Customer Segmentation - Primary or Secondary Data?

You are what you eat, and click, and buy. Modern segmentation is powered by behavior. But primary data still plays a critical role in telling us why.

Marketing Strategy is made up of many components, but key ones are:

• Segmentation - What are our key segments, their size and what are their interests?

• Targeting - What mediums are best to reach our intended segment?

• Positioning - How do we message and differentiate ourselves from alternatives?

• Market Definition - Who do we serve?  Who do we not?

Segmentation is essential to Targeting and Positioning actions.  Hence, it is important to get your segmentation correct and maintained over time.

The challenge today when it comes to consumer segmentation is what data source to use - primary or secondary data?  Or both?  Primary data typically implies data you go out and get for the sole purpose of a specific project, typically through marketing research methods via focus groups, surveys, etc.  Whereas secondary data implies data (generally systems-oriented in nature) that is used for insight purposes, but such insight is secondary to the original intent of why these data were collected in the first place.  For example, sales data from an eCommerce retailer is there first for inventory and making a sale, insight is secondary.  Or, web surfing behavior data is there first to load the necessary pages, insight is secondary.

When it comes to consumer segmentation, their lifestyles and how best to serve them, popular techniques typically leverage one or more of the following data sources:

• Demographics - age, income, geography, race, etc. Primary and/or secondary data.

• Desired Needs / Benefits - wants, preferences, requirements, etc. Primary data.

• Psychographics - attitudes, beliefs, interests, opinions, etc.  Primary data.

• Behavioral - purchases, clicks, downloads, etc.  Secondary data.

We believe consumer segmentation is a matter of precision.  The more precise you can be the more successful you will be at Targeting and Positioning your brand.  To help with this level of precision, let’s take a look at how consumer segmentation has evolved: 

Era	Model	AKA	Used By	Real Consumer
1950s	You are what you earn	Demographics	Mass market media buyers	I spend very differently from my “peer”
1980s	You are where you live	Geo-Demographics	“Targeted” marketing industry	I can’t eat at Jill’s house - I am vegan
1990s	You are what you say you are	Desired Needs / Psychographic questionnaires	Many manufacturers & research firms	I try to tell the truth, as best as I can recall
Today	You are what you do	Behavioral-based targeting	Leading companies	Ok - “now you’ve got me”

As you can see, we are big fans of behavioral-based targeting.  Why?  It is more precise, scaleable, repeatable, targetable, and therefore, able to bridge insights to activation.  By understanding a specific user or household purchases the majority of their food with clean labels, has a health club membership, and searches for organic products, marketing can now target the what, where, and how of that user.  

That said, primary data does have a role.  Primary’s role can help validate and develop the “why” behind the behavior.  This can help you develop the right message or emotion behind a targeted campaign for each behavioral-based segment.  If you have the data, create and scale your segments with behavioral data, validate and explain your segments with primary data.

For those companies with little to no access to behavioral data, clearly you will need to leverage primary data as your key source.  However, continue to improve your systems and operations to begin obtaining secondary data.  It is all about precision.

Consumer Segmentation is an expertise area of TAP Analytics. We have helped our clients develop the necessary systems to collect behavioral data, create their consumer segments, maintain them over time and have leveraged primary research to build their confidence.  If you’d like to learn how we may be able to help your organization, get in touch with us as hello@thetapconsultancy.com.