Happy New Year! It’s that time of year again when people – and companies alike – begin the process of looking back to the past, and more importantly forward to the coming year. We take the time to reflect on the changes we need to make to ensure our unmitigated success in the New Year. For many this year, our business ‘resolutions’ have centered around ‘doing more with less’ as we seek to address the dueling realities of an unstable economic environment and shareholder demands for improved revenue and profit performance.

Enter an opportunity for micro-targeting for all. Micro-targeting has long been relegated to the financial services industry (i.e. those with rigorous statistical models, and reams of customer data based on direct relationships), or niche brands who have a small customer set and know exactly where they live, work and play...and thus how to find and target them. However, with the rise of entirely new technologies/ mediums (e.g. Facebook, Twitter, etc.) and consumer research capabilities, that world is changing...and the opportunities to do more with less through micro-targeting are no longer only for financial services and niche brands...they have reached the world of CPG and retail in a very real way.

The Cambridge Group has had the opportunity to assist a wide range of financial services clients in micro-targeting through the development of proprietary predictive models capable of classifying consumers into Demand Segments. However, TCG has also been engaged by an increasing number of mainstream CPG companies to develop an unparalleled understanding of consumers in the category, specifically who has the profit and what they demand. Clients consistently seek TCG’s guidance in unleashing the power of these insights through the ever expanding micro-targeting opportunities that focused media buys, targeted online advertising/ product placements, Facebook, Twitter and other new technologies offer.

We have only to look to the actions of CPG giant P&G – shifting spending from mass media buys to micro-targeting friendly PR and internet buys – to see that with increased channel fragmentation and channel blurring, companies are realizing they must be more precise than ever at targeting their most profitable customers.

For example, consider a refrigerated-meat manufacturer, who by leveraging TCG’s proprietary Demand LandscapeTM, Customer Demand AnalysisTM and Demand Insight GroupTM approaches was able to develop a fuller, more precise understanding of its true core of profitable customers – teenage boys and their moms. As they discovered, their heaviest users were not summertime backyard grillers, as they’d thought, but households with teenage boys who eat hot dogs for after school snacks (oftentimes as much as 5 pounds in a month). The team used its refined understanding of the core buyers and their needs to boost its usage among heavy users, and build awareness among teens. It withdrew most of its mass media spending and focused more on micro-marketing efforts – such as sponsoring the online Major League Gaming – one of the key places these teens could be found – as a way of boosting its awareness among youths. The revised marketing actions combined with targeted product/ packaging optimization drove growth of more than 15% in two years, enabling the brand to achieve the number one position in the category while simultaneously growing its household penetration three points, a major victory. (Interested in learning more about this case? See our HBR blog at: http://blogs.harvardbusiness.org/cs/2009/11/surprising_insights_from_super.html) For a consumer durables client that had suffered almost 5 years of flat to declining growth, our micro-targeting approach increased sales 8% in year one and an additional 9% in year two. These results were achieved by re-allocating existing spend into more precise micro-targeting efforts rather than adding spend.

Increasingly, CPG clients are asking us how to get started with micro-targeting. We recommend five key steps:

1. Determine what your objectives are. Gain agreement as to how the micro-targeting effort will be evaluated. Is it aimed at increasing awareness, trial, sales or some other goal?
2. Build a detailed fact base about your target segment(s). You must be very clear on who you want to reach. Typically we are trying to engage the most profitable segments of consumers for our clients. But in some cases the effort might be to reach lapsed users, competitive users or some other group
3. Create a compelling message for the target. Once you’ve successfully reached your target you have to have something of interest for them to engage in or you risk losing them despite all of the work to reach them
4. Determine where best to reach the target. Where will they be most interested and receptive to your message?
5. Measure results and improve. Track your results and take corrective actions or drive improvements based on learnings and results

To be truly successful, micro-targeting requires an unparalleled understanding of your target, profitable demand. Truly, The Cambridge Group is second to none in the development of such Demand Insights, and has the creativity and the know-how to convert these insights into actionable strategies on the ground for you and your brand. If you are interested in doing more to connect with your target consumers, please consider visiting The Cambridge Group at www.thecambridgegroup.com, or contacting us directly at 312-425-3600, to learn more about effective micro-targeting strategies grounded in Demand Strategy.