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How to Use Consumer Survey Data to Define Target Segments: A Four Step Approach

August 21st, 2017

Go beyond demographics to segment consumers

Consumer segmentation can be a powerful tool to help companies better understand and appeal to their target market. By going beyond typical demographic-based groups, such as age or gender, and segmenting consumers based on similar buying behaviours and lifestyle habits, companies can better develop products, marketing campaigns, sales strategies and growth initiatives that resonate with key customers.

Companies seeking to go beyond demographics to better understand their target markets have a variety of segmentation tools at their disposal. This article highlights the top-down approach of segmenting consumers based on broad survey data in four steps.

For companies with an initial idea of their target customers, already-collected consumer survey data can be a useful starting point for both quantifying the size of target segments and better understanding how these customers think and behave differently. While the instinct may be to use results from a laser-focused survey on a particular industry for this segmentation, drawing from a broader survey of consumer habits and preferences across many areas of life is a better starting point for putting a company’s target segments in context.

Use consumer data to define and quantify your target market

Step One: Identify markers of target segment characteristics within consumer survey

The first step is to pinpoint characteristics that all consumers within the target segment share. Although this approach ultimately relies on previously-collected survey data, companies should not feel restricted by the survey questionnaire when brainstorming key characteristics of their target segment(s). Do not depend solely on the questions, as that might impede creativity. After a set of common characteristics is identified, the survey questionnaire can be used to match characteristics with relevant questions and response choices.

Key considerations:

  • Do you expect your target segment to be a relatively large portion of the overall population or are you looking for a niche segment? Keep in mind that the more survey questions you use when creating target segment criteria, the smaller the segment will be.
  • Demographics should not be the only defining characteristics of a target segment but may be important when using this approach. Consider the following:
    • Do you want to restrict your target segment by any demographic factors?
    • Along the same lines, is this segment only in one market or is it found globally?
    • If global, should the segment definition be the same across all markets or should regional adjustments be made?

Case Study: Identifying the “digital consumer”

Euromonitor International analyzed the results of their 2016 Global Consumer Trends survey to define the “digital consumer” segment and its habits across markets. As a first step, digital consumer analysts worked with survey analysts to link hypothesised key traits of digital consumers such as heavy mobile usage and comfort with online shopping with questions on the Global Consumer Trends survey.

 

Step Two: Create and test target segments against key measures

Once an initial set of criteria has been identified, the survey data is used to categorise respondents meeting all of the criteria. This initial segment should be analysed for size and key behaviours. If the segment encompasses either too many consumers or too few, or if respondents within the segment do not have expected behaviours across key measures, then the criteria should be adjusted and re-tested.

Key considerations:

  • What types of habits or preferences do you associate with your target segment? Use those or proxies for them based on available survey data to measure the fit of segment iterations.
  • What do you think is a defining characteristic for your target segment versus a common behavior across consumers in the segment? Although it is easy to blur these two concepts, it is important to separate them when using this segmentation approach. Defining characteristics should be used as segment criteria, while each iterative segment should be measured against expected behaviours or preferences.

Case Study: Identifying the “digital consumer”

The first iteration of Euromonitor International’s digital consumer segmentation used criteria related to mobile and online commerce activities. After isolating survey respondents who met the criteria, Euromonitor explored the other tech behaviours of those in the segment, but found that this definition did not adequately include key online shopping habits. This initiated the iterative process of adjusting segment criteria.

 

Step Three: Find the best fit criteria for segment identification

Using existing survey data to define target segments can sometimes be more of an art than a science. This is apparent when making decisions around adjusting segment criteria and settling on a final definition. Here, companies should use their best judgement and not fall into the trap of “analysis paralysis”. With a large survey, possible criteria iterations are infinite. Ultimately, the decision relies on intuition and the data analysis described in step two.

Key considerations:

  • The absolute perfect fit may not be attainable using this method, but you should be able to get very close. For example, do 86% of consumers in your defined target segment fit the key measures you identified in step two? Can you find any common links between the remaining 14%? If not, you may have your best segment definition and should proceed to step four.

Case Study: Identifying the “digital consumer”

After several iterations, Euromonitor International settled on the following criteria for the digital consumer segment: respondents in this segment rely on their smartphone for at least four of seven possible commerce-related activities each week and they typically buy at least half of the surveyed products online, either via mobile or computer. The resulting segment accounted for between 2% and 34% of respondents in each of the 20 markets included in the Global Consumer Trends survey, which aligned with expectations going into the segmentation process.

 

Step Four: Profile final consumer segments across survey topics to contextualise habits and preferences

Although the process of creating target segments using survey data can raise insights regarding segment size and characteristics, the real value of this approach comes after the segment has been finalised. With a defined segment, all of the other questions in the survey are now available for comparison.

Key considerations:

  • Now that you have defined your target segment, what would be most relevant to understand about consumers within the segment?
    • Do you care most about their shopping habits?
    • Usage of technology?
    • Daily lifestyle, such as food preparation and exercise?
    • Attitudes toward the environment?

With a broad consumer survey as a base, all of these areas are open for further exploration.

Case Study: Identifying the “digital consumer”

With a clearly defined digital consumer segment, Euromonitor International’s Digital Consumer team created a series of reports analysing these consumers in key regions across the globe. The reports explore the current habits and preferences of this tech-forward segment, along with forward-looking insights on how companies across industries can target digital consumers in the coming years. See the “Digital Consumer Profiles” series on Euromonitor.com and Passport for more information.

 

The top-down approach to consumer segmentation highlighted in this article is one of several used by Euromonitor International to help clients better understand and refine their target markets. Other approaches include more traditional demographic segmentation and cluster analysis used to create Euromonitor International’s ongoing, proprietary consumer types series, as detailed below:

Euromonitor Passport Consumer Survey has segmented shopper types into increasingly specific categories over time

To learn more about Euromonitor International’s consumer survey and segmentation offerings, request a demo of Passport.

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Lisa Holmes

As Survey Manager at Euromonitor, Lisa reports on consumer-focused topics such as: lifestyles, technology usage, shopping habits, and personal values. Lisa specializes in synthesizing the results of Euromonitor’s global consumer surveys into reports, articles and datagraphics, particularly focusing on the consumer path to purchase and consumer segmentation.

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