Demographic segmentation is the foundation of traditional marketing – but does it still work? A consumer behavior psychologist and professor of marketing, Michael Solomon discusses his book, “The New Chameleons” highlighting fundamental shifts in terms of how we think about customers. Michael explains generational differences, targeting “markets of one”, and predicts which consumer behaviors accelerated by the COVID-19 lockdowns and economic changes will persist post-pandemic.
Adrian Tennant: Today’s episode of IN CLEAR FOCUS is a conversation we first published in March of this year. Our guest is Michael Solomon, who discusses his book, The New Chameleons – especially relevant because Bigeye we’ll be publishing the results of our new national study later this month, examining how shopping behaviors have changed and what customers most want from brands today. Enjoy this encore episode with Michael Solomon.
Michael Solomon: There are a lot of very, very fundamental assumptions we make about the way we categorize people that no longer work in terms of how we think about customers and more importantly, how they think about us as marketers.
Adrian Tennant: You’re listening to IN CLEAR FOCUS, fresh perspectives on the business of advertising produced weekly by Bigeye. Hello, I’m your host, Adrian Tennant, VP of Insights at Bigeye. An audience-focused, creative-driven, full-service advertising agency, we’re based in Orlando, Florida, but serve clients across the United States and beyond. Thank you for joining us. Several episodes in this season of the podcast have focused on industries we have seen significant growth during the pandemic due in part to changing patterns of consumer behavior. However, not all changes in behaviors are due to COVID-19, but rather a reflection of trends that have been accelerating for some time. Understanding consumer behavior is a through-line for IN CLEAR FOCUS, and today we’re going to discuss why and classifying groups of consumers using traditional segmentation and targeting methods is increasingly challenging. But the flip side is that insight derived from an outlier in research data could unlock the next big opportunity. Our guest this week is the author of the recently published book, The New Chameleons: How To Connect With Consumers Who Defy Categorization. Michael Solomon is a consumer behavior psychologist, a marketing professor, and an international speaker. Currently professor of marketing at St. Joseph’s University in Philadelphia, Michael also advises global clients on marketing strategy and consumer centricity, working with brands, including Intel, BMW, eBay, McKinsey and Company, Ford, and Levi’s. Michael regularly contributes articles to Forbes magazine and has spoken to Fortune 500 companies, top advertising agencies and marketing associations, and government organizations worldwide. And if you’ve taken a marketing course anytime since the early 1990s, it’s quite likely that you’re already familiar with Michael’s work since he’s the author of the leading textbook on consumer behavior, now in its 13th edition. Today, Michael is joining us from his home office in Philadelphia. Michael, welcome to IN CLEAR FOCUS.
Michael Solomon: Adrian, thanks so much for having me today.
Adrian Tennant: Michael, you’re a prolific author and writer contributing articles to journals and magazines. Your latest book is entitled The New Chameleons: How To Connect With Consumers Who Defy Categorization published by Kogan Page. What prompted you to write this book?
Michael Solomon: I often get asked to give speeches about trends in consumer behavior, as you mentioned earlier in your kind introduction. And as I put these together, what I started to see is that there are some huge disruptions going on in the consumer behavior marketplace. And I don’t think that that would be news to any of your listeners, but I began to realize that not only are there disruptions going on, but we’re even looking at fundamental changes in terms of how we think about customers and more importantly, how they think about us as marketers. And so as I started to dive into this, I realized that in fact, there are a lot of very, very fundamental assumptions we make about the way we categorize people that no longer work. And these assumptions really inform almost all marketing strategy, because this is what, and mea culpa, I teach this to my students, you know, some of the basic concepts that we teach, worked very well back in the middle of the last century, but they haven’t really been substantially updated today. And so I felt like it was time to maybe try to do that. And I figured I would write a book to talk about it. And so I did.
Adrian Tennant: So, Michael, why are today’s consumers like chameleons?
