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A Forward Looking Approach to Segmentation

A new Strategy Analytics study of the habits of 5,000 U.S. and European technology consumers, "Applied Consumer Analytics," highlights the impact of digital lifestyle factors on determining actionable market segments.

One growing segment identified in the study is the 'Challenged Consumers' category, whose digital appetites drive a higher level of spending than their incomes might suggest.

Their demographics alone might cause this group to be overlooked, but closer inspection shows them to be in the middle of a 'great divide' between traditional consumer technology product use and an emerging 'Web-lifestyle,' characterized by a high degree of interactivity.

These consumers are spending more than average on ringtones, games and other online activities -- which suggests a potential opportunity for carefully targeted interactive services. This should serve as a wake-up call to vendors of games, online media, cellphones and even automotive electronics -- and others -- to look beyond the obvious in their metrics.

"Relying only on such obvious demographic facts as household income and age distribution, digital media vendors might jump to the conclusion that this is not a technology sector," says Tom Elliott, Strategy Analytics Vice President and director of the Applied Consumer Analytics study. He continues, "That could be a mistake, because surprisingly, in some areas, these particular consumers outspend other segments that appear to be better prospects demographically. They spend one and a half times the sample average on text messaging, and 28 percent more on mobile game downloads. Our research suggests that they are willing to pay a lot more for mobile music, as well.”

At GeoActive Group USA we concur that traditional consumer segmentation approaches are obsolete, because they are a remnant of the bygone mass-market era. In contrast, segmentation methodology that acknowledges lifestyle, interest and behavior attributes is far more likely to uncover meaningful and relevant market development insights.

We know that nascent market opportunities can't be uncovered by those marketers who only consider legacy 'backward-looking' market segmentation modeling. Moreover, access to available Datamarts is often under-utilized, because marketers fail to leverage the full potential for predictive analytics -- to be actively applied in the design of new products, services and innovative consumer experiences.

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