Storytime!
One day a researcher at Quaker Oats in the UK noticed that cold breakfast cereal sold just as well in the middle of winter as in summer.
Up until then, Quaker Oats saw hot and cold breakfast cereals as two different product categories bought by two very different types of customers.
So, researchers were promptly dispatched to figure out what was going on.
And they discovered that despite what sophisticated market studies had shown, people frequently enjoyed having their favourite ‘cold’ breakfast cereals with a helping of hot milk in the middle of winter.
No one likes to come last.
Over a long enough period, all brands share the same customers.
And it’s true even in a shorter time frame:
Even a brand as large as Coke, with almost universal availability (and appeal), shares as much as 66% of its customer base with other brands.
That’s the thing. You almost certainly share a portion of your customers with your direct competitors within your product category.
And that’s why narrow category segmentation (hot and cold breakfast cereals) can lull marketers into a false sense of security. Why be the tenth in the candy bars category when you can be first in the ‘chocolate-coated nougat bar with peanuts’ category?
Duplication of Purchase
Duplication of Purchase says that all brands share their customers with other brands in the same category. It also says that everyone shares a lot with big brands and a little with smaller brands.
Marketers underestimate how broadly their brands compete. And segmentation studies often overstate minimal differences.
Understanding Duplication of Purchase can help pull you out of product-oriented myopia that all brand marketers inevitably fall into.
Call it availability bias, but unnecessary feature-based segmentation can blind you to your actual competitors and prevent you from understanding how your customers actually buy.
In reality, very few brands are exclusively bought even by the same people. And which brands people spend money on vary among consumers over time.
Planning your marketing strategy with this in mind means planning for;
Gaining most of your new customers from the largest brand in your category and
Defending your customer base from defecting to the largest brand in your category.
A person staring at the options available to them in the candy aisle isn’t aware of the sophisticated segmentation marketers come up with. They’re there to buy a treat that fits their mood.
This doesn’t mean that market segmentation is useless. It’s very useful.
It means that you should see segmentations as sub-markets driven by consumer preference for different features that fit different situations rather than entirely different markets altogether.
💎 In case you missed:
How one brand leveraged video to transform passive consumer encounters into active ones. /Digiday
People are dating all wrong. According to data science. /Wired
How transforming your marketing operating model is like driving in New York City. /Forrester
Fortnite Creative’s creator economy represents the future of metaversal brand activations. /Digiday
In graphic detail: How influencers drive social commerce sales. /Digiday
Stay curious!
Aliyar