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The Case Against Heavy Consumers

2010 September 29

There is a popular marketing mantra that you should always target high-volume, high-value consumers.  Why waste time on marginal, low profit prospects when you can go after the big fish.  That’s where the real money is!

However, there is a problem with that argument.  Different brands in different situations have different needs.  Moreover, since marketing contexts tend to be fluid, targeting needs to be flexible and adaptive, not subservient to rigid rules.

While the heavy consumer argument is valid and carries weight, there are, in fact, some good reasons to look outside heavy consumers when considering your marketing plan.

The 80/20 Rule

The Pareto Principle, which holds that roughly 80% of sales will come from 20% of your client base, is the basis of the heavy consumer argument.  Not only does it provide a strong conceptual foundation, it has the added attraction of being true (or at least true enough).

For many brands, the thinking holds.  There is often great merit in the notion of targeting heavy consumers.  They are usually distinctive, brand loyal and, in fact, worth far more than ordinary consumers.  Often, heavy consumers can be worth 20 times the average consumer.  If you can win them, they are highly profitable.

Furthermore, they usually aren’t very hard to reach.   Because they share characteristics with each other that aren’t common to the population at large, targeting heavy consumers will often lead to a focused, effective marketing plan.

Except, of course, when it doesn’t.

Disruptive Innovation

In 1997, Clayton Christensen published The Innovator’s Dilemma and introduced the concept of disruptive innovation, based on his research about good companies that fail.  What he found was that paragons don’t stumble because they violate management principles, rather they often run into trouble by applying them too strictly.

Tim Kastelle, in his excellent innovation blog, offers a classic case in his telling of the Xerox story.  Xerox rose to prominence by targeting heavy consumers, large corporations who needed a lot of copying done.  By 1975, they had an astounding 75% of the copier market and had a strangle hold on the best customers.

Then along came Canon and Ricoh.  They didn’t try to take away Xerox’s customers, at least not at first.  Instead, they used seemingly out of date technology to make copiers so cheap that all businesses could afford them.

They weren’t targeting heavy copier users, but rather companies that didn’t need or couldn’t afford the state of the art.  In effect, they were targeting non-consumers with an inferior, albeit cheaper, product.  Within a decade, Xerox’s market share dropped to 40% and, as the upstarts migrated upstream, went down from there.

No market is set in stone and that’s the biggest problem with heavy consumers.  They represent the past.  Markets change when light and non-consumers get into the game.

Brand Switchers

A less dramatic example of potentially disruptive consumers are brand switchers.  These are usually light consumers who are often price sensitive.  They will alternate between a few brands in search of getting a better deal and are extremely responsive to value promotions.

Like heavy consumers, brand switchers tend to be a distinctive lot.  Moreover, they are also apt to be vastly different from heavy consumers, which makes targeting switchers ideal for a challenger brand who wants to avoid retaliation from the market leader.

A switcher strategy, therefore, is much like a disruptive strategy.  It’s difficult for an incumbent to counter because, upon doing so, they would reduce their own profitability.

Moreover, switchers can be transformed into brand loyalists over time as their economic and cultural situation evolves, so the strategy is not only immediately practical, but potentially long term viable.

Brand Advocates and Brand Detractors

With the rise of social media, consumers no longer interact with your brand only through purchase, but also by what they say about it.  This was always the case somewhat, but now ordinary people can broadcast their views to thousands or even millions.  A difference in degree is a difference in kind and therefore this new reality requires a new approach.

Rishad Tobaccowala makes the point in a recent post that often we confuse heavy influencers with heavy users when the opposite is often as true.  In other words, we need to target the people who influence consumption as much as the consumers themselves.  That includes brand detractors as well as  brand advocates.

Who influences?  As I wrote in a previous post about big seed marketing, influence happens by receptive people influencing other receptive people and receptivity is much different than product consumption.  It has to do with media consumption (especially, but not only, social media) and aspirations much more than economics.

So again, if you’re dead set on focusing your efforts to heavy consumers, then you are going to miss out on some big opportunities (and in the case of detractors, expose yourself to serious peril).

Another Useless Rule

As I argued before, marketing rules are not only useless, but dangerous.  They are, in effect, an excuse for not thinking and often serve to end serious discussion rather than promote it.  The notion that we should always target heavy consumers is just such a case.

By using heavy consumers as a default starting point, you forgo the opportunity to ask important questions such as: How can we disrupt the market?  Where will consumption be 5 or 10 years from now?  What do non-consumers say about our brand?

While nobody doubts the value of heavy consumers, they shouldn’t be pursued blindly.  As with any strategic exercise, targeting should be pursued not with prejudice, but with an open-mind.  Rules are formed by consensus and at some point, the conventional view becomes seriously wrong and that is when the truly enormous opportunities arise.

– Greg

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