Segmentation is the starting point for enterprises to operate in the market. When doing business, enterprises must first segment (Segment) the market. Segmentation is about identifying consumer differences, because different consumers have different needs for a product. Therefore, based on the differences in needs among different consumer groups, a product market can be divided into multiple smaller markets.

Secondly, enterprises need to analyze and determine which segment or segments offer the greatest market opportunities, and select that segment as their target market (Target). Consumers in that segment are their target consumers, and enterprises must study and gain insights into their needs and pain points.

Finally, enterprises develop the market for their chosen target market, determine the core value the product brings to consumers, clarify the product positioning (Position), and design corresponding pricing strategies, select distribution channels, and implement communication and promotion.

Dr. Cao Hu, Global Partner and President of China at Kotler Consulting Group (KMG), once said: "In marketing theory, only three things are close to theory—market segmentation, consumer behavior, and customer lifetime value." This shows the importance of segmentation.

Enterprises must first segment when doing business, because no enterprise can do business with everyone in the market. Of course, this is not absolute.

For example, forty years ago, in an era of scarce goods and insufficient market competition, an enterprise could indeed do business with everyone;

Later, as more enterprises produced similar products, enterprises had to choose to focus on a specific market segment, such as only doing business with women;

Later still, they might need to further focus on the business of white-collar female workers;

And now, a startup is likely to need to narrow its audience further, such as being completely vertical to the independent women's market in first- and second-tier cities.

Another example is from the industry perspective.

A shampoo company could sell its products to everyone forty years ago;

Later, it had to choose to make differentiated products, such as anti-dandruff shampoo (Head & Shoulders), smoothing shampoo (Rejoice), hair repair shampoo (Pantene), and styling shampoo (VS Sassoon), dividing shampoo into small categories;

Then, it focused on men's anti-dandruff shampoo (Clear);

Now, it must further verticalize to scalp care men's anti-dandruff shampoo, selenium-containing anti-dandruff shampoo, and anti-dandruff shampoo for different hair types such as oily and dry.

Of course, category segmentation is essentially also audience segmentation. It is precisely because different consumers have vastly different needs and preferences that differentiated functional products and segmented categories emerge.

With the continuous development and prosperity of the market economy, more and more enterprises produce similar products, competition becomes increasingly fierce, products and categories continue to differentiate, and consumer needs also continue to differentiate.

For today's enterprises, segmentation is a basic prerequisite, so that enterprises can strategically focus, create differentiated value, and build competitive advantages.

People Group by People

How to do audience segmentation? The traditional approach is to analyze consumer differences, including demographic factors, psychological characteristics, and industry differences, and screen out a group of people with common needs from all consumers.

For example, we often say that Douyin has 8 major audiences: GenZ, new sharp white-collar, urban blue-collar, refined mothers, senior middle class, urban silver-haired, small-town youth, and small-town middle-aged and elderly.

Based on Douyin's definition and description of these 8 major audiences, I have drawn them on a chart. As shown in the figure, Douyin uses age, city level, consumption level, etc. as benchmarks to divide over 1 billion Douyin users into 8 types of people. These dimensions are what we often call demographic factors.

Another example is Xiaohongshu's release of the "20 Lifestyle People White Paper" in April this year, which divides people into 20 groups based on lifestyle segments such as home life, parenting and learning, and fashion attitudes. For example, the parenting and learning group is further divided into 4 types: relaxed parents, scientific parenting party, companion-style parents, and progressive parents.

It can be seen that Xiaohongshu uses lifestyle, interests, and values as benchmarks for audience segmentation.

These practices are what people often call "people group by people."

We believe that a group of people who are similar or identical in age, gender, income, city level, family structure, lifestyle, interests, and values will have commonalities in product needs and brand preferences. Enterprises base their business on the commonalities of this segmented audience.

Including what we usually call "user persona," giving a brand's user persona is actually describing the common demographic, cultural, psychological, and behavioral characteristics of this group of users. Behavioral characteristics refer to dividing users into heavy users, light users, edge users, loyal users, general users, potential users, etc., based on consumers' behavior towards brand contact and purchase. It involves user relationship management, not audience segmentation, so I won't elaborate here.

But here's the problem.

