May 13, 2015

Marketers aren’t Mind Readers: Why Consumer Life Stages are Fundamental to Marketers

Every marketer wants to influence consumers, but if you listen to the social scientists you’d realise that this task is even harder than we may think. As Iain Macleod, the UK Health Minister famously proved by chain-smoking through a press conference on the dangers of smoking and lung cancer in 1954, a vast proportion of our daily choices are habitual not conscious.

Purchasing decisions are no exception. Indeed, there are numerous studies that show we’re pretty much on autopilot as we walk through the aisles, filling our baskets with the same stuff we’ve always bought. This is partly why shopper marketing agencies have grown so rapidly over the past two decades – everyone wants to find a way to break the pattern of unconscious shopping and turn shoppers into ‘conscious consumers’.

New life-stages make us shop more consciously

It’s not all about transforming shopper behaviour in-store though. Studies have also affirmed what all marketers know to be true: when consumers go through major life events – such as graduating from University, getting a first job, getting married, moving house or having a baby – shopping habits can change if the consumers are engaged by a clever marketer. For example, a precisely timed advertisement, sent to a recent divorcee or new homebuyer, can change someone’s shopping patterns for years.

The economic impact of targeting consumers with the right message just as a new life stage begins is huge. Consider just one example: Having a baby. Expectant parents in the UK will spend an average of £1,600 preparing for the arrival of their first baby, which equates to a total of £492 million each year for all first-time parents. There’s a lot of money at stake.

How to identify and target life stages

All marketers know that life-stage targeting has long-term effects on consumers, so the question companies need to ask themselves is: can we use life-stage targeting to engage consumers online with the most relevant message from us? The answer is (of course) yes, but constructing accurate life stage segments isn’t easy. It demands two essential requirements: declared demographic data and massive volumes of shopping intent data. Here’s why: In-market and intent data signals alone won’t indicate a life stage. For instance, consumers who Google car seats are likely to be parents, but that is in no way a given. They may be grandparents, or even office managers tasked with ordering a baby shower gift for a co-worker. In-market is often short term; life-stage isn’t.

So how do you distinguish between in-market and a life stage?

The first thing you need is a robust set of declared demographic data to serve as a truth set. Shopping surveys, presented at key points throughout the online retail ecosystem, are excellent vehicles to collect demographic data from tens of millions of consumers, including age, gender, income, education, ethnicity, and family composition.

Next you need accurate shopping-intent data so you can detect purchasing patterns. Here’s where scale is critically important. A new mum may switch to gentler brands of household cleaning supplies, which is very relevant insight to a CPG marketer, but on an individual level, that signal is lost. If you see billions of shopping data signals a month, you get a lot closer to the truth. Fortunately, some ecommerce companies already collect much of this information from hundreds of millions of shoppers who transact across their retail networks.

The value of the whole is greatest

The real value comes by joining both data assets together. Data scientists can use statistical analysis to reveal life stage segments based on shopping patterns and validate them with demographic data. That analysis can help marketers flag new mums who pay more attention to certain CPG product categories—like baby wipes—and are receptive to new messages from relevant brands.

We’ve observed that consumers who declare they’re recent graduates in surveys go on to purchase small appliances, bedding and work clothes. They’re quite different from first-time homebuyers who also buy plenty of appliances, but already have bedding and clothes. On the surface they may look similar since they’re both buying stuff for the home, but they’re not the same. The value of life-stage targeting is that it enables marketers to target new grads differently than those first time homeowners.

Precisely timed advertising via programmatic marketing

Once you’ve identified when consumers are at critical life stage changes – along with the products they’re likely to buy – the final step is to deliver those precisely timed ads to change their shopping patterns.

Add retail signals to demographic information, deliver it programmatically and you have the recipe for success. Demand-side platforms (DSPs) purchase campaign inventory via real-time auctions – one impression at a time. Purchasing decisions are based on the unique combination of user data (including life-stage segment), page and campaign attributes. In other words it asks: is this consumer a bride-to-be, is this a site that delivers conversions, and how many times she has seen my ad, and so on.

All of the pieces are falling into place, precisely as millions of Baby Boomers and millennials are expected to move through significant life stages. Programmatic is already a buzzword but it wouldn’t be surprising to see life-stage targeting become the new buzzword within programmatic marketing soon, after all, it’s where consumers (and their spend) can be won and lost, and there’s a lot of consumer money to be won.

By Adam Yates, Director of Sales EU at Connexity.

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