Strategy

Segmenting Rural: ‘One size does not fit all’

Segmenting Rural: ‘One size does not fit all’

Many market research and communications companies claim to be able to undertake a market segmentation. But do they really know what they are doing and can they accurately segment regional and rural audiences?

A market-based segmentation typically refers to the classification (and clustering) of people on the basis of certain characteristics. Underpinning market segmentation is the notion that ‘one size does not fit all’. Consumers will respond differently to different product features, attributes and communications. What might appeal to one person is of lower interest to another. By grouping people who exhibit similar characteristics, marketers can design products and communications tailored to these audiences, which are therefore likely to have a greater appeal.

Almost any characteristic can form the basis of a segmentation, but may not drive an actionable and robust segmentation. For example, there would be little value in segmenting a market on the basis of age, if age was not a factor on which attitudes or behaviours differed.

This is a key point, as it is not especially difficult to produce an interesting segmentation and segment names, but it is of little value unless the segments differ on factors of interest that are actionable.

Characteristics of a good segmentation: For a segmentation to be of value it is desirable that it meets most of the following criteria. These include:

  • That a segment can be relatively easily found, described and segment members classified;
  • That any given segment is internally homogeneous, that is, its member’s exhibit uniformity or similarities on a large number of characteristics of interest;
  • That each segment is externally heterogeneous, that is a member of one segment exhibits differences on characteristics of interest to a member of another segment;
  • That the segmentation is actionable: that it is cost-effective to identify and market to any given segment and that the segments respond to marketing;
  • That each segment is stable and not too small.

Redhanded’s approach to a robust, actionable segmentation: Typically, a segmentation requires first a good understanding of the overall market and target audience. This will reveal whether the market tends to naturally cluster and if so how. In a segmentation project, typically Redhanded will undertake a qualitative phase to develop hypotheses and better understand the market before deploying a quantitative phase using sophisticated data analysis techniques such as Latent Class to accurately measure, size and describe the segments. Our approach is summarised in the following four-step segmentation development and allocation program:

  1. Gather Data: A standard questionnaire format that gathers attitudes and opinions of the audience in question in order to develop a segmentation, supplemented with qualitative insights as required.
  2. Analysis: Latent Class analysis of the data so as to develop and size the segments (attitudinal, behavioural, demographic  etc)
  3. Segment profiling: Full description of the segments including size, behaviours, attitudes, demographics etc.
  4. Allocator tool: Computer tablet friendly, segment allocator tool that enables the client to ask a small number of questions to allocate any given audience member to the segment.

What do I get out of it?  As described above, a segmentation might be interesting to marketers but unless it can be actioned and drive improved targeting and sales, what is the point? For this reason, Redhanded has developed a segment allocator tool, specifically for regional and rural clients. This tool, which can be used on a tablet, enables clients to ask a small number of questions to allocate the market to the segments determined by the research.

Segmentation_Lachlan

 

So, if you think a segmentation is needed of your target audience, contact us today about getting it done properly and making a difference to your offer. Segmentation—because not every Tom, Dick and Harry are the same!

Lachlan Drummond who is Redhanded’s Strategic Director has undertaken numerous segmentations and has over 20 years of market research and strategy experience.

Like What You See?