Mark Ritson: Segmentation is not the prerequisite for success

There are three areas where the marketing industry is spending too much time and energy, and often missing the point, according to Mark Ritson.

Speaking during the opening session of Marketing Week’s Festival of Marketing today (5 October) the Marketing Week columnist and founder of the Mini MBA stated that, in particular, segmentation of audiences is often “pointless” as there is so much homogeneity in the market.

He argued that marketers feel obliged to have a section on segmentation within every plan, but that “as the rest of the plan goes forward you’re struck with the fact there is no point to the segmentation, except to tick a box”.

“It seems to me that marketers are looking for differences in their markets because people like me and others have told you, you should do that and it’s part of marketing. And so you do it,” he said. “And when you look for differences, you can find a few differences but ultimately, if you step back, it’s pretty much all the fucking same. And finding those differences doesn’t really do anything. Sometimes it does. I don’t want to tell you I think the whole business of segmentation is pointless, but I’m increasingly aware that much more often than not, your segmentation is pointless.”

He described the work of agency Ladder on behalf of the financial management app Money Dashboard, which found that the simplest digital display ad was the most effective across all segments. He cited this as evidence that the “overwhelming reality is that the best ad for one audience is the best ad for all audiences”, which “runs against 50 years of marketing thinking”. The agency found this to be true across all its clients, big and small.

“So I think that challenges us and it challenges us to think whether our segmentation is worth it. I don’t think segmentation itself is necessarily always pointless. I’m saying that in this room of marketers… 90% of the time our segmentation isn’t fit for purpose, not because you’re doing anything wrong, but because there isn’t really any need to segment [because] there’s so much homogeneity in the market.”

Targeting

Next, he spoke of the diminishing returns of targeting, which he stated is the area of marketing that is changing most rapidly. He noted that for years, particularly during the 2000s, the industry was hellbent on pursuing exclusionary marketing techniques as a result of a fixation upon targeting.

The lingering effects of that focus have, at least, led to a recognition that the more targeted a campaign the more prohibitively expensive it is to actually reach those audiences in an effective way.

“Targeting is about going after one small group at the expense of all the others. But there’s some problems with this approach. Can we really identify the group that we’re going to go after? Again, back to my point, do these segments really matter in any practical way? And a new one – can we really afford to target them?”

Over the past 10 years, he argued, the industry has gradually moved towards a more mass market approach to targeting, driven by Byron Sharp’s How Brands Grow. It is a recognition that it is much more cost-effective to speak to a mass market for brand building – though he noted that given finite budgets some concessions have to be made.

Ritson: Differentiation is not about uniqueness 

He said practicing sophisticated mass marketing “isn’t as obvious as going we’re just going to target everyone”.

“There’s still a lot of skill in this to pull it off. There’s another problem with sophisticated mass marketing – none of you have got enough money to do it. Except for the people from Amazon. No one else can do it… The budget doesn’t stretch. You might theoretically believe in Professor Sharp’s approach, but then you’ll need a marketing budget and you’re like ‘what, what?’ Most of us are in that boat. We don’t talk about it. So what we have to do, and this is a great paradox, we have to slice into the market. Not because we believe in targeting and segmentation. We believe in mass marketing, but we can’t afford to do it. ”

He pointed to the work of Tesco, which invests in a mix of very mass market above-the-line campaigns to sustain its brand building and targeted offers via its Clubcard to activate specific audiences.

“The other challenge of targeting, if you follow the work of Uncle Pete and Uncle Les [Peter Field and Les Binet] that book isn’t just the long and the short, it’s also the target and the mass… no one talks about this,” he said.

“If you look at the book when they talk about brand building, the long of it, there is very clearly broad reach, a Byron Sharp style approach. But when they talk about the short of it and activation, they move into a much more targeted world. Two speeds. Everyone for the brand, target segments for activation at the bottom of the funnel, another approach to targeting so we kind of have to do both.”

He described it as a “complex approach”. “Going out to everyone with brand, and then at the same time going after specific segments within that total population to activate them for a week or a month, in a more entrepreneurial way is a brilliant way to do things but it’s also a complex way too,” he added.

Positioning

Ritson’s final point was that the marketing industry needs to wean itself off complex positioning. “We have forgotten what positioning is meant to be, literally forgotten.”

He added: “Positioning is the one area I would impel you to change next year if you want more success. You’ve all lost the fucking plot with positioning.”

He argued that no brand has truly unique attributes, and that pursuing the idea of finding a unique selling point was “the biggest 50-year waste of time… we made that the centre of marketing” when in reality consumers have been shown not to care.

He noted it was natural for marketers – who spend their entire working lives thinking about the brands with which they work – to assume consumers have the same level of investment.

Start saying less things, say them much more often, say them to everyone. Say them across different media, say them with 60% of your budget, say them with better creative.

Mark Ritson

He argued that the idea of purpose driving profit is a childish and naive way of thinking about intent that gets rolled into the idea of differentiation: “We lost the plot with purpose. The whole point of purpose is that it will cost you… we do purpose because we believe in it. Well-meaning effort led you to a wrong conclusion, that consumers feel the same way about your brand and its centrality in your life in their life. Nobody gives a fuck about your brand.”

However, rather than seeing that as a negative, he argued that marketers who accept that reality are free to pursue more effective marketing strategies. He said the idea of ‘wear out’ – that consumers eventually tire of marketing messages due to overexposure – is in fact marketers’ paranoia.

He cited KitKat as a brand that is successful in maintaining market share because of the consistency of its approach. It focused on getting across a single associated attribute – ‘Have a break’ – across all its messaging, and has a presence in consumers’ minds as a result.

He said: “Start saying less things, say them much more often, say them to everyone. Say them across different media, say them with 60% of your budget, say them with better creative, say them across more than advertising because it’s the weakest of the touchpoints.”

Most importantly for positioning, he said, brands need to be consistent with their messaging for “at least 20 years”.

Ritson, referring back to his argument that change is coming across the marketing industry, finished by saying the industry needs to wean itself off the bad practice of the past two decades if it wants to speak to consumers more effectively.