nationality/tribe/race, a certain religion, a social/economic status, a profession, and an age group – much more than today, anyway. There were clear clusters of elements pertaining to appearance, general behavior and particularly consumption. Then, at those times, if you knew one element of a particular cluster, you could quite easily guess the others. But all of these things changed. As people are becoming gradually more individualistic, and as possibilities have multiplied, people have become less and less definable as types.

In the 70’s we were taught that because of this process, it is worthwhile to conduct psychographic segmentations which included characterizations according to lifestyle groups. A widely accepted approach such as VALS (Values, Attitudes, and Lifestyles) classified people into 10 ‘lifestyle groups’, then later it was changed to only eight. Disappointingly, the groupings were unable to predict, with reasonable credibility or consistency, specific purchase decisions, or preferences in specific product categories. The alternative was to use those groups for purposes of personal-psychological characterization. So, then again, just like in the case of the demographic, and socioeconomic classifications, found in each segmentation project, representatives of all lifestyle types, and sadly, not much progress was made.

If you have been segmenting for many years, you already know that the problem has been worsening with time. The reason why this is so is that there has been a long lasting consumer trend going on, with numerous implications, because of which we should change the way by which we segment the market.

In order to adapt to this consumer reality, our segmentation (and subsequently, our products and services, our advertising and so on) should be formulated not according to groups of people, but according to motivations and uses.
Note that this constitutes a formation of a real revolution in segmentation thinking. Some of you would probably comment that this is not so much about segmentation as it is about consumer behavior analysis. Well, let me answer you. It is important to recall the original purpose of market segmentation. It is the division of the market into smaller units enabling us to focus our marketing/branding/advertising activities, and to achieve differentiation, so that we could win advantages we could not get when working with the entire market. The search for small consumer groups has evidently stopped delivering results. However, the pursuit after groups of ‘purchases/consumptions’ rather than of people, could offer new horizons.

Let us sharpen things a little. According to the old segmentation, each group is characterized by a need/preference/motivation. The new approach preserves this concept. Yet, in the new reality, and according to the new approach, the motivation is no longer common within a defined consumer group. A ‘segment’ is now a group of ‘purchases/consumptions’ qualified by a certain context of purchasing or consuming a product plus a specific motivation.

When we segment according to this approach, we analyze consumer behavior; we identify the various contexts of product consumption, and the different motivations that characterize consumers who experience those contexts. The new relevant segments could consist of certain moods (such as the ‘I’m going to teach that husband of mine a lesson he’s never going to forget’ segment), certain social situations (such as the ‘Wow, I haven’t seen YOU in a long time’ segment), all according to what is relevant to that specific product category. Note that when we meet a given purchasing context (a dinner at a restaurant) there are varied consumer motivations that exist (‘tonight we’re going out solo, no kids’, versus ‘we’re celebrating grandpa’s birthday’), and they would be considered different market segments. A specific consumer is likely to participate in one segment, few segments, or no segment. Nevertheless, much like the old segmentation, every segment accounts for a share of our sales, and we can do our profitability calculations accordingly.

I know this can seem a little strange at first, so let us examine an additional example. Let us say that you are a shampoo manufacturer. Then, the segment of “I’m going to look fabulous in that party” would be responsible for a certain percentage of your income, and so will the segment of “I do so need a half an hour to myself”, and the segment of “my god, all those expenses are wearing me out, I must cut down a little”. The same consumer could belong to each of those market segments, at different times.

According to this approach, then, our marketing activities, at all levels, should be aimed towards a context of purchasing/consumption plus a certain motivation, and not towards groups of consumers.