Quantitative research approach to understanding how consumers adopt technology related products and services

OTOi, Marketing Services Team | One To One Interactive
May 30, 2003

Introduction

Those of you who have worked with One to One Interactive know that we encourage customer-focused solutions when developing Internet marketing strategies. By devoting some time up front to really understanding the segmentation of your target audience, it is that much easier to develop compelling online programs for them. Our eMarketing Optimization process focuses on segmenting a market based on behavior and potential value. This approach is distinct and a better approach to purely psychographic or demographic segmentation because behavior is quantifiable and measurable and segmenting based on potential value will yield higher marketing ROI. Nevertheless, psychographic and demographic segmentation are helpful in targeting messages and developing communications programs that reach the desired prospect. We think Forrester's Technographics segmentation is particularly useful in this area.

Companies that sell technology-focused products and services, whether it's the latest mobile handset or online banking, have a unique option available to them when it comes time to define target audience segments: Forrester Research's Technographics. Forrester developed this segmentation model to help identify the unique characteristics of early- versus late-stage adopters of new technology, as well as their primary motivations for using it.

The segmentation model is derived using three critical dimensions:

1. A division of the U.S. population based on "technology optimism" (i.e., are people convinced that technology will enhance their lifestyles, or are they skeptical of/intimidated by new technologies?)
   
2. The consumer's ability to act on his/her technology compulsions (i.e., if the consumer is optimistic about technology, can he/she afford to follow through on an impulse and make a purchase?)
   
3. A qualitative suggestion as to why a consumer may choose one technology over another, and how he/she may use it. Using factor analysis applied to survey data, Forrester has uncovered three motivational variables for consumers: career, family, and entertainment. Each of these factors may influence when and how a consumer will adopt technology products/services.

Technographic Segments

Using the above dimensions, Forrester identified 10 segments (or clusters) for the U.S. population. Each segment exhibits unique behaviors and purchase patterns ranging from the successful, career-driven "Fast Forwards" to the techno phobic "Sidelined Citizens."



The top row represents the "Early Adopters" — people who enjoy technology, can afford to buy it, and tend to have the "latest and greatest" models. It is important to note that not all Early Adopters will use technology in the same way; use is generally dictated by their primary motivations for purchasing it. Therefore, Forrester has further segmented the Early Adopters into three motivation-based groups, represented by the columns. These motivational segments help further define the audience by defining what kinds of technology they will use. For example, because Mouse Potatoes are driven by a dedication to entertainment, they are more than twice as likely to own a DVD player as the average person, and are the most broadband-dependent segment of them all.

The second row consists of the "Fast Followers" — people eager to jump on the technology bandwagon, but forced to wait until price points come down to a level they can afford. Again, this group has been further defined based on their purchase motivations. For example, Digital Hopefuls who are focused on their families may be in the top ranks of digital camera ownership, but they likely have last year's 2-megapixel Epson instead of this year's 4-megapixel Minolta.

The third row is appropriately called "Cautious Onlookers." These people have the money to buy the latest technologies but are initially skeptical of its practical value. They don't read about technology or swap stories with their friends. Instead, they wait until they've received positive feedback from their friends or seen a buzz in the pages of Fortune or Newsweek before they adopt a technology.

The last row is composed of just one segment, the "Sidelined Citizens," or low-income technology pessimists. Since this group is skeptical of technology and does not have the income to afford it, technology is the farthest thing from their purchasing decisions. They generally wait until "new" technology becomes "old" technology before adopting it. Just as the telephone went from a high-tech gadget for the affluent to something that 96% of all homes have, other technologies have to lose their tech edge before significant numbers of Sidelined Citizens jump aboard.

Applying Technographics

So how do you apply Technographics to your business?

The first thing you should consider is how your product or service will diffuse across segments within the marketplace. This will enable you to determine which segments to target first, as well as what treatment, advertising, and messaging strategy to apply.

Let's take the example of a mobile camera phone manufacturer. The two segments that would respond positively to mobile camera phones would most likely be New Age Nurturers and Mouse Potatoes. The primary motivation for New Age Nurturers is their families, and a mobile camera phone can certainly be used to stay in touch, preserve family moments, or send pictures of newborns to grandparents. On the other hand, the primary driver for Mouse Potatoes is entertainment value. They will likely be first adopters of mobile camera phones because they are cool, versatile, and sleek.

Naturally, each of these segments would require a different creative and messaging pitch. Advertising to the New Age Nurturer would require a softer touch with an emphasis on family reunions, travels, and staying in touch. On the other hand, advertising to the Mouse Potatoes would require a sharper, edgier approach, with an emphasis on the "cool" factor — perhaps the versatility of editing pictures with Photoshop, and flashy features like optical zoom.

Now that we have a general idea as to how to tailor our message for the respective segments, the question remains as to where to target them. For each of the Technographics segments, one can also drill down in terms of demographics and psychographics to develop the media strategy. For example, New Age Nurturers may be described as follows:

• Slightly older and significantly more educated
• Established and experienced professionals earning $76K a year
• Possessing a voracious appetite for news and information that affects their health, lifestyle, and families
• Tend to shop at JC Penny and Target rather than Macy's and The Limited
• Not natural leaders, they aren't the first to introduce themselves at parties
• They go out to eat less frequently and have less interest in concerts

Other Considerations

One of the drawbacks of the Technographics model is that it attempts to bucket the U.S. population into only 10 clusters. Because of this, the demographic and psychographic profile of each segment may not be as precise as one would want when developing a highly targeted Internet marketing strategy. For this reason, One to One often recommends scoring the data set through Prizm. Prizm is a lifestyle segmentation model that was developed by Claritas Corporation, which is owned by Nielsen NetRatings and Nielsen Media Research. Prizm's segmentation model operates on the premise that people with similar demographic and lifestyle characteristics tend to live together. Instead of 10 clusters, Prizm segments the entire U.S population into 62 clusters. There are three distinct advantages to having the data set scored through Prizm:

• It enables validation of the Technographics findings
• It enables a more refined treatment strategy, since the demographic and psychographic profiles are more precise
• We can identify the exact Web behavior of each cluster, since Nielsen classifies each of its panelists by Prizm cluster.

Conclusion

Segmentation is key step in One to One Interactive's eMarketing Optimization process, and we have seen great success using the above approach with our clients. Utilizing Forrester's segmentation model, marketers can identify the appropriate target segments for a particular product or service offering, and use the underlying demographic and lifestyle characteristics to create effective creative and messaging strategies. With the addition of Prizm scoring, marketers can drill down on specific demographic and lifestyle characteristics, which aide more precise targeting of customers on the Internet. Together, these two sources can provide powerful insights into your online audience, which is essential to developing effective marketing plans.

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