Michael Solomon: Well, as, you know, a chameleon is a reptile that changes color to adapt to its environment. And so it’s very malleable. It adapts to what’s going on around it. It also apparently adapts to its own moods. So it’s kind of like those old mood rings we used to have – remember those? That changes color according to your mood. And so I thought that was a very good metaphor because today we really are like an animal that changes its colors very, very frequently. By color, I refer to our identities, our social identities, how we think about ourselves, the aspects of ourselves that we want people to know about. And so sociologists have long talked about this notion of having multiple selves. You know, when you’re in a business environment, that’s one part. When you’re playing the role of devoted parent or child, that’s another. And on and on. And much of consumer behavior is oriented around that. In other words, in every one of these identities, we have certain goals that we want to reach. One of the main functions of a good advertisement is to show people how your product or service will get them closer to that goal. So the chameleon metaphor reminds us that, unlike the old days, you know, back in the forties, fifties, sixties, where we talked about these very large, relatively unchanging blocks of people who could be counted upon to behave in pretty similar ways. Today, you can just throw that out the window because consumers are much more proactive. They’re looking for new identities, they’re looking to experiment and as they do that, So to speak, they change their colors because they alter the constellation of products and services that they choose to express that identity.
Adrian Tennant: In the book, you identify and discuss seven fundamental oppositions or dichotomies that are either headed toward obsolescence or already obsolete. The first of these focuses on a long-established foundation of market research, as well as media planning and audience segmentation, namely consumer demographics. Michael, why are they obsolete? And in what way should we rethink how we define consumer groups?
Michael Solomon: Yeah. So market segmentation, especially demographic segmentation as you know, is the bedrock of modern marketing strategy. And, it was actually invented back in the early part of last century by the good folks at general motors. And they were actually responding to, I think, in some way to Henry Ford’s assertion, that his customers could have a car in any color they wanted, as long as it was black. And I love to tell that story because that was the impetus for them to start to think about divisions, you know, Chevrolet versus Cadillac and so on, and largely based on income segmentation, but it reflected a – really, for the time – pioneering realization that not everybody in the market is the same. We’re not all identical. So let’s identify these large, homogeneous groups where we can message a group, say men in their fifties or women in their twenties who live in urban areas, what have you. And that approach worked very well for a long time when we lived in a broadcast kind of environment. You know, at one point we had in the US three and then later four television stations that basically reached everybody. And anyone listening to this knows that that is totally outmoded. Today, we have thousands of stations and thousands of interest groups. We have basically a fragmentation in our culture, as people are picking and choosing much more proactively, you know, “I like this.” “I’m going to sample that”, and so on. And what that means is that sure, it’s great to start with demographics. For a long time, we’ve advocated, layering over that psychographic kinds of data, psychological differences and so on. But I think even that doesn’t capture the nuances that we often pick up today. And so I think in many cases, it makes more sense to talk about so-called, “markets of one”, where, especially in the online world, we are able to customize and personalize the messages and the products to some degree that every individual gets. That’s a very, very powerful tool. And not only that, you can get trapped by thinking that just because you’ve assigned someone to a demographic category, you understand them. And so for example, one of the dichotomies is the old one of male versus female. And so, if you do that and you say, “well, I’m going to pick the male or I’m going to pick the female market.” Well, by definition, you are already leaving half of the population off the table because you’re not going to consider them. And so there are many, many examples of that when we relax those old dichotomies, that’s where we see the real market opportunities are hidden.
Adrian Tennant: We typically employed generational groupings in research, focusing on differences between the youngest cohort, Gen Z, and older groups: Gen Y, Gen X, and of course, Boomers. Michael, is this generational approach to marketing still useful?
Michael Solomon: Clearly, as a rule, young people are different from old people. But you can get hemmed in by this. I know that there are a lot of successful age-related marketing strategies out there, but you have to tread a little carefully because our cultural definitions of what it means to be a certain age are changing very rapidly. And so when we talk about older consumers, for example – and this is perhaps a separate topic, how, the advertising industry has largely overlooked people who are over 30 or 40, even though ironically, they have far more spending power than anybody else, or I should say we have – but there’s an example where we talk about cultural definitions of aging and what it means to be old. And today we all know that you know, if you’re in your forties, 50s, 60s, 70s, that means something very different than it did in our parents’ generation. And so we hear that “80 is the new 60”, “60 is the new 40”, et cetera. I don’t think that’s just a convenient way for older people to rationalize having another birthday. I think that there is a sea change in terms of what people will allow themselves to do. And so, again, these generational splits are useful to a point. They can become dysfunctional. So for example, back in my day, we had an expression, “Never trust anyone over 30.” And that was true until we all turned 30, you know, then it became a different story! But that implied that there was a big divide, for example, between let’s say children and their parents. And so the parents were almost kind of the enemy if you will. Today, that is definitely not the case and when you talk to a lot of younger consumers and I get this from my students all the time, they consider their parents often to be their best friends. They go shopping with their parents, more importantly for marketers. So there’s an example where that kind of, you know, “let’s put them in a category and assume that they have no contact with another age category or they don’t have any aspirations that they share with that category” that can be very dysfunctional.
