OPINION25 January 2022

In demand: how to manage segmentation modelling

Innovations Opinion Trends

Demand Spaces look set to continue their growth and become a key segmentation framework in brands’ toolkits throughout 2022. Here, Adam Rowles provides his top tips to using them successfully.

Clay figures in the middle of a target, representing the requirement to target customers effectively through segmentation

Demand Spaces are an iteration of the traditional 5Ws approach, but rather than pull a category apart on one of the drivers of demand (who, what, where, when and why), they combine multiple drivers into one simplified framework.

This better reflects the realities of consumer choice, something that helps marketers to identify demand, resulting in sharper communications and propositions. Demand Spaces are proving particularly useful for brands looking to map changes in customer behaviour post-pandemic.

Here’s our list of top tips:

  •        Don’t set up your Demand Spaces to answer everything

Demand Spaces are an incredibly powerful tool. They can help drive growth through penetration, occasionality and frequency, and bring clarity to decisions on brand, portfolio, and innovation.

However, their flexibility can also be their weakness, as it can be tempting to try and setup a Demand Space project to address all the above points. In trying to have your Demand Spaces do everything, you erode their sharpness and can end up with something that doesn’t give you clarity or actionability at all.

  •        Do build on what you already know

Mention segmentation or Demand Spaces and most people immediately think of the investment in terms of both time and money. But it doesn’t need to be a huge investment.

Before committing to any full-scale Demand Space survey, you can build a hypothesised Demand Spaces model with the category knowledge, insight and experience that you already have, such as sales data, category drivers, qualitative inputs and so on. Starting here will enable you to identify any gaps in your understanding and the dimensions that drive choice in your category, before conducting any primary research,

Also, if your budget is limited, you can direct it at testing your hypothesised model versus trying to build something from scratch.

  •        Do make sure that the framework is built on the dimensions that drive choice in your category

Most of the 5Ws, to some extent, will influence how decisions are made – for instance, who the customer is, why they are consuming and where/when the consumption is taking place. But most categories will have one or two dominant Ws, responsible for influencing the bulk of behaviour. For example, choice of supermarket might be driven by who the consumer is and the needs they are looking to fulfil (why), whereas snacking might be more about why and where/when a purchase is being made.

Using these drivers prominently in your Demand Spaces framework will ensure that the spaces you create will be defined on what has the greatest potential to influence consumer behaviour.

  •        Do define your spaces appropriately

Defining effective Demand Spaces is a balancing act. Zoom too far out and each space becomes too broad, losing the nuance and richness that make them so powerful. Zoom too far in and it is likely you will finish up over-segmenting. This often happens when too great a reliance is placed on one of the Ws to pull the market apart. In these instances, you end up with tiny opportunity areas that become too difficult to meaningfully address.

Think about adding a commercial lens, eg sales, market share, CAGR, to be totally confident about where the money is and where you should prioritise your efforts 

  •        Don’t limit your focus to one Demand Space

Once you’ve completed your Demand Spaces it is important not to fall into the trap of restricting yourself to one or two of them. We’ve seen instances of brands assigned a single piece of the Demand Space landscape, forcing them to innovate and communicate in an overly restrictive space.

If the objective is increasing frequency, then focusing on a single Demand Space can help. But if the objective is penetration, that is often best achieved by combining Demand Spaces to engage more users and expand the brand footprint.

Adam Rowles is marketing director at The Forge.

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