When the era of mass marketing gave way to the era of market segmentation, the advertising industry saw a definitive separation between marketing and advertising. Marketing became about how to reach your target market by performing research, applying the research findings to an advertising campaign, and executing that campaign through market segmentation. Now, market segmentation is evolving yet again.
Why is Market Segmentation Changing?
People continue to evolve. Technology continues to become more advanced. The way people interact with technology (and, thus, other people) has changed. To understand why market segmentation is changing means that we must first understand how our economies have changed.
Over time, advertisers and marketers have changed their tactics and abilities to reach people based on shifts in consumer behavior. Society’s “economy” changes along with these eras and movements also. The goal of every shift in the economy is to better reach consumers where they are at.
In short, market segmentation is changing because consumers are demanding that it changes. Today, we are living in what is known as:
The Expectation Economy
Like it or not, your consumers have expectations of you. Expectations of your brand, expectations of service, expectations of technology offerings, and more. The list keeps going and growing!
In the expectation economy, what is expected today is quickly replaced by a new expectation tomorrow. Today’s consumers are not interested in the status quo.
Think about a time that you were using an app on your smartphone or visiting a brand’s website from that phone. Maybe it was your own bank or credit union’s app!
Think about that experience from start to finish.
What piece of functionality do you, or did you, want that app or site to have that it did not? Was it a smoother mobile ordering process? Perhaps the site was not laid out to your liking.
That’s the expectation economy. You expected better of an experience you had.
The expectation economy is not limited to technology. Many of today’s consumer expectations stem from using technology, but it is not relegated to that role. With the amount of media and messages available, consumers are making up their minds about things like service interactions, physical locations and how brands interact with society. They are passing judgment on everything long before they may even interact with your brand.
What is the Expectation Economy About?
As explained in the book “Trend-Driven Innovation,” the expectation economy is based on the idea that consumers have ever-accelerating expectations that they apply to every purchase decision, experience and moment of attention.
There are three strands of consumer expectation:
- Rising Quality. This means that consumers expect the best. They see right through products and services that are rushed to market. Brands that deliver anything but their best will die a rapid death.
- Positive Impact. This means that your brand’s actions and how the brand interacts with society are subject to unavoidable awareness. In today’s world, brands are judged based on the impact they leave with the environment, social issues and health impacts. Consumers expect brands to take a stance so that they know whether or not they want to be a part of your story.
- Personal Expression. This means that today’s consumers are prioritizing self-improvement and personal expression through the products, services, and brands they align with. Your brand must create a personalized, emotional experience for your consumers. Consumers expect not only to have and get more from your brand but to be more to your brand.
What does the Expectation Economy Mean for Your Marketing?
The expectation economy means that marketing has evolved to center around individual and customizable brand interactions and experiences. It’s moving the needle beyond “all customers who do not have an auto loan with us” and then marketing auto loans.
The expectation economy demands that you understand more detail about your consumers. That same customer group that does not have an auto loan can be micro-segmented into different audiences.
For instance, understanding which customers your ultra-savers are and prefer never to have an auto payment. Or finding out why those customers who have just paid off their auto loan in a large lump sum and may have refinanced elsewhere did so.
In summary, the expectation economy means that your bank or credit union understands and values each customer or member you serve. That everyone’s story is unique and different. That brand and service standards need to dictate that guidelines should be just that – guidelines. That there is room for flexibility to customize an experience. That’s where your brand starts to better meet the expectations of your consumers.