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Customer segmentation – Learning from the Vedas

April 23rd, 2009 by Devangshu Dutta

Advertising Age recently carried an article titled “The Death of Customer Segmentation”, by Michael Fassnacht.

He questions the traditional marketing hypothesis that the better we segment consumers, the better we know what is relevant and the better we can market to them.

Fassnacht argument is that:

  1. Segments are becoming more volatile [totally agree!]
  2. Consumers are never part of just one segment [fashion companies discovered that a few years ago, and began marketing to "purchase occasion segments" rather than plain-old consumer segments defined by demographic and static psychographic profiling], and
  3. Consumers are preferring to choose what information would be relevant and of interest.

This last point is of particular importance, since electronic media – especially websites that customize themselves based on analysis of the users behaviour and history – are becoming more prevalent communication platforms. In fact, for the last few years “mass customization” and “a consumer segment of one” have been fashionable phrases thrown about in marketing circles.

Fassnacht quotes Amazon, Apple and social networking sites such as Facebook and MySpace to support his well-structured argument.

However, it may be a challenge for traditional retailers and brands to apply the learnings from these brands in their physical stores.

Going further and on a lighter note  – or perhaps not :-) – if we are to believe the philosophy of the Vedas, the Universe has a head start on “self-segmentation” and “customization of consumer experience” technology. According to it, the world and our experience of it is “Maya,” an illusion product of our mind, and we are free to create and mold it, and experience it as long as we hold the illusion.

If that’s the case, our modern techies and marketers have a long time to go before they climb that technology curve.

The original article is available here: The Death of Consumer Segmentation?

Posted in Apparel, Consumer, Customer Relationship, e-commerce, Footwear, Lifestyle & Fashion, Market Research, Marketing, Retail, Soft Goods, Strategy, Textiles, Uncategorized | No Comments »

Would you like some ads with that coffee?

April 13th, 2009 by Devangshu Dutta

We’re all for new business ideas and guerilla marketing tactics. However, it is a fact that some work, and many don’t.

Here’s one idea that  raises some question marks.

It’s a business called freepapercups.com that provides free paper cups to offices carrying the ads of other companies who pay for the cups. The company’s proposition is that everyone wins – the recepient office saves on paper cup expenditure, coffee service providers get a new tool to save their customers money (and for themselves to possibly gain some share or the revenues?), and the advertiser gets to penetrate a previously untouched white-space. Who knows – this may work, just like the ads and logos painted on the roofs of white delivery vans.

However, the thing is this: paper cups – with ads or without – will get thrown away like yesterday’s newspaper and last month’s magazine. So, this would be another form of broadcast advertising whose effectiveness needs to be measured and proven, and it’s guilty (of waste) unless proven innocent. 

Also, it is invasive to a great degree in a space that should be uncluttered with any messages other than what are relevant to the organization’s own business. 

So, will it really contribute anything significant to the offices who won’t be spending on the paper cups, or to the brands that do spend to advertise on them? Or will it just detract from both?

What might be next – co-branded letterheads perhaps?

Lest I sound too much of a cynic, let me offer up a thought: maybe governments should put a new line item in their  budgets – “Grant on expenditure on ceramic coffee cups for offices to carry environmental and fiscal-consciousness messages”. 

A caffeine-laced economic stimulus – now that should get the economy going again!

Posted in Branding, Consumer, Entrepreneurship, Market Research, Marketing, Uncategorized | No Comments »

Asians in America & the new (old) Indians

March 31st, 2009 by Devangshu Dutta

New American Dimensions and Asian-American advertising agency interTrend Communications has just put out a report titled “Asian Indians in the US”.

It is amusing to come across the term “Asian Indians”…only in the USA!   :-) )

That aside, the executive summary has some interesting insights including:

  • Though relatively new to the U.S., first-generation Indians show many signs of advanced acculturation. However, they often go through an intense retro-acculturation later on life as they begin to realize the uniqueness of their culture. 
  • This group champions American individualism. They respect this value, as it allows them a greater freedom to succeed. Females appreciate this land of opportunity as it creates more possibilities for them to get ahead in life. 
  • Although highly acculturated and proficient in English, most express the desire to preserve their native culture through food, music, entertainment and language, and to pass it along to the next generation. 
  • Though they use a lot of media in English with American content, they still consume a considerable amount of Indian media both in-language and in-content. The younger segment (18-34 yr.) consumes the most Indian media, including television, radio and internet; while the 44-54 group reads the most Indian newspapers.

