How Consumer Segmentation Can Be Counterproductive

An old hippie friend who enjoyed the ‘60s with great gusto once told me, “Anything worth doing is worth doing to excess.”

Ever since marketing prof Wendell Smith introduced the idea of consumer segmentation to marketers in a 1956 edition of The Journal of Marketing, marketers have striven to follow Smith’s advice to excess.

On its face, segmenting consumers makes a lot of sense: save money, increase effectiveness by targeting only those consumers who are most likely prospects.

However, the process of segmentation is a process of exclusion. It discounts consumers who are not members of a target segment. And they might add up to being a sizeable number, even if not so similar to one another as to be neatly clusterable.

Harley-Davidson eschews segmentation, or at least is so subtle (not excessive) about it that you never sense that Harley prizes one category of consumer over another. The company avoids running ads in which you can tell the age of a biker poised on his (or maybe her) prized bike. Yes, often you cannot even tell the gender of the rider.

New Balance similarly makes people in its ads so indistinct that you can’t tell their age. This is one reason why New Balance, whose growth is outpacing even mighty Nike, has a broader age appeal than its competitors.

Consumer segmentation still makes sense, but in today’s increasing diversified consumer populations, it is often counterproductive. Gap realized this after 23 months of unbroken losses and adopted a new tag line: “For all generations.” It returned to profitability.

Sorry, my old hippie friend, consumer segmentation is one thing that should be done in moderation.