Why Marketers Need to Stop Labeling Their Customers

Don’t think that customer is interested in a high tech product because she’s an older woman? Or another couldn’t possibly be in the market for a minivan because he’s a single man? Here’s why labeling customers is costing you sales. 

These certainly are interesting times for marketers. For years, we’ve put customers into tidy little boxes, such as age groups, income groups or gender groups. Business school professors (mea culpa) indoctrinate the next generation of executives to this way of thinking:  We teach our MBA students about tidy 2 x 2 experimental designs that vary some factors and hold others constant so that we can identify what causes changes in consumer behavior.  If we do observe a change after we manipulate one or more variables, we are more confident that something in what we varied caused the shift.  Even then, we’re never certain – most studies establish a confidence level of p < .05, which means that the odds are less than 5% that the change we witness was caused by chance.  After all, the most rigorous study cannot totally establish a causal link. The best we can do is to increase our confidence in the likelihood that altering one variable causes a change in another. Scientists who make a more definitive statement than that are operating above their pay grade.

At least since General Motors pioneered the concept of market segmentation in the 1940s (Chevrolets for some, Cadillacs for others), we’ve assigned labels to consumers. Then we develop products and services for those who land in each neat box. Marketing strategy is largely about dichotomies: Male or female.  Introvert or extravert. Light user or heavy user. Black or white. No room for shades of gray (much less 50 shades!).  

The Truth is Out There

Why are these walls everywhere we look in marketing? Like their counterparts in the hard sciences, most social scientists (including this one) cut their teeth on the hallowed scientific method. This paradigm relies upon strict categorization and an objective, unbiased perspective to understand what’s going on in the world. The modernism philosophy that gave birth to this approach rebelled against many centuries of a culture dominated by what its founders viewed as baseless superstitions and religious hypocrisies. In its place, the new “religion” of the late 19^th and early 20^th centuries worshipped technology and practical experimentation. Function took precedence over form. The Industrial Revolution elevated engineering over art.

Unfortunately this positivist approach doesn’t always work so well in the social sciences, where we study messy people who don’t necessarily behave the same way in a lab as they do in the real world.  Although many marketing researchers still pursue “the truth” via laboratory research, we’re also witnessing a rebirth of qualitative methods like ethnography that encourage analysts to observe their customers in their natural settings.

Welcome to the wild, wacky world of the postmodern consumer.  To truly understand today’s customer, it’s often smart to use naturalistic techniques that require researchers to “live with the natives.” In other words, observe how consumers actually use products in their everyday habitats. Fish where the fish are. 

But let the seller beware:  Things get messier in the real world where our customers actually live – and buy.  Sure, we reap a lot of rich insights.  But because there’s a lot of “stuff” going on out there (some call it “life”) be sure to apply a grain of salt when you interpret the results.  Controlled laboratory studies are much more sterile – but unfortunately in more ways than one.  Although we may pick up a lot of static in natural environments, we also get a level of richness that is very hard to come by in more formal research settings.  Cast your net wide, and don’t be surprised if not all of what you catch is usable.  However, the fish that remain will be well worth the trip.

Apples to Apples

Another reason we love to put things in categories is simple efficiency. When we place an object in a tidy group, we have something to compare it to. The product joins other brands we have assigned to that category as well. An industry develops specifications and nomenclature to apply across brands within a vertical. A retailer knows where to display an item in the store. Shoppers know where to find that item. 

If we can compare apples to apples, it’s easy to see how a brand stacks up against competitors. We can decide if a brand is “best in class” — a good or bad representative of that category — by comparing it to other members. An apple and a tomato both belong in the “fruit” category, but you can guess which is a better exemplar.

A consumer doesn’t evaluate a refrigerator in isolation; she compares its attributes to those of other refrigerators she has already considered. Similarly, a brand manager doesn’t promote a product in isolation; she identifies immediate competitors and positions her brand (ideally) to emphasize areas where she excels and downplay those where she doesn’t.  Those qualities on which the brand excels are its determinant attributes. That’s why marketers devote a lot of effort (or at least they should) to answering the basic strategic question, “What market am I in?” 

The answer often isn’t as obvious as you’d like to believe. To invoke one of the most tried-and-true marketing stories, the Railroad Barons of the late 19^th century who ultimately succeeded were those who figured out that contrary to popular belief they were not in the railroad business. When they redefined their industry more broadly as transportation, they were able to compete against the newfangled automobiles and trucks that appeared on the scene. Those who weren’t agile enough to make the switch suffered from a classic case of marketing myopia – and they paid the consequences.  

The postmodern consumer actually is many consumers. They change their identities faster than a chameleon changes color. On Monday, they may be a Hugo Boss suit-wearing salaryman who listens to Adele, reads The Wall Street Journal, quaffs a greasy burger for lunch, and tunes in to Fox News.  Come Saturday, the tats emerge from underneath the starched collar, they ditch the suit for a Kid Dangerous tee and Vans kicks,  down a tuna poké with a craft beer, and listen to Imagine Dragons while checking out the latest issue of High Times. Just what lifestyle category do they belong to? Today’s postmodern consumer defies categorization and it’s important as Marketers we recognize this and fast.

Dr. Michael Solomon is the author of Marketers, Tear Down These Walls! Liberating the Postmodern Consumer. He advises global clients in leading industries such as apparel and footwear, financial services and e-commerce, CPG, retailing, sports, manufacturing and transportation on marketing strategies to make them more consumer-centric. He is a Professor of Marketing in the Haub School of Business at Saint Joseph’s University in Philadelphia. For more information, please visit, www.michaelsolomon.com.