How segmentation began 100 years ago with 1 man

1. The coolest segmentation and mapping
solution you ever saw:
how it all began 100 years ago with 1 man
December 2012

2. As marketers we are pretty crap at managing 1:1 relationships
We struggle because we can’t handle the planning requirements
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3. As marketers we are pretty crap at managing 1:1 relationships
Creating individual plans and objectives for each
customer is impossible
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4. As marketers we are pretty crap at managing 1:1 relationships
Even targeting communications to individuals is hard
Finding the optimal combination of offer and content
for each customer
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5. The reality is that we manage relationships with groups of consumers
Instead we use segments
And we use segmentation techniques to create them
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6. The reality is that we manage relationships with groups of consumers
And we do this because
It is easier to manage relationships with a groups
Rather than individuals
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7. The reality is that we manage relationships with groups of consumers
If we are talking about existing customers then we often have
behavioural data to play with
Tesco and Woolworths think
You are what you buy
And generally they are correct
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8. The reality is that we manage relationships with groups of consumers
They use this wealth of information to create multiple
segmentation solutions
Across multiple dimensions
Which they use to manage relationships with their shoppers
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9. The reality is that we manage relationships with groups of consumers
But what do you do if you don’t have access to data at this level?
Or
If you are looking at acquisition opportunities?
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10. The reality is that we manage relationships with groups of consumers
Where do you get the insight that allows you to plan your
communications strategy?
To create relevant offers and content
Using appropriate imagery
Across preferred channels
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11. The reality is that we manage relationships with groups of consumers
You start with generic segmentation solutions
And there are lots of them
PRIZM
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12. The reality is that we manage relationships with groups of consumers
These allow you to break the population up
Into a series of segments
To better understand your target market
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13. The reality is that we manage relationships with groups of consumers
They all classify consumers based on where they live
The assumption is that
you will be more similar to the people who live in your
neighbourhood
Than those who live in other neighbourhoods
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14. The reality is that we manage relationships with groups of consumers
“Birds of a feather flock together”
So in the absence of knowing more about you
You are where you live
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15. The reality is that we manage relationships with groups of consumers
And we known this to be true
Bondi Penrith
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16. Where did segmentation begin?
The segmentation industry as we know it today
began over 100 years ago with this man
Charles Booth
(1840-1916)
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17. Where did segmentation begin?
He was a wealthy businessman who made his fortune through
shipping
But he had a bit of a hobby
He devoted almost 20 years of his spare time to a study of poverty
At a personal cost of about £1.3 million in today’s money
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18. Where did segmentation begin?
Booth's circle of friends regularly discussed the social
problems of the day
Perhaps the most pressing in the rapidly growing Victorian
cities was that of poverty
This was often sensationally reported in the contemporary
press to provoke fear amongst its readers
Booth recognised the importance of a true description in facts
and figures of the social landscape.
In 1884 he undertook to assist in the allocation of the Lord
Mayor of London's Relief Fund, by analysing census returns
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19. Where did segmentation begin?
From this he discovered that the census, at that time, was not
fit for purpose
A report was published in 1885 that stated up to 25% of the
population of London lived in extreme poverty
Booth disagreed and told the author that "in his opinion he
had grossly overstated the case“
And that he would himself be undertaking an inquiry into the
condition of workers in London
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20. Where did segmentation begin?
The outcome of this work was published under the title
Life and Labour of the People in 1889
A second volume, entitled Labour and Life of the People,
covering the rest of London, appeared in 1891
This was later expanded between 1892-1897
A third volume was published as
Life and Labour of the People in London in 1902-1903
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21. Where did segmentation begin?
Booth and his team of researchers recorded a huge amount of
data over the years of study
The survey methodology was complex and original
Booth attempted to understand the lives of Londoners
through an investigation of
1. their places of work and working conditions
2.their homes and the urban environments in which they lived
3. through the religious life of the city
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22. Where did segmentation begin?
Investigators accompanied London School Board visitors, and
policemen on their beats
They interviewed factory owners, workers and trade union
representatives at their places of work or in their homes
They visited ministers of religion and their congregations
The data they gathered was then used to generate statistical
evidence of the living and working conditions of Londoners
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23. Where did segmentation begin?
Originally he wanted to collect data for every family in London
He began in Tower Hamlets and worked his way through
Hackney
Soon realised that this goal was unachievable
They collected information for the rest of London on a street
by street basis
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24. Where did segmentation begin?
The study identified 8 categories of
social class based on their degree of
poverty
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25. Where did segmentation begin?
Each street
was the put
into a
segment
and the
results
mapped
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26. Where did segmentation begin?
It’s the black areas that are the most interesting
“Lowest Class, Vicious Semi Criminals”
He expanded on this description
This doesn’t sound like Mosman
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27. Where did segmentation begin?
West End
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28. Where did segmentation begin?
Bayswater
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29. Where did segmentation begin?
Borough
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30. Where did segmentation begin?
Limehouse
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31. Where did segmentation begin?
Booth popularised the idea of a “Poverty Line”
He set this line at 10 to 20 shillings
Which he considered to be the minimum amount
necessary for a family of 4 or 5 people to subsist
Through his work Booth finally identified that 35% of
Londoners lived in poverty
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32. Where are we today?
Booth’s work was eventually the start of the modern
movement
In 1966 Richard Webber was working at the
Centre for Environmental Studies investigating
measures of social deprivation in Liverpool
He used data from the 1966 Census to build a ward level
classification that identified deprived areas with different
needs
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33. Where are we today?
In 1979 Richard went to work for CACI where he built
Modern Geodemographics was born
This was immediately overlaid onto TGI to allow the
segmentation to be cross tabulated with the UK’s largest
market research sample
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34. Where are we today?
In 1985 Richard left to join CCN - which later became known
as Experian
The largest business services company in the world
In 1986 they launched
Since then Mosaic has taken over the world
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35. Where are we today?
There is even here
Which we are currently using on Aegon
to identify
the target market for launch
and to
create value propositions for their Insurance products
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36. Where are we today?
Segmentation is now a multi billion dollar market worldwide
And it was all started by a ship owner from Liverpool who
wanted a better view of the scale of poverty in Victorian
London
hamish.hartley@ogilvy.com.au
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