Adrian Tennant: Let’s take a short break. We’ll be right back after these messages.
Marissa Martin: I’m Marissa Martin on Bigeye’s operations team. Every week, Bigeye’s podcast IN CLEAR FOCUS explores how consumer behaviors are evolving as a result of COVID-19 – from the influence of Generation Z, with its interest in social and environmental issues, to the fast-growing Hispanic market and the opportunity it presents. Bigeye interprets signals from primary and secondary research, identifying the trends driving consumer spending today and those that will have the greatest impact tomorrow. If you’d like to put Bigeye’s research-backed, data-driven insights to work for your brand, please contact us. Email email@example.com. Bigeye. Reaching the right people, in the right place, at the right time.
Adrian Tennant: Today’s shoppers are more informed, connected, and demanding than ever before.
Michael Solomon: A lot of people who never would have thought to order groceries online have seen the light and I guess they’re going to continue to do that.
Paige Garrett: When it comes to influencers’ recommendations and the way that you as a consumer feel connected to that influencer, it’s very similar to getting a recommendation from a family member or a friend.
Adrian Tennant: The widespread adoption of online shopping during the pandemic has heightened consumer expectations and challenged retailers to reimagine the customer experience, to entice people back to physical stores.
Dana Cassell: It’s clear that customer habits have solidified. And to me, that means the digital conversion funnel needs to be working well from top to bottom and your organization needs to know what levers to pull to convert better step to step.
Doug Stephens: E-commerce is growing exponentially faster on a percentage basis than physical retail. And so it’s quite likely that as early as 2033, we may find that 50 or more percent of our consumption is being performed online and or by subscription.
Adrian Tennant: RETAIL DISRUPTED: What US Shoppers Want From Brands Today – a new report from Bigeye, coming soon.
Adrian Tennant: Welcome back. I’m talking with Michael Solomon, consumer behavior expert and author of the book, The New Chameleons: How To Connect With Consumers Who Defy Categorization. A theme you explore in the book is the move away from a linear path to purchase. Michael, is the traditional marketing funnel dead? And if so, what’s replaced it?
Michael Solomon: It’s a very, very complicated ecosystem out there. For 50, 60, 70 years, we’ve thought about the decision-making process – and I mean this more generally, not just marketing – but how, in terms of how psychologists understand decision-making. We’ve looked at it in a linear fashion where there’s a fairly well-defined set of steps that decision-makers go through, starting with awareness of the problem, and then searching for a solution, searching in the environment, narrowing down the options, making a choice, and then evaluating the quality or the outcome of that choice. Furthermore, we usually think in terms of a solo decision-maker, who’s going through these steps largely alone. Well, neither of those things are happening today. In the first place, we’re not just getting information on demand when we need it. We’re being hit by a fire hose of information, that’s constantly coming at us. So today’s consumer is really “on” 24/7, whether or not they’re in active decision-making mode, they’re getting updates from their networks that are telling them, “Oh, you ought to check this out.” “I just bought this blush. It’s really terrific”, to “Take a look at this pair of basketball shoes”, what have you. And so it’s much more of a circular process where people are constantly scanning and getting updates from their network. I think of it as more of a hive mind. And, if any of your listeners are Star Trek fans, you may remember the borg: they were constantly assimilating other decision-makers and other types of people. And so that linear process really is not nearly as ubiquitous as it was. And furthermore, we’re clearly not solo decision-makers because so much of our efforts to evaluate products today are happening before the fact. So to me, one of the big ironies of the internet age is, you know, it’s supposed to make our lives so much simpler by sorting through all this information, giving us this information to begin with, but the reality is that we often are working harder to make even very simple decisions. And why is that? You know, Google refers to this as the ZMOT: the Zero Moment Of Truth. When are people finally committing to the purchase and what you find is that they tend to be committing much later in the process because they’re doing a lot of homework beforehand, you know. One of the trivia questions I love to give my students – I’ll share it with your audience – is we know that Google is the biggest search engine in the world. What’s the second biggest? And they’ll usually say something like Bing. Well, the answer is YouTube. And the reason for that I think is that in many cases, people are calling up videos of peers when they want to know, “I’m thinking about buying product X, what is your experience with it?” So we’re calling up YouTube videos, we’re reading reviews, we are querying our network on Facebook and other platforms until we finally get to the point where we’re taking a lot of their direction as we make a decision. And so ironically, by the time a customer enters a store and I mean, either offline or online, they often actually know what they’re going to buy already. They’re just there to see if they can get it at a good price. So for retailers, again, offline or online, who think that they’re going to make a sale because the customer walks in and they can do a sales pitch and steer them one way or the other, they may find that that’s actually a harder slog because the customer already has gone through so much of that process before. So it’s not like the old days where we have our five reliable steps of decision-making.
