“What about de-segmentation? What’s that for?”

MarketingRx –November 14, 2008

By Dr Ned Roberto with Ardy Roberto

Q: We read your recent column on self-segmentation. We never thought about market segmentation that way. That is, as a consumer behavior and not only as a marketer behavior. We were having a lunch discussion on this concept when someone reminded us that in one other previous column you were also talking about another segmentation idea, namely, “desegmentation.” The lady who reminded us said she read it in your column regarding Kartajaya’s Philippine Marketing Association keynote speech where he provoked the audience by saying that marketing is better off today if it gets rid of market segmentation.

Then another person told us that you actually talked about desegmentation in your last Blue Ocean Forum two months ago. He told us that the title of your talk was in fact “Market Segmentation, Self-Segmentation and Desegmentation.” In your column last Friday, you explained the first two but didn’t say anything about the third, that is, desegmentation.

So please tell us about desegmetnation. How useful is this for us marketing practitioners? What is it for? It seems to us that market segmentation and self-segmentation are enough for our segmentation requirements. A mystical sounding third called desegmentation sounds to us like a redundancy and even a contradiction.


A: The concept of “desegmentation” comes from the best seller and voted #1 strategy book of 2005 and 2006, Blue Ocean Strategy. That’s by W. Chan Kim and Renee Mauborgne, 2 professors from INSEAD, Europe’s leading MBA school. In chapter 5 of the book, Kim and Mauborgne explain desegmentation by defining it as follows: “Desegmentation is putting a stop to the pursuit of finer segmentation”… when you’ve identified a “product category non-customer” segment who when combined with the “current product category customer” segment surface a “common product category value” that can be satisfied with a new offering that will reach and “aggregate to a new much larger demand.”

Of course, every time we quote that we hear marketers say and ask: “Wow! That’s a whole lot. What does it mean?” It is a lot to chew and swallow. So read carefully and you’ll be amply insightfully rewarded.

Let’s start from what desegmentation obviously is not. It’s not doing away with segmentation. Unfortunately, that’s the most common first impression that our clients and students get from just reading this compound term. In forming the compound, desegmentation, the use of “de-” creates in the reader’s mind a negation of the term to which it is affixed. That is what happened to you and your business friends in your own impression of the contradictory connotation of the term. So if you want to understand the concept and put it to practical use, this misinterpretation is what you have to first unlearn.

This clears the way for understanding what desegmentation really is. Firstly, it’s about doing several levels of segmenting. It’s first a process of “finer and finer segmentation” of your total market. Secondly, it’s about knowing at what level of refinement to stop the process. And thirdly, it’s about stopping at the level where your best candidate PTM (primary target market) segment represents a source of “a new much larger demand.” It is this unique 3-step disaggregating of the segmenting process that is the outstanding contribution of Kim and Mauborgne to the strategy of market segmentation.

The idea of segmenting beyond the first level and refining down to the “behavioral segments” is not Kim and Mauborgne’s. That’s from the senior MRx-er’s Strategic Market Segmentation book. The logic of the process is simple. The first level segmentation is usually by socio-eco and demographic variables such as, for example, by socio-economic classes like Class AB (rich) segment, Class C (middle class) segment, Class D (borderline poor) segment and Class E (extreme poor) segment. Or by age, or by gender, etc.

To target any one of these first level segments and change its purchase or usage behavior, the marketer must ask: “Are the consumers in, say, the Class C segment the same in, for example, their sensitivity to pricing?” The answer will almost always be “no.” This means that for targeting and consumer behavior change purposes, that Class C segment should further be segmented by price responsiveness. When this is done, it will result, for example, in identifying an economy Class C price segment (whose consumers are immediately price sensitive), a premium Class C price segment (whose consumers are less price sensitive), and even a super-premium Class C price segment (whose consumers are not at all price sensitive).

Let’s have an example of the multi-level process of segmenting so we can continue discussing in the concrete. The senior MRx-er recently had a 3-day marketing consulting engagement with the Singapore government’s Civil Service College. In one half day of the 3 days, the consultant had a workshop session with the Health Promotion Board. One of the programs discussed during this session was the Board’s campaign to accelerate the acceptance and participation by Singapore company employees in the Board’s “Workplace Physical Activity Promotion Campaign.” The idea of developing a 3-level segmentation of the total market of company adult employees was proposed and taken up.

The Board was already segmenting at a first level by age. This identified 3 segments; (1) young adult company employees, (2) mature adult employees, and (3) post-mature adult employees. To get the 3 age segments into identifying each one’s “behavioral segments” called for going beyond this first level segmentation. In order to proceed to a second level segmentation, the Board members in attendance were asked to first answer this question: “Which segment among the 3 has the most need for the workout?” This was for setting priorities among the 3 identified age segments.

The Board chose the young adult segment. This segment became the subject of a second level segmenting. This time it’s segmenting by the working out behavior. This led to 2 identified behavioral segments: (1) the young adult company employees who are now working out, and (2) those young adults who are not working out.

