Should Micro Segments Matter? (Random Waxing on Text Analytics and Brand Equity)
In 1638 the New Sweden Company established a colony on the Delaware River. Between 1846 and 1930 roughly 1.3 million people, about 20% of the Swedish population at the time left the country, the majority for the USA. By 1900, there were close to one million Swedes in Chicago alone.
Skip forward to 2012, according to US Census data adult Scandinavian language speakers in the US total around 150,000, only about .05% of the population (of which 43% are Swedish speakers). A majority of these are concentrated around the New York and Los Angeles areas. If you expand to include Americans claiming Scandinavian heritage that percentage goes up to about 4% or just over 11 million.
While Swedes living abroad have long taken pride in brands like Volvo and Saab, which were until recently Swedish, arguably nothing is closer to the heart than a people’s food. IKEA, perhaps inadvertently at first, seem to have stumbled upon this in their marketing. I believe for IKEA the Scandinavian (especially the Swedish) global Diaspora have played a small but important part in IKEA’s global conquest and current brand equity. While maybe not significant as a total proportion of sales; this groups unwavering positive advocacy for the brand, even as it has struggled to gain a foothold in more challenging markets like the US in 1985, has certainly helped IKEA.
Nationality as a branding strategy has been on the wane recently it seems. According to a study my firm did in 2007, only 38% of US college students knew that IKEA was a Swedish brand (24% assumed it was American). Amazing considering that IKEA is a very relevant brand among this segment and IKEA stores all fly the Swedish flag, are painted blue and yellow, all products are named after Swedish words, and most stores have a Swedish Food Market.
Today I’m not going to talk about whether or not product country of origin is important in branding. For several brands (especially luxury brands) I’ve found that at least among many of its most important customer segments it is. Instead I’d like to talk about micro segments in general.
IKEA recently decided to stop carrying Swedish food brands; about 150 products in total including Swedish brands from Abba seafood to Marabou Chocolate have been eliminated. These quality brands have been replaced with lower cost products all carrying they IKEA store brand name.
This change may not be very noticeable for the majority of IKEA customers who come to IKEA mainly for their furniture needs. For all I know the Food Market may have been a loss leader for IKEA which it has decided it no longer needs.
While I know the Swedish expatriate community around the world is extremely disappointed about the decision, and many have voiced their opinion on social media including Facebook and Twitter; because it is such a small group, their voice is drowned out by business as usual.
I’m not unrealistic - I do expect businesses to do what is most profitable for them. I wonder though not just about how we as marketers choose to measure brand equity, but how we choose to create and market to our customer segments. Most companies have 3-6 important customer segments that they pay attention to and market to differently. With the advent of Big Data, will it soon be possible or reasonable to pay attention to segments smaller than 1%?
Text Analytics now allows us the ability to record and monitor discussions of even a minority online that would have been dismissed as outliers and ignored in traditional marketing research. However our priorities on how to deal with these data have not changed.
Will firms like IKEA ever switch from traditional market segmentation only strategy and pay attention to ‘micro segmentation’ and listening - or would this be a waste of time? Curious to hear your opinion.
[Note: My post today may be somewhat biased. I realize the opinion stated may be held only by me and a very small customer segment. However I believe for marketers it raises questions on how we define segments. How large should a segment be for it to warrant special consideration? Also, should segments be measured only based on pure economic potential, or should we as marketers also consider the more difficult to measure influence a small segment may make in ongoing brand advocacy? Finally, with text analytics capabilities now available to measure online sentiment, do we have an obligation to also pay attention to the ‘outliers'?]