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Micro-Targeting It’s Not Just for Niche Brands Anymore
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Micro-Targeting It’s Not Just for Niche Brands Anymore

micro-targeting

Jason Green, The Cambridge Group

SUMMARY: The rise of new technologies and increased channel fragmentation makes reaching consumer targets more challenging than ever. More and more consumer packaged goods manufacturers and retailers are finding that micro-targeting strategies—traditionally employed by specialized business—are unleashing new, deeper insights into their customer targets enabling them to grow brands in creative and profitable ways.

Micro-targeting, or the in-depth analysis of a company’s consumers, has traditionally been viewed as a tool for very specialized businesses. Long used by the financial services industry, with its rigorous statistical models and reams of customer data based on direct relationships, micro-targeting plays an important role in effectively communicating with precisely the customers those firms want to reach.

Meanwhile, niche consumer brands with a small customer set and the ability to know exactly where those customers live, work and play have also used this tool to grow their businesses. However, the rise of entirely new technologies and mediums such as Facebook, Twitter and other social media, as well as new consumer research capabilities have made micro-targeting a useful tool for a broader range of industries.

Who has the profit and what do they demand…
Uncover Demand Potential

As a pioneer in the use of micro-targeting, The Cambridge Group—part of The Nielsen Company—has, for some time, assisted financial services clients in micro-targeting through the development of proprietary predictive models capable of classifying consumers into Demand Segments. More recently, however, the challenging economy and intense market competition has prompted an increasing number of mainstream consumer packaged goods (CPG) companies and retailers to dig deeper into their data to develop an unparalleled understanding of consumers in their categories, specifically who has the profit and what do they demand. The power of these insights are being unleashed through the use of focused media buys, targeted online advertising/ product placements, Facebook, Twitter and other new channels to more effectively reach target customers.

Already, one of the world’s largest CPG companies has shifted its spending from mass media buys to micro-targeting friendly public relations campaigns and Internet buys. With the increased channel fragmentation and blurring, they realize that they must be more precise than ever at targeting their most profitable customers.

The revised marketing activity drove annual growth of 15-20%…
Drive Growth

Another example of how the use of micro-targeting has expanded beyond its niche is the case of a refrigerated-meat manufacturer. Leveraging our proprietary approaches, this client was able to develop a fuller, more precise understanding of its true core of profitable customers—teenage boys and their moms. As they discovered, their heaviest users were not summertime backyard grillers, as they’d thought, but households with teenage boys who eat hot dogs for after school snacks (oftentimes as much as 5 pounds in a month!).

The team used its refined understanding of these core buyers and their needs to boost usage among heavy users and build awareness among teens. It shifted its mass media spending and focused more on micro-marketing efforts such as sponsoring online Major League Gaming—one of the key places these teens could be found—as a way of boosting its awareness among youths. The revised marketing actions combined with targeted product/packaging optimization drove annual growth of 15-20% for several years in a row, enabling the brand to achieve the number one position in the category while simultaneously growing its household penetration three points, a major victory.

In another case, we worked with a consumer durables client that had suffered almost five years of flat to declining growth. Our micro-targeting approach increased sales 8% in year one and an additional 9% in year two. These results were achieved by re-allocating existing spend into more precise micro-targeting efforts rather than adding spend.

Road Map to Success

So how do CPG companies get started with micro-targeting? The Cambridge Group recommends five key steps:

  1. Determine what your objectives are. Gain agreement as to how the micro-targeting effort will be evaluated. Is it aimed at increasing awareness, trial, sales or some other goal?
  2. Build a detailed fact base about your target segment(s). You must be very clear on who you want to reach. Typically we are trying to engage the most profitable segments of consumers for our clients. But in some cases the effort might be to reach lapsed users, competitive users or some other group.
  3. Create a compelling message for the target. Once you’ve successfully reached your target you have to have something of interest for them to engage in or you risk losing them despite all of the work to reach them.
  4. Determine where best to reach the target. Where will they be most interested and receptive to your message?
  5. Measure results and improve. Track your results and take corrective actions or drive improvements based on findings and results.

To be truly successful, micro-targeting requires an unparalleled understanding of a company’s target and turning these insights into actionable strategies. But done correctly, it is one tool that really can enable companies to “do more with less” and grow brands in new, creative ways.