Adrian Tennant: Customers are often our best resources when it comes to new product development and of course research. But you feel that marketers need to look beyond the traditional twin pillars of quantitative and qualitative research if we want to gain fresh consumer insights, is that correct?
Michael Solomon: Well, it is, I think. One thing we need to do is, and when we’re seeing this to a large extent, a resurgence of qualitative research, which as you probably know, had its heyday back in the 1950s, but is coming back with a vengeance today. And that’s because quantitative research definitely has hugely important value to us when we’re looking at insights, but it paints a very broad, but superficial picture. And so it tells us the what, but it doesn’t tell us the why. When we talk about our customers, this is one of those dichotomies that I discuss at length in the book: producers versus consumers. For many companies, it’s almost like they’re in a castle and there’s a moat and they want to keep the consumers out of the castle until they’re ready to let down the drawbridge, meaning that the product is now perfect, so to speak. But we know that actually, this can be a huge mistake. Software developers were the first to tell us this because they’re always asking the users of the code to help them debug it. And so companies like Microsoft have known this little secret for years, they save millions of dollars a year in their insights budget because they recruit programmers for free, who are more than happy to tell them where they screwed up. And by continually revising and making those corrections, they come up with a better product, they save money, and they involve those customers as co-creators in the process. So it’s not enough just to ask customers whether or not they like what you’re selling. It can be very valuable to bring them in prior to that and say, “This is what we’re thinking about doing, what would you do here?” Rather than presenting them with a fait accompli and just asking them on a seven-point survey, whether they’re likely to buy it or not. So we really need to be, methodology agnostic. One thing I’ve seen over the years and perhaps you’ve seen this as well as that when people are well-trained in a methodology, they want to use it for everything. So they become what I call a hammer in search of a nail. And the reality is that depending on the particular context, on the needs that you have for your insights program, there may be other tools out there perhaps in addition to, or even instead of what you’re normally using. And so it’s often good to at least, for example, triangulate – all things equal, if you can get three readings, then if you get two data points that are wildly discrepant, you don’t know which is probably more accurate, but at least if you get three and two of them are together, it’s more likely that you’ve identified the correct direction.
Adrian Tennant: You also identify a move toward renting or leasing in preference to owning. Metro dwellers will be familiar with models like Zipcar, but what other categories do you see reflecting this change in consumer behavior?
Michael Solomon: You know, it’s been fascinating as the so-called “sharing economy” has exploded, you know, dampened a little bit with COVID, but I suspect it will come roaring back. It’s amazing to see what people aren’t exchanging with one another. And it’s hard to find things. I’ve seen that first of all, younger people in particular are not as interested in rites of passage, like owning a car. And so you see that the rate of 16- or 18-year-olds getting driver’s licenses in the US is going way, way down. Homeownership, obviously there are financial reasons for this, but a lot of people are preferring to rent rather than own. But even when we get into everyday products, when we talk about companies like Rent the Runway, for example, or a Bag Borrow, or Steal, they have introduced a new model where many younger people are not even owning stuff in their closet. They’re just leasing it. But it goes beyond that, you know? So for example, there are many sites where let’s say that you need a drill, when you think about a lot of the products that we buy, it’s very economically inefficient. So let’s say you buy a power drill. I don’t know why I’m using that example because my wife doesn’t allow me near power tools! But let’s say you’re buying a drill and let’s just say it costs a hundred dollars. The average homeowner is going to actually use that drill for what? One hour over the life of that drill? And you’re paying a hundred dollars for it. And that’s true for many of the things that we own. We only use them sporadically. And so you see all these peer-to-peer websites popping up where in fact, you can lease a power drill for $8. You use it for an hour. You give it back. You’ve just saved $92. And so there’s really almost no limit to what you can rent out. And of course, people are renting out their homes, obviously with Airbnb, et cetera. But even the everyday stuff. My daughter is in her early thirties, she tells me that she probably owns about a third of the clothing she wears to work – the rest of it is rented.