Since the Board wanted to get to a “finer” third level behavioral segmentation, it had to prioritize the 2 just identified second level segments. To do this, the consultant the audience to answer this question: “Between the 2 segments, who is less difficult to reach and persuade about more regular or more intensive work outs?” The Board’s answer was “those now already working out.”

For the third level segmentation, segmenting was by “working out frequency.” The session on this yielded 3 third level behavioral segments: (1) those working out irregularly, (2) those are regular in their work out, and (3) those working out vigorously. To arrive at a prioritizing of these 3, the Board answered this question: “Among the 3 segments, who has the most need for help in their working out frequency?”

After some quick exchange of opinions, the Board members ended by choosing as its PTM (primary target market) segment those who are irregularly working out. Those following a regular work out schedule were designated as the STM (secondary target market) segment. The TTM (third target market) segment was the segment of employees who are vigorous in their work out frequency.

So as this example illustrates, repeating the responsiveness question for some other segmenting variables like product needs or benefits can bring the process to a next or another level segmentation. This particular level will identify what used to be popularly known as “benefits segments.” As our Singapore example shows, it’s possible to go on repeating but every time a marketer is tempted to make the repetition, the critical and practical question must first be answered: “Where do I stop? Is it in the next level of finer segmenting of the market or in this level?”

Here is where the Kim and Mauborgne “desegmentation rule” comes to a most welcome rescue and serves as a most useful decision handle. So in our example, we saw that the Health Promotion Board deciding to stop at the third level segmentation. At that level, it chose for its PTM segment, the segment of those young adult company employees who are already working out but doing so irregularly. Does this choice satisfy the desegmentation rule? That is: Is this the segment representing a source of “a new much larger demand?”

There was not enough time for answering the question with “facts and figures” and not just anecdotally. But one or two Board members mentioned that in terms of segment population size, the chosen PTM segment is known to make up the larger population size. There are also some experts’ opinions to consider. Psychologists and physical therapists working in the campaign hold that it is this young adult segment that promises more than any other segments a “multiplier effect” on other segments including mature adults and post-mature adults. Both of these 2 segments look up to the youth for healthy working out practices and reminisce about their own youth period when they were at the “pink of health.”

There was a final challenging and quite provocative question that was raised. It asked something like the following: “What about those other 2 segments of mature and post mature adults? This is a real problem with segmentation. As a government agency, we must reach all, everyone. That’s the democratic rule. The desegmentation and market segmentation rule violates the mandate of democracy. So how can all segments be reached?”

This basic objection to segmentation has been raised before. Government and non-government organizations who are struggling with the relevance of marketing in their work are particularly concerned about it. There have been different answers from marketing experts. Here’s the answer and explanation in abridged form from the consultant:

“The Rule of Democracy is usually interpreted as the Majority Rule. The logic assumes that if you reach and serve the majority, the minority will soon be reached and served as well. But the history of democracy tells us that this is rarely true. Once the majority is served, the minority is forgotten. And this is why Sir John Mortimer, the noted English barrister and playwright, came out with what we may call the Mortimer Rule of Democracy. It says: “The test of democracy is not that the majority should always get its way but how far minorities are respected.” Majority and minority. These are essentially market segments. And the Mortimer Rule is no different from the Segmentation Rule. So to reach both segments, follow the Mortimer version of the Rule of Democracy, which is the Segmentation Rule.”


Keep your questions coming. Send them to us at MarketingRx@pldtDSL.net or visit www.marketingrx.org . God bless!

Why is ad recall no longer a good ad effectiveness metric? - Nov 24-06

MarketingRx # 160 for Nov 24, 2006
By Dr Ned Roberto & Ardy Roberto


“Why is ad recall no longer a good ad effectiveness metric?”


Q: In a recent marketing conference, we heard that you were more than critical of advertisers who are using advertising recall as an ad effectiveness metric. Our marketing director who was in that conference emailed us after and instructed us that from now on we should drop ad recall in our ad effectiveness study. He said he doesn’t want to see anymore the ad recall score of our TV ad when we’re presenting our research on our TV campaign’s post launch effectiveness.

We are not at all clear about this rejection of ad recall as a good ad effectiveness metric. We remember attending your advertising research seminar way back in 1998-1999. You basically endorsed ad recall as a useful ad effectiveness indicator. In fact, you told us then, that ad recall is a measure of “the quality of ad awareness,” suggesting that it’s a better ad effectiveness measure than ad awareness. We also remember your telling us that ad recall is P&G’s favorite ad effectiveness indicator. You even called it “P&G’s philosophy of a good advertisement.” It was on the basis of this proposition from you that since then, we’ve never missed including ad recall in our post launch ad effectiveness study.

So to start with, please tell us if you actually said what our marketing director told us you said about ad recall. If you did reject ad recall, then please help us understand why. If 8 years ago, it was a good effectiveness measure why is it no longer good now?

