The Segmentation of Everyone

First, let me apologize for the continued discussion about JC Penney across all of my posts. I’m deep in studying their strategy and keep uncovering nuggets that reveal just how smart their conclusions are. One comment in particular touched on a favorite topic of mine, segmentation. When asked who the company was targeting in this new strategy, Ron Johnson simply replied “Everyone. We want to be everyone’s favorite store.” Wait a minute. That goes against every tenet of modern business practice. Every marketer today knows the first question to answer in developing marketing strategy is “who is the target?” Any creative brief I’ve written had the obligatory target description that needed to personify the distinct segment of interest - their beliefs, needs, demographics, etc. What gives? You can’t be everything to everyone.

Unfortunately, the JC Penney management team failed to include me on the memo that explained their rationale. But I believe their approach is based on a belief that traditional means of segmenting are obsolete, a belief I share. In theory, segmentation is logical and desirable. Find a group that has unique characteristics from other groups, then tailor communication and features around those characteristics. The offer should resonate better with this group than with others, and AB tests often show a higher response rate when offers are designed around a segment than when not. OK, that is the point, right? Maybe not.

The problem I continue to have with segmentation is that the distinct groups tend to be different simply by a matter of degree. Descriptions of the segments will include statements like 63% of segment A behave in this way, while “only” 54% of segment B behave that way. The finding is that segment A is “more likely” to engage in the behavior, which I think is flawed. All it is saying is that nine percentage points more of segment A behave a certain way. The 54% of segment B are just as likely to engage in that behavior as are the 63% of segment A. So, if segment A was determined to be the segment of interest based on that behavior, we completely exclude or lose the 54% in segment B. Lest you protest that we don’t segment based on one behavior, the idea underneath my point is true if talking about one behavior or many.

I think what we need to start thinking about is shared interest, and that the path to purchase for those with that interest are going to be across the spectrum of points of purchase that now exist. Predicting that a segment is more or less likely to use a certain purchase path falls into the trap of the flaw of averages and instead of choosing one path that is most “likely,” identify the several that will cover the vast majority of those with interest and spend your time understanding what is common among them, what is is that motivates their interest. Your audience is likely going to include young and old, many ethnicities and male and female. Instead of focusing on their differences, find their commonality and spend your resources making their experience engaging and meaningful. That’s what I think J.C. Penney is doing - focusing on being any woman’s favorite store, period, which invites any woman to shop there, not just one type of woman.