Retailers in the US might draw a leaf out of British retailers that have significantly tailored their product mix to suit specific immigrant populations. Sure, the UK has a higher proportion of Indians (and other South Asians), but there are enough areas in the US where the South Asian population is high enough to warrant more specific merchandising and marketing. 

When I think of the “Indian stores” owned by someone of Indian or South Asian origin in concentrated catchments of high-income South Asians (LA, Houston, Boston etc.), I can’t help thinking of the opportunities missed by the chain stores.

On a separate note, the study says that some respondents “felt that the Asian classification was negative, an attempt to lump Asian Indians in with the rest of Asia when they have a distinct, rich culture that should stand by itself.” 

I’m sure other communities would also take exception to such “lumping”. 

It is indeed interesting that marketers tend to use the term “Asian”, throwing together diverse cultural and linguistic backgrounds from Turkey in the West all the way East to Japan, and throwing segmentation disciplines out of the window.

(The executive summary is available here.)

Posted in Consumer, Market Research, Uncategorized | No Comments »

Finely Targeted Advertising on Cable TV – Shades of Big Brother?

March 5th, 2009 by Devangshu Dutta

New York Times reports that Cablevision will provide targeted ads to selected homes based on a variety of criteria. (Cable Companies Target Commercials to Audience).

Department store pioneer John Wanamaker is reported to have said that half his advertising was wasted, but complained that he didn’t know which half it was.

With such targeted advertising on cable, he would have not only been able to tell which half was being wasted, but would have also been able to reschedule it to reach the right audience and avoid the waste. Cable companies with a good consumer database and analytics should be able to figure out who would be watching what shows, and target the ads accordingly (e.g. late-afternoon may trigger fast food ads in households with kids).

The article says: “…Cablevision will use its targeting technology to route ads to specific households based on data about income, ethnicity, gender or whether the homeowner has children or pets…viewers may not realize they are seeing ads different from a neighbor’s. But during the same show, a 50-something male may see an ad for, say, high-end speakers from Best Buy, while his neighbors with children may see one for a Best Buy video game.”

This could, of course, sound very creepy to an average customer who doesn’t want to know that he or she is being tracked.

If fact, the article quotes Marc Rotenberg, the executive director of the Electronic Privacy Information Center, a Washington-based civil liberties group, as saying that the company needs to show that the information “can’t be reverse-engineered to find the names of individuals that were watching particular shows”.

But let’s face it, in today’s environment, if we’re online or on a communications device, there is a good chance that we can be / are being tracked.

We can expect the tug-of-war about consumer privacy to continue, but this is too seductive a tool for advertisers to ignore, especially in a downturn. 

Posted in Consumer, Market Research, Marketing, Strategy, Uncategorized | No Comments »

Discounted Luxuries

February 25th, 2009 by Devangshu Dutta

Luxury has its ups and downs. Assuming that the economy will look up at some point of time in the near or distant future, luxury brands will shine again, even if they’ve muddied themselves slightly in the puddles of discounting.

Public (and industry) memory is short, especially in fashion, where you might be as good/bad as your last collection. There are plenty of luxury brands which had once been pushed to the dustiest back shelves, that have come back into fashion in recent years. So I’m sure many of the brands will be forgiven their current trespasses.

And, as a precursor to that, someone’s going to come back very soon with the bumper sticker from the post dot-con days which read: “I want to be irrationally exuberant again!”

But on a more rational note, brands which have tried to “democratize” luxury by tinkering with the basic product quality and not paying attention to the brand values would find it harder to climb up again. Just because you want to reach a larger audience you cannot inherently reduce the promise of a brand. Especially when there is true quality available across the price spectrum today.

Who knows, we might even get back to the days when the joy of luxury was based on having truly superior products rather than just a name that a lot of people recognise.

 

Posted in Apparel, Branding, Footwear, Lifestyle & Fashion, Marketing, Soft Goods, Strategy, Textiles, Uncategorized | No Comments »

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