Adrian Tennant: Michael, which consumer behaviors that were accelerated during the pandemic, do you expect will be part of our new normal when COVID-19, hopefully, is less of a concern.
Michael Solomon: Well, the first and most obvious one is continued gravitation to online buying. That’s a no-brainer, I think. What happens in situations like this is that people who are normally frozen and we know that consumers tend to be really set in their ways – it can make you crazy if you’re a new brand, trying to break in just to get people to alter their routines. When something really major happens like this pandemic, that creates opportunities for lesser-known solutions to get a shot. And so for example, a lot of people who never would have thought to order groceries online have seen the light. My guess is they’re going to continue to do that. So that’s an easy one. Another one I think is automation. If I go into a bricks-and-mortar store and either I’m checking out with contactless checkout or in some cases being waited on by a robot which is starting to happen. Everything from Home Depot is experimenting with them on the sales floor. A big bank in Japan was one of the pioneers. They have a robot who waits on customers. His name is Pepper, for some reason. And people were kind of squeamish about that but now I guess they figured out that computers don’t get the same kind of virus that we do and so it’s a lot safer. And so I think retail automation is another example of something that will continue when we get into the new normal.
Adrian Tennant: Hmm. You obviously remain very connected with current and emerging marketing practices. During your research for The New Chameleons, were there any data points you came across that really surprised you or led to an insight that helped a client solve a strategic challenge?
Michael Solomon: That’s a great question. I think one of the biggest, aha moments for me was a few years ago. My business partner and I were working for a very large multinational industrial company. We got to know the head of R and D and he had a budget of about $100 million a year to spend on research – how about that? And what we learned was: how much was he spending on consumer research? And the answer was zero. Out of that $100 million, you know, it was all about building the better mousetrap, so to speak. And he was open enough to put us onto a task force. There were about 30 engineers and chemists on the task force. And the two of us who were both psychologists and what we saw is that – and I think their approach is very, very similar to a lot of other companies – they had what they called a “molecule forward” approach, which meant that they would task their R and D people to come up with a brand new, literally a brand new molecule. And then they would try to push it through the channel and figure out what might be the applications and who might buy this thing. And what we persuaded them to do was to take a step back and actually implement what we call a “market back” approach, which is really Marketing 101. What I tell my students all the time is that we start at the end and work backwards. We don’t just invent something and then see who wants it, we start by identifying an unmet need. And then we see if our capabilities align with that. I just took that for granted, you know, studying consumers for years and years. And what I discovered was that the engineers and scientists who made these products, for example, had never sat in on a focus group. And when they actually watched end consumers talk about these particular products that they made, it absolutely blew them away. That was the best thing they’d ever seen. They thought it was terrific because no one had ever put them in a position of thinking about the situation from the point of view of the end-user rather than, you know, some industrial capability in the channel. So, that led them to some strategic changes that resulted in creating some new applications for their chemicals that had never occurred to them before, because the engineers hadn’t thought of them but end consumers did. It really opened me up to understanding this gap between producers and consumers that we often have. And yet again, those consumers are the lifeblood of what we all do. If we don’t have them, if we don’t meet their needs, I don’t care what a great molecule you make, you’re out of business. And I wish more companies would adopt that philosophy.
Adrian Tennant: Michael, if IN CLEAR FOCUS, listeners would like to learn more about you, your books, articles, and speaking opportunities, where can they find you?
Michael Solomon: Well, they’re welcome to go to my website, which is MichaelSolomon.com. Or drop me an email, that’s very easy, Michael@MichaelSolomon.com. And of course, they can find my book, The New Chameleons: How To Connect With Consumers Who Defy Categorization, or other books at Amazon, or wherever you buy books. So I appreciate it, Adrian.
Adrian Tennant: Michael, thank you very much for being our guest this week on IN CLEAR FOCUS.
Michael Solomon: My pleasure, it’s been fun.
Adrian Tennant: You’ll find a transcript with links to the resources we discussed today on the IN CLEAR FOCUS page at Bigeyeagency.com under “Insights.” Just click on the button marked, “Podcast.” And if you enjoyed this episode, please consider following us on Apple Podcasts, Spotify, Google Podcasts, Amazon Music, Audible, YouTube, or wherever you listen to podcasts. Thank you for listening to IN CLEAR FOCUS, produced by Bigeye. I’ve been your host, Adrian Tennant. Until next week, goodbye.