Tuesday, May 5, 2009

Market Segments Are Not Communities

image Is a group of people a community if its members don't know they're part of it? I don't think so, but some recent blog posts have confused community with something else. Before we redefine all of the useful distinction out of yet another buzzword, let's think about what makes a community. After all, your community engagement strategy requires a community to engage.

What a community is
Community is a nice-sounding word that threatens to become just another euphemism. Activists use it to describe entire populations, usually based on some attribute that gives them minority status. Politicians refer to "the community of nations," which is either all of the world's governments or the entire world population (clarity seems not to be the point). Community has come a long way since its local roots.

Now, marketers are using community to describe groups they'd like to reach. The references that inspired this post listed "communities" that were really market segments, such as teenage girls or white-collar professionals. While these examples can be useful segments, they're missing the essential elements of community:

  • Self-identified
    Members not only know that they're a part of the group, they think of it as a community (but they might choose a different word to describe it. Membership in a formal organization is a big hint here, but not a requirement.
  • Exclusive
    Communities know who is not a part of the community, too.
  • Connected
    Members of communities have social connections with each other. They recognize each other as members of the same community.
  • Communicating
    Without communication, there's no community, and old communities fall apart. But communication alone doesn't necessarily lead to community.
  • Supporting
    Community members usually provide some level of support to each other.
First community, then engagement
Communities form for many reasons. Some reasons—common interests, careers, industries, demographics, geography—map nicely to segments that marketers find interesting. But members of market segments—whether defined by demographics, psychographics, purchase patterns or interests—don't form communities just because marketers want to try community strategies to reach them.

A market segmentation of people or organizations sharing one or more characteristics that cause them to have similar product and/or service needs. A true market segment meets all of the following criteria: it is distinct from other segments (different segments have different needs), it is homogeneous within the segment (exhibits common needs); it responds similarly to a market stimulus, and it can be reached by a market intervention. The term is also used when consumers with identical product and/or service needs are divided up into groups so they can be charged different amounts. These can broadly be viewed as 'positive' and 'negative' applications of the same idea.

Successful segmentation requires the following

  • Homogeneity within the segment
  • Heterogeneity between segments
  • Segments are measurable and identifiable
  • Segments are stable over time
  • Segments are accessible and actionable
  • Target segment is large enough to be profitable
Variables Used for Segmentation
  • Geographic variables
  • Demographic variables
  • Psychographic variables
  • Behavioral variables
  • Technographic variables

Source: SocialMediaToday & Wikipedia.