Download Five Steps to Smarter Targeting Journal of Advertising Research

Journal of Advertising Research
Vol. 52, No. 3, 2012
www.journalofadvertisingresearch.com
Five Steps to Smarter Targeting
Jenni Romaniuk
Ehrenberg-Bass Institute
Targeting is a key component of any marketer’s toolkit, but the recipe for smart targeting has become more complex. Media proliferation
has widened the list of ingredients, while the emergence of large fused databases provides more ways to slice and dice consumers.
Like adding salt, a pinch of targeting may enhance your marketing efforts, but too much can ruin the dish (and your bottom line).
If marketing had a list of 10 commandments, “Thou shalt target” would be one of them. Right back in Marketing 101, would-be marketers
are told they need to identify a target market to do effective marketing. The aim: to build a loyal customer base from your target market
that is immunized against competitors because your brand is the best one for them.
If only it were that simple.
We might dream about finding that large unfulfilled need in consumers that only our brand can meet. However, we wake up to a world with
many similar competitors, all vying for the same consumer attention and dollars. In addition, media proliferation adds complexity. We have
more avenues and multi-platform combinations to reach consumers with our advertising. Marketers need to wade through many possible
permutations to find any specific target group of consumers.
At the same time, we face the growing availability of consumer-centric data. Greater access to broader and lengthier information on
consumers’ purchases and media behavior gives more options for defining target markets. With all of these choices, however, it’s easy to
lose sight of the big picture from targeting efforts, which is to improve the brand’s profitability.
Here are five ways to improve the quality of your targeting efforts.
Make Your Target Market Definitions Evidence-Based
I am sure you can conjure up a vision of your target market: who they are, what they do, how they live their lives. Ask yourself, however,
is there concrete, quantitative evidence for the stereotype you hold? Have you checked your vision of the brand’s target market against
the real profile of who buys your brand? If you take the sales from a specific time period, what proportion of them are actually from your
target market? In terms of defining all the brand’s buyers, what does your customer base really look like?
The first step to smarter targeting is make sure your targeting efforts reach, at minimum, all of your current customers. Check your
assumptions: does your stereotypical profile of those who buy your brand match the profile of real brand buyers?
Include as Many People as Possible in Your Target Market
Do you have a profile of who buys the category? Sometimes it makes sense to exclude some people. For example, people without dogs
rarely buy dog food. Once you have identified category buyers, however, does your brand buyer definition need to vary from this? What is
the benefit of excluding people who buy the category from your marketing efforts?
We are encouraged to approach target marketing like a clique at school. Identify whom the group includes (i.e., males between the ages of
18 and 35); everyone else is unimportant. This has always struck me as unnecessarily restrictive. Why don’t we approach targeting by
framing the question as: Of all those people who buy the category, to whom would we say, “No… This brand is not for you?”
Your target market, therefore, is all those people you do not reject. When our target markets are designed to maximize inclusion rather
than exclusion, fewer potential customers are “out of target.” These broader target markets include more people and have greater
potential return on investment from marketing activities. The second step to smarter targeting, therefore, is to remember to think
inclusively; the narrower your target market, the smaller your potential market share.
Avoid the Heavy-Buyer Trap
There is an old sports adage: If you score, you may win. If your opponent never scores, however, you will never lose. This idea of
protecting the team motivated me when I played an unglamorous guard in basketball.
In marketing, however, there are three reasons why it is risky to invest too much in defense of the current heavy buyers:
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Heavy buyers often are not as heavy as we might assume. The Pareto Law (or 80:20 rule) implies that heavy customers account for
around 80 percent of sales. The truth is more prosaic. The top 20 percent usually account for around 40 percent to 60 percent of
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sales. This figure varies a little if you extend the time frame but is pretty consistent for all brands in a category. Therefore, lighter
buyers—or the bottom 80 percent—cannot be ignored, even to maintain market share.
Evidence from household panel data normally shows that only around 50 percent of 1 years’ cohort of heavy brand buyers remain
heavy brand buyers in the next year. So even if you can locate your heavy buyers and target them, you can expect that 50 percent
will not remain heavy buyers of the brand in the next year. This might seem like a strong motivation to target heavy buyers—to try
and retain them; however, a good proportion of this cohort movement over time is stochastic. Customers die. Kids leave for
college. And such changes totally are beyond the influence of even your best marketing activity.
There is no real need to target heavy brand buyers. These customers are more likely to have the brand in their pantry, to notice the
brand’s advertising, and “like” its Facebook page. Indeed, any marketing activity is much more likely to reach and be noticed by
these buyers. There is little chance, therefore, they will forget the brand. By comparison, a brand’s light buyers—those who rarely
buy the brand—are more easily swayed from buying. The third step is to make sure your targeting efforts do focus on heavy buyers
and neglect light buyers.
