Social media redefines market segmentation

“Market segmentation: A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action. (Investopedia)”

Market segmentation has been around for over fifty years, a track record practically unheard of in a world where the shelf life for innovation is growing ever shorter. Perhaps the longevity of the practice can be explained by adaptability. The rise of social media as an increasingly critical marketing tool has demonstrated how truly flexible the concept of market segmentation is. For global companies, the expanding definition of market segmentation will make succeeding in highly diverse markets even more challenging.

Traditionally, demographics data — age, gender, education and income levels, profession and geographic location — dictated how markets were segmented. Demographics still count. In fact, most market data reports are organized around these factors even when describing behavior on social media platforms. For example, an infographic recently posted at Wishpond, illustrated how and what social media are used in different countries and regions. Device preference — mobile vs. computer — and B2B vs. B2C data were also added into the mix to create the visual.

For example, the infographic notes that a Tuenti, a social media site based in Spain, is giving Facebook a run for its money in the 18–24 age group; in Russia, Odnoklassniki appeals to men under 35 while Facebook is the go-to site for wealthier and younger people. In Portugal, pre-teens favor Hi5. Young men in Sweden like to play games while young Swedish women prefer reading and blogging. User-generated content gets high marks in China as compared to the U.S. market.

The Wishpond infographic, as useful as it is, only skims across the surface of a very deep well of possibilities. Social media has introduced a whole new twist to traditional demographics-based market segmentation, a twist that includes socialgraphics and psychographics.

Socialgraphics recognizes that consumers are far more transient than previously, which makes geographic location a moving target. In addition, globally, social media users are far more pro-active than traditional consumers. The information is out there and social media users know how to find and use it. Neicole Crepeau, a columnist at {grow} writes, “Socialgraphics capture the attitudes, characteristics, behavior, and, most important, motivations of customers online.” Psychographics, she writes, includes identifying and measuring “customer’s interests, values, and attitudes”.

For social media marketeers, socialgraphics and psychographics go hand in hand with a much more subtle, much more, well, social approach to marketing. Consumers who inhabit the social media space have finely-tuned radar — and a deep-seated distrust — for the traditional hard sell. That means, wherever your market may be, online or off, hard-core hawking is out. Influence is the key word. In addition, according to social media expert Mark Schaefer, ROI no longer means Return on Investment; it means Return on Influence. And, more and more, return on influence is the critical metric.

How to skillfully martial influence is tricky under any circumstances. In a global context, it can verge on the absurd. For most companies, having Madonna spontaneously crow about their product is influence gold. When Madonna gave Washlet toilets an unqualified and highly publicized thumbs-up, however, the Japanese toilet-maker hesitated to parlay the superstar endorsement into sales. Why? It seems that the potentially lucrative U.S. market is more than just a tad ticklish when it comes to talking toilets.

As Sam Fiorella explains, influence marketing strategies “are ineffectual on the consumers’ purchase decisions when they are not interwoven into a more complex influence campaign that takes into account other decision-making factors such as culture, purchase lifecycle, context of the relationships between ‘influencers’ and their audience, etc.”

Companies with a global footprint know the important role language and culture play in purchasing decisions. The increasing importance of social media, however, will compel them to rethink traditional demographic market segmentation, dig deeper and consider myriad other factors. Merely applying social media strategies across all target markets, however, simply won’t cut it. For companies who want to catch the global social media wave, getting a clear and highly-detailed picture of their markets worldwide then figuring out how to influence, not sell to, them will be an on-going challenge.