A: Your first question is easily answered. It’s correct that I suggested that in today’s media world and landscape, ad recall is no longer a good ad effectiveness metric. What your marketing director missed telling you though is that I suggested a replacement that’s more suitable to the current times. That’s brand recall which leads us your second question.

You have to admit that in today’s full blown digital world, 8 years is a long time. That’s nearly a decade. And many things can change in 8 years. The generalized version of Moore’s Law tells us that in the digital world, the speed of change doubles every 18 months. Metcalf’s Law adds the other dimension of scope to speed. It says that we are getting interconnected “in direct proportion to the square” of our networkings. Moore is Gordon Moore of Intel while Metcalf is Robert Metcalf, founder of 3Com.

In marketing, one of the things that have changed rather dramatically is advertising: its role in the marketing mix, its significance as a communication tool, and its credibility among TV viewers, radio listeners, newspaper and magazine readers and other ad media audiences. In the marketing mix, advertising has become inseparable from promotion: the A&P. The use “&” has a normative implication. If you are to advertise your brand, make sure you also promote it so you’ll motivate your buyers to buy now and not later. And if you are to promote, then make sure you advertise your promotion so you’ll get many consumers to learn about your promotion and thereby generate a larger base of promo participants. Over the years, the A&P budget has tilted in favor of more promo than advertising. This has prompted many marketers to now talk about P&A rather than A&P.

If you now look over today’s communication landscape, advertising has increasingly lost its prominence. PR, publicity, events, sponsorship, product placement in movies and TV shows, and direct response advertising via the internet and mobile phone have been sharing the limelight that tri-media advertising used to dominate. More and more share of communication voice and communication investments is leaving advertising in favor of PR, publicity, events, and the like.

Advertising, PR or Word of Mouth?
Most importantly, consumer credibility is also quickly exiting advertising and entering PR, publicity, and in particular word of mouth. In fact, Al Ries predicts that PR will take over advertising because advertising is speedily losing its remaining consumer credibility. Actually, if you read Al Ries carefully, you will discover that he’s talking of PR not in its traditional form but in its word-of-mouth and/or word-of-mouse versions.

Before, or back in the 70s and even 80s, it was reasonable to say and there was enough consumer behavior reality to believe that “consumers buy a brand because of what they recall from (say) the TV commercial for that brand.” But today, advertising has lost its premier consumer persuader position in favor of promotion in the marketing mix. In communication, it similarly lost its significance to PR, publicity, events, and other non-tri-media channels. And most importantly, advertising’s credibility has suffered from a reversed Moore’s and Metcalf’s laws: its credibility loss has been accelerating at the speed of Moore’s law, and the scope of its credibility loss has been widening at the expansion rate of Metcalf’s law.

“Nature abhors a vacuum. Sooner than later, something else fills that vacuum.” And so it is in the advertising world. The vacuum in ad effectiveness that ad recall has been creating with its accelerating loss in consumer credibility is being filled by something else that consumers are using as basis and reason for buying a brand. That something else is brand recall.

Consumer behavior research is telling us the following about brand recall. In many more cases and occasions, consumers buy because of what they have learned and appreciated about a brand more than because of what they recall about what its advertisement said. So more and more because of brand recall than ad recall.

In our research, we measure brand recall by asking consumers everything they know about a brand but without relating this to the source of their brand knowledge. This is important because you can always argue that brand recall came from the ad recall. Control this source of metric contamination by explicitly deleting it from your questionnaire.

So do we completely throw away ad recall? No, not really. If we don’t, what then do we do with it?

Drivers of ad recall
In our research, we draw on its usefulness and function as a “bridge” or “gate” to discovering and measuring potential and actual consumer buzzing. (In consumer research language, it’s our screening question to probing on consumer word-of-mouth behavior toward ad recall.) That’s basically the word-of-mouth value of the ad recall. Our research calls this “the ad recall buzzing effectiveness metric.” It’s the percent of "ad recallers" who either: (1) told others about the recalled ad message, (2) discussed with others the recalled ad message, or (3) asked others if they heard the recalled message. Those “others” can be a family or household member, a friend, a neighbor, an officemate, and the like.

Increasingly, our research data are showing that in 7 to 8 out of ten successful TV ads, it is not just the TV exposure alone that was the driver of success (measured as increased brand sales, consumer usage, trial purchase, or repeat purchase). It was the word-of-mouth extension of the ad recall that was a co-driver. In fact, in more cases of the 7 to 8, it was the word-of-mouth that was the multiplier driver (especially if your ad gets posted on YouTube). TV was just the additive driver.

Some of our readers who are interested in learning more about word-of-mouth may have missed our several columns on word-of-mouth advertising and word-of-mouth as an ad media. To request for soft copies of those columns email us at the address below.

Keep your questions coming. Send them to us at MarketingRx@pldtDSL.net. God bless!