I recently had the pleasure of giving a presentation to an audience of business leaders in Lithuania as part of a Seminar on “The Keys to Success to Enter the U.S. Market”, offered by our company, Global Commerce Education, in partnership with AmCham Lithuania, the Baltic American Chamber of Commerce and Enterprise Lithuania. My talk was about the cultural differences between the U.S. and Lithuania in the context of a strategy to enter the U.S. market. As our company provides training on this topic I’m often called upon to present on this and explain the specificity of the market especially as it differs from that of the attendees.
There is one particular aspect of the U.S. customer landscape that is sometimes difficult to appreciate and it has to do with segmentation. The need to identify and target a very specific, narrow segment of the customer population is absolutely critical when entering the U.S. market. Clearly segmentation is an aspect of marketing strategy that has its place in any country. However, for a number of reasons, it is of vital importance when planning for the US market. The first reason is the sheer size of the country, which has a large population spread over a large and varied territory. It comprises many different States and different regions which each have their particular culture, industries, ethnic groups and socio-economic strata. For example, preparing to sell a steak sauce to someone from the northeast region and to someone in the Southwest is going to be very different. Of course, many products may adjust just as well all over the country (think ketchup!). But it is important to understand whether that is the case for your own product or whether your customers will have different requirements and preferences in different areas of the country.
Another reason why segmentation is key in the US is that the population has become quite demanding in terms of personalization and expect products to be adapted to their unique needs. The launch of an increasing number of services that tailor their offerings to an individual’s specific needs illustrates that trend. For example, you can subscribe to a service that will send a package every month with an assortment of pieces of clothing that have been chosen especially for you not only for your size and body type but based on a long and detailed survey of all your likes and preferences. A friend of mine has tried it and is delighted by the selection every time, even liking pieces that she would have never picked up in a store. These trends have resulted in a consumer population that is now expecting an increasingly high level of customization and will have a lukewarm response to more generic products.
These reasons make it quite clear that segmentation is needed in the US and that is a concept that is a fairly easy to grasp. However, when we speak with business leaders from different countries, especially countries with a relatively small population, we find that although the principle is clear, the extent of the segmentation needed, the narrowness of the target segment is really hard to imagine. As mentioned earlier the 1st level of segmentation that could be considered is geographic, by region or by States, maybe even by city. But that is only the tip of the iceberg. Traditionally ethnic and socio-economic differences would dictate the next level of segmentation. Again, we now need to go deeper. To do that we need to understand that many Americans tend to have very specific narrow interests and thanks to the large population, they are able to find other individuals just like them and band together to pursue those interests even more deeply. One has just to look at our TV programming with hundreds of channels; one only runs British comedy shows, one is dedicated to knitting… and of course there are several for different aspects of each possible sport. Let me give you an example that is close to home: my husband happens to enjoy creating elaborate models of monsters from old Japanese science fiction movies (yes, really). Not any models, not any movies, not even any type of science fiction movie… Well, he now has a large group of friends who share this passion and even attend multi-day conventions around the country. They buy t-shirts, stickers and all sorts of memorabilia.
The importance of a segmentation strategy has to do first with finding where your target audience can be reached, which is much easier when it is narrowly defined, and second, with your messaging to that audience. Having chosen this small group of consumers you will be able to really study them in depth to understand their psychological motivations, what drives them from an emotional standpoint and what needs they have. You will become an expert at satisfying their needs and tailoring to their preferences in a way that no other competitor does. Your message to them will be crafted in such a way that it will resonate strongly and they will see you as an expert, a thought leader in that particular subject that they are so very fond of. And once you have become the specialist in their eyes you will be differentiated in the market, your product or service will have a following of loyal customers and even advocates, and you may be able to command a premium price.
Of course, not all products lend themselves to this particular strategy but it is important to understand it and consider it in order to more easily and effectively enter the U.S. market, particularly as a foreign company without an established reputation.