Join Doug Ladd for an in-depth discussion in this video Cultural segmentation, part of Marketing Foundations: Customer Segmentation.
- Did you know that in the census of 2000 12.5% of the population identified themselves as Hispanic or Latino? By 2010, that number had grown to 17% of the population, which is 50 million people. This shift has large implications for virtually every segment of the US economy. But movements such as this aren't unique to America. In western Europe, there's been a large influx of immigrants from Africa. These cultural shifts create opportunities for marketers.
Cultural segmentation involves the subdivision of groups by aspects such as languages spoken, religion, sexual orientation, dietary preferences, and lifestyle preferences just to name a few. It may sound as though some of these are similar to demographic segmentation variables, and in reality, they are very closely linked. Cultural segmentation came about as marketers look for better descriptors to some of the broad demographic components. This may be useful to you if you need to understand the reasons why your customer or target group behaves or acts in a certain way.
It may also be useful if you have a product or service that appeals directly to specific cultural groups. For example, if you're involved in the development activities of a charity linked to the Catholic Church, and want to promote a large upcoming community event, is it enough to know that 40% of the people that live in a certain zip code consider themselves to be Catholic? Or would you also like to know that only 15% of the people in that zip code went to church in the last year and 8% of the residents responding to a recent survey said they attended regularly? You might want to know this especially if your research also uncovered that a zip code just across town, about the same size, also has 40% of its population calling themselves Catholic, but 25% went to church in the last year, and 18 said they attended regularly.
Your direct mail dollars may be better put to use in the second zip code. This is an example of how cultural segmentation allows you to dive a bit deeper into a population. In reality, there are two important components of segmenting a market by culture. The first involves digging into the customer groups to understand if there are cultural subsegements that are of meaningful size or interest to your business. The second component involves the adjustment or revision of your marketing plan to increase the appeal of your offering to a specific cultural segment.
Describing or defining the cultural segments that are important to you begins with analysis. You've likely heard of the 80/20 rule of thumb in business. This concept says that 80% of your revenue comes from 20% of your customers or something similar. Often the numbers don't line up perfectly with this ratio, but it isn't uncommon for businesses to begin their segmentation work and learn that a large portion of their sales come from a concentrated group of core customers that provide a lot of repeat orders.
When you look at your business through this lens, it's then helpful to look at the two groups of customers. The first bucket is of your best customers. Those that come back time and time again to give you more business. Or if you're in a volunteer organization, who are the people that show up every time, the ones you can count on to participate? Are there any cultural similarities in this group? Do they have societal factors in common? The second bucket consists of the perhaps 80% of your customer base that are occasional or light purchasers.
You should consider them through the same lens. Are there similarities related to culture that you can uncover? Why do this, you might ask. Well there may be something about your business or organization that's more appealing to a certain cultursl group, and therefore, you may have an opportunity to grow by focusing on one or more of these subsegments. You can't do this solely by looking at the numbers, though. Going through your customer records and sales numbers may help you develop some theories, but ultimately, you're going to need to talk to your customers and listen intently to look for patterns and opinions that may help you figure out which groups are most important.
Cultural analysis from a marketing perspective, is done by looking at the behaviors, symbols, values, and languages used by a cultural segment. If you do the work to determine that a cultural group is more important to your business than other groups, you can then look at the common behaviors within the group. The symbols that are important or easily recognizable by the group, the things they value, the language they use, etcetera. Here's an example of how this is used. Research on new automobile sales indicates that members of the Latino culture make up about 20 to 30% of new car buyers of Japanese brands, such as Nissan, Toyota, or Honda.
Remember earlier, we said that Hispanics make up about 17% of the overall US population. So it appears that they have an affinity for Japanese car brands. Further research showed Hispanics are 15% more likely to buy a car from a Japanese manufacturer when compared to others. To get this deeper level of analysis required speaking with customers of Hispanic origin to learn they preferred these brands. That type of insight doesn't come out of looking at new car registration numbers.
After hearing this, it probably won't surprise you to learn that Toyota has a specific advertising program targeted directly to the Latino market. I encourage you to look into your business and see if you can identify any cultural subgroups that make a difference for you. If you'd like to learn more about adjusting your marketing plan to target specific cultural groups and how to incorporate these learnings for marketing your business internationally, I'd recommend you check out International Marketing Fundamentals here at Lynda.com.
- Segmenting by location
- Segmenting by demographics
- Segmenting by usage or other behavior
- Why segmenting is important
- Creating and using customer personas