Ryan Hamilton is an Associate Professor of Marketing at Emory University and co-author of the book “The Growth Dilemma”.
For most mature brands today, the growth playbook looks pretty much identical: find potential first-time buyers who look like the customers you already have amongst the pool of new category entrants, or try to penetrate an adjacent market where there may be enough latent demand to be worth mining. Going directly after competitive users (usually through price promotions) is always an option as well, but those customers are hard to snatch away if they’re brand loyalists, or if they are persuadable, likely to be just bargain hunters.
That typical playbook is known as “Segmentation, Targeting and Positioning”, or STP for short. Figure out your “Ideal Customer Profile”; partition the total addressable market into distinct demographic or psychographic segments; and then spend as much as you can afford capturing as big a share of the target population as possible. When that strategy runs low on fuel – growth is always constrained by category size and the inevitable counteroffensives from competing brands – marketers can just tack over to the alternate (albeit riskier) path to growth: broaden the tent by stretching the value proposition, maybe even refurbishing the brand image, to draw in segments from outside the core customer base.
Where brand strategy often goes awry – sometimes horribly awry – is taking wild swings at marginal segments who may otherwise be indifferent to the category. Driven by the insatiable demand for faster growth, marketers will go to any lengths to hit their numbers, even if that means retrofitting the brand identity to court atypical buyers. That sudden positioning change can of course sow confusion amongst longtime customers and possibly alienate them. “That’s not what I signed up for”, they think, or “That’s not who I am”. Next thing you know, they’ve abandoned the brand in droves.
Certainly segmentation ought to drive strategy. People do differ, sometimes dramatically, in their reasons for choosing a particular brand. Marketers do have to tailor their strategies accordingly, whether through line extensions, new product development, the creation of flanker brands or simply variable positioning. The problem is that marketers often go about it with blinkers on. Taking existing customers for granted is all too common – so is being oblivious to newly formed market segments looking for something different – so is catering to one segment’s needs at the expense of another. But there is another, even more pernicious blind spot, according to Emory University’s Ryan Hamilton: ignoring the potential for conflict between customer segments, leading to friction that can fracture a brand’s identity and suppress growth.
Managing those segment relationships is supremely important to brand health, Hamilton says, whose book “The Growth Dilemma” provides a framework for frictionless growth. In the book he and his co-author Annie Wilson explain why customers clash; describe the different kinds of conflict that can occur; and suggest ways to minimize potential friction, knowing how segments differ in their needs, values, perceptions and expectations, thereby removing possible obstacles to growth.
Ryan is a recognized expert in consumer behaviour, with a special interest in the psychology of brands and pricing, and the co-host of the podcast “The Intuitive Customer” along with Colin Shaw. His undergraduate degree, however, was in applied physics, so I started by asking Ryan how he made the leap into marketing.
Ryan Hamilton (RH):: I started off my undergraduate career as a communications major. I still maintained a communications minor. I found it a very interesting subject, but I was very idealistic when I was younger and so I wanted to, even though I found the subject interesting, communications, and arguably I found my way back there eventually through marketing. I wanted to push myself and so I’m not naturally a math guy, I found physics very interesting though, so I just, I bled my way through those classes man, they were, they were hard. But I did feel like I had accomplished something at the end of it. I felt like I, my brain was in a better place after my undergrad than it was before. I don’t know that I would have the, the energy or the patience to do it again at this stage of my life, but I’m glad that I did. And ultimately it’s kind of a branding exercise. Nobody questions that I’m a smart person because I can just show them that credential and there you go.
Stephen Shaw (SS):: So true. But I still, I’m still missing the bridge between communications and physics, getting there.