As Malcolm Gladwell details in my absolute favourite TED talks presentation, “Choice, Happiness and Spaghetti Sauce”, customer segments in many industries are often too broadly defined in terms of consumer preferences. Through an analysis of the works of Howard Moskowitz , Gladwell details a powerful market segmentation method, known as horizontal segmentation. Effectively, horizontal segmentation is the basic understanding that desirable variety for target consumers has potential to be sufficiently more profitable than a ‘one-size fits all’ type of product. As well, not even the consumer’s themselves has a realistic understanding of their ideal preferences for certain goods. Using the beverage industry for an example, Moskowitz discovered that they key to success for a company like Pepsi is to develop more flavours of Pepsi. And using the Spaghetti Sauce market as an example, it’s detailed that extra-chunky tomato sauce is preferred by 1/3 of U.S consumers, and, at the time of the example (1980s), no such extra-chunky tomato sauce product retailed. Gladwell makes one final statement I hold very highly for both business and social practices: “by embracing the diversity of human beings, you will find a surer way to true happiness”.
Image: Malcolm Gladwell