Buy Media on Audience Numbers Reached Rather than Indices
Indices make small media look more attractive and, in doing so, they will distract you from making smart media choices.
The claim that media choice X over-indexes on your target market by 160 percent sounds like an attractive proposition. Such large indices,
however, are more easily achieved with small bases. If the medium reaches only 5 percent of the market, the target market reach would
have to be only 8 percent to index at 160. More of your target market is more likely to be found in larger-reach media.
In a similar vein, we are now learning that the audiences for different media are not of equivalent value to the brand. In a recent
Ehrenberg-Bass study (“What Works in the New Age of Advertising and Marketing”) across 16 media in nine countries, marketing activities
where the consumer needs to think and find the brand—such as a brand’s Web site, Facebook page, or Twitter account—tended to skew
toward reaching heavier brand buyers. This is an important consideration for media selection, as there are natural biases in who pays
attention to our marketing activity.
There is no need to enhance this by selecting biased media as well. We should understand the audience reached by the media and ignore
indices. The fourth step to smarter targeting is to buy media that reach all of your (now broader) target market based on numbers
reached, not indices.
Don’t Sacrifice Reach for Engagement
Engagement is sexy, but reach has money. It is tempting to implement something with low reach, hoping it will be sufficiently engaging to
compensate for the lack of reach. Before you do this, however, do the math (See Table 1).
Let’s say you were to move from a broader media—reaching 30 percent of your target market—to a narrower option—reaching only 10
percent of the market. To compensate for the 20-percent loss of reach, you would need a 300-percent higher response from the smaller
group. Is your “something” so engaging that will command a 300-percent extra reaction from the smaller group you would be reaching?
It might seem more exciting to develop an engaging series of five-minute Webisodes about a brand than another 30-second
advertisement. The important questions when making this kind of decision are:
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how many people would see these Webisodes and
would that audience have the capacity to deliver the extra sales needed to make up for sales lost from the people not reached by
choosing this lower reach, but more engaging option?
HOW WIDE IS TOO WIDE?
The logical question arises: Won’t a wide target market lead to a brand that does not stand for anything?
It is natural to worry that, without a defined target market to aim at, your brand image and advertising will become bland and not resonate
with consumers. To avoid this, it is useful to separate out brand differentiation from brand distinctiveness:
Brand differentiation means you offer something unique or better than competitors. This “something” then causes your target market to
select your brand over competitors as you better match their needs.
Differentiation is one of those cases where marketers rarely let evidence get in the way of a good story. Despite its also being a key
marketing commandment, there is very little evidence to suggest that differentiation is necessary or important for a brand. If your
ambition is to be a large brand, you will need to fit a wide range of consumer purchase and consumption situations. Consumers see largeshare brands as linked to all of the category’s core needs/situations and salient in more buying occasions. In contrast, truly differentiated
brands, when we do observe them, tend to be smaller share, functionally different brands.
Distinctiveness is about creating an identity that is unique and evocative of the brand. This is done through the development of distinctive
assets (i.e., HSBC’s use of red borders around its print advertisements). At their heart, these distinctive assets are not why people buy the
brand. I doubt any of HSBC’s customers are with the brand because of the red borders.
Instead, these assets are how consumers easily identify and find the brand. Irrespective of the target market, distinctive assets can lift a
brand’s campaigns from being bland and generic to having cut through and being well branded.
THE FINAL TAKE-AWAY
In summary, effectiveness in this new world involves targeting smarter not harder. Remember:
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Do not get seduced into “narrowcasting” your brand by choosing small-reach media.
Think big, broad, and inclusive for your potential customer base and choose media that first reach your broader customer base.
Then worry about creative that might engage them.
Minimize the use of media that require consumers to “think and find” the brand, so the audience you reach is less likely to be biased
toward heavy brand buyers.
Worry less about differentiation to appeal to a target market, and more about your distinctive brand assets to create a unique brand
identity so everyone can unmistakably identify your brand.
Jenni Romaniuk is associate professor of brand equity and associate director (international), Ehrenberg-Bass Institute for Marketing
Science, where her research focuses on brand equity, advertising effectiveness, and word of mouth. In addition to the Journal of
Advertising Research, where she writes the quarterly “Marketing Matters” column, her work has been featured in the pages of the Journal
of Business Research, the Journal of Marketing Management, Marketing Theory, the European Journal of Marketing, and the International
Journal of Market Research. Email: [email protected]
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