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Demographics Fail

We forget, now that our reach is wide, that all purchasing is done by individuals.  Since we don’t know the individuals, and locating and selling to each and every one of them (us) is too expensive, we developed marketing to help us select the people, the individuals, most likely to purchase whatever we are selling.  We do that by carving up the population into demographic segments.  We do that by creating images and messages our testing tells us will appeal to those demographics.  As you noted, I am using the word “demographics” loosely – as it can just as easily mean single white 18-24 year-old men when selling video games, as it can mean general practitioners in the rural parts of beef exporting states when selling Lipitor.

759460300_63ca1caac9_mBut, why is this important?  Demographics provide us with statistically probable individuals.  Using these expected values are a great way for describing groups, but the value breaks down when talking about individuals.  We all know the story about the man who drowns crossing the river that is, on average, six inches deep.

The second failing in demographics is the pure focus on the individuals.  If the goal of sales and marketing is to convince individuals to take action (purchase, vote, visit, etc.), demographics alone does not provide the context under which we, as social animals, make decisions.

The number one factor that we as consumers use in making purchase decisions in consumer packaged goods, automotive, everything is our peers.  The younger we are, the better demographics reflect our peers, but that starts to break down rapidly once we leave school and enter the work force.

One place where we, as marketers, do a great job taking peer context into account is children’s toys.  Think about how they are advertised.  Is the latest and greatest StarBot 7000 action figure advertised with a static image of the figure with a voiceover talking about the high durability injection molded plastic construction and the die cast elbows capable of withstanding 30,000 hours of continuous play in -40°C conditions?  No, they show bunch of kids running around having a great time with the StarBot.  Children do not have long-standing deep networks of peers, so advertisers create a potential peer group in the advertisements.  Even as children get older, more media savvy, and create deeper relationships with their peers, all parents will recognize the plaintive cry of, “But, Billy has one!”

Bringing this back to decision making in general, if the number one factor in one’s decision process is our peers, then we are not making purchasing decisions on our own; we are making are making decisions as a group, and taking action as individuals.  We’re not talking Jungian collective unconscious or Orwellian groupthink, but rather recognizing that decisions of individuals are dependent upon, and create influence over, feedback from our network of peers.  This feedback mechanism, our network, determines the outcome of our decisions.  Networks make decisions.

At first blush, this sounds fatalistic, but once we add some of the subtlety to the idea, we will see that just because the network makes the decision, does not mean we can determine what the decision will be.  But first, let’s look at an example.

You are part of the merger team brought in to consolidate two bitter rival companies.  Your role is to get the line workers in the acquired company to adopt a process, which is completely new to them, from the buying company.  Naturally there is resistance.  Do you go an directly convince each and every of the 10,000 employees who will be doing the work, that the process is a good idea?  No, the network will resist the change.  First you do the ground work and win over the management team and get them to support (or at least not resist) the change.  Then you broadcast the message that the process will change through the company newsletter and break-room bulletin boards.  Then you hold a Town Hall meeting meeting to talk through the change and overcome grievances.  As you publicly convince those questioning the change, you build a small base of agreement in the network.  Once there is this undercurrent of possibility, you locate some influential individual line works and win them over.  You then broadcast the their success with the new process to their peers, etc.

In our idealist example, we have alternated our efforts between focus on individuals and broad based messaging.  In each step, we use the context of peers to push to the next level of agreement. We are using the actions of individuals to influence the decisions of the the network.  Or, in grammar school lingo: peer pressure.

In our example, we can see that network decision making is anything but fatalistic.  The outcome is dependent on many factors, including the initial disposition, the manner of feedback, the composition of the peer network, and the order of actions taken.  Imagine if any one of those steps in our example occurred in a different order.  Imagine how much harder it would have been to effect the change if we started off convincing individual line workers while the management was still opposed to the change.  This is not to say that it can’t work that way, but it certainly would be exceedingly more difficult.

So if this is the way that decisions are made, by networks, why aren’t we using this in marking today?  Two points: one, we are, but it’s usually accidental; and two, the data just had not been there.

I say we are using this idea of network decision to some small extent today, as that’s the way decisions are made, but we’re certainly not taking advantage of it.  When we talk about viral marketing campaigns, what we really mean are campaigns looking to use the network explicitly rather than as a happenstance.

The second piece is much more straight forward: until the rise of Facebook, MySpace, etc., the majority of our knowledge of social networks was at the micro-niche level, and rarely in a form we could access easily.  Now with these massive social networks and the growth of issue and demographic specific networks everywhere, the quantity and availability of data has reached a threshold where active study of the networks of our target markets is both feasible and profitable.

With this in mind, we now have the ability to locate and sell to influencers and not just demographics.  As childrens’ toys manufacturers sell to children, and not the parents who actually hold the wallets; just as a quarterback rarely scores a touchdown – these individuals have huge influence on the outcome.  Demographics tell us to target the parents, to target the running backs, which as we have seen only half right.  Until we can use networks to determine who the quarterbacks are, we’re going to have a hard time getting the ball into the hands of those who reach the end zone.

Some alternate metaphors to chew on:

  • Conductor of an orchestra: the only member who does not make a sound.
  • Director of a play: is not on stage.
  • Executive Chef: makes very little of the food in a restaurant.
  • Trend setter: can only wear one pair of shoes at a time.

[Photo Credit: FadderUri]

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{ 1 comment… add one }

  • Chris Moran February 2, 2009, 9:43 pm

    Nice writing style. Looking forward to reading more from you.

    Chris Moran