With the development of the times, material abundance, cultural maturity, and technological advancement, people's lifestyles are becoming more and more diverse; each generation of young people increasingly values self, pursues individuality, and desires to be different. In an era that promotes individuality, people have less and less in common.

Years ago, hundreds of millions of people across the country had similar lifestyles. Since the differentiation began with the 70s and 80s generations, now two post-00s consumers may have nothing in common except similar age. Today, there are many brands targeting post-00s. How do you do business with this audience? The foundation of audience segmentation is almost gone.

To find commonalities among people, enterprises must segment the audience finely enough. But extreme segmentation leads to a narrow market, limiting enterprise scale, just as many niche professional brands find it hard to grow big.

So, how should we find consumer commonalities? The answer is scenes.

People Group by Scene

The previous article mentioned that people live in scenes; find the scene, find the people. In different scenes, even the same consumer will have different needs.

This article adds one more sentence: In the same scene, even different consumers will have the same needs.

It sounds a bit like a tongue twister. It doesn't matter; let me explain why different groups have commonalities in the same scene. There are two main reasons.

First, scenes are hard boundaries.

Scenes occur in the specific time and space of people's lives, with hard constraints of real conditions for consumers. When consumers make purchase decisions, they must first consider the constraints of the scene, and only then personal preferences and brand preferences.

As Mr. Liu Chunxiong said: "The first variable that determines user choice is the hard constraint of the scene. Within the boundaries of hard constraints, consumers have freedom of choice."

For example, take Nutri-Express mentioned in the previous article. For breakfast, personal tastes vary greatly; some like sweet, some salty, some prefer soy milk and fried dough sticks, some coffee and sandwiches, some pursue healthy low-calorie, some prefer happy carbs.

But in the scene of a working person's weekday breakfast, the hard boundary is that it must be fast, otherwise you won't make it to work on time, so options that aren't fast enough are eliminated.

Another example is the self-heating rice and self-heating hot pot that became popular a few years ago. It initially focused on the "single-person meal" scene, with labels like convenience, satisfying cravings, stay-at-home economy, and lazy economy, and once surpassed fast food delivery in consumer minds. But it didn't last long; it was abandoned by users due to low cost-performance and the ingredient list being "technology and hard work."

However, in scenes like camping, outdoor activities, and self-driving trips, self-heating food is still an excellent choice for meals. Because in these specific scenes, consumers want to eat something hot, and the options are extremely limited.

Another case I recently learned about is Ruihu Thermos Cup. Its biggest selling point is the threadless design, with a lid that can be opened and closed with one hand, without needing both hands to twist it off, which is particularly friendly and safe for drivers.

Therefore, the brand uses the scene of drinking water while driving extensively on Douyin for seeding, and the conversion effect is very good. Products that can be used while driving are also a hard boundary.

Second, scenes are soft constraints.

People are social animals, living in the public space of groups. Many scenes in our lives have social attributes, regulating individual behavior and words, and even many scenes have clear social etiquette requirements. Scenes are a group norm for individuals, a soft constraint.

For example, consider dressing.

Everyone's aesthetics and dressing style vary greatly, but in many industries and companies, during work hours, company meetings, or business entertainment, employees are required to wear suits.

Another example: a 25-year-old county civil servant and a 34-year-old programmer at a top tech company may have no similarities in values, interests, and lifestyle. But when they hold weddings, they both choose to buy or tailor suits.

So, for a men's suit brand, the traditional approach would be to target the business segment, such as middle and senior managers in enterprises and institutions, financial professionals, lawyers, etc.

But today, with the global trend of informal dressing, business men don't wear suits every day; their closets might be full of Arc'teryx and Descente.

If this suit brand wants to expand its business scale and capture a more precise target audience, it should actually focus on life scenes such as weddings, company annual meetings, business entertainment, and expand to men's blind date attire, travel suits, etc. As long as consumers have these scenes in their lives, regardless of whether they are business elites, they have a high probability of buying suits.

Consumers have the right to choose independently, but they are often limited by real conditions and social group norms. Scenes greatly influence consumer behavior, with both hard boundaries of time and space and soft constraints of social consensus and social etiquette.

So scenes can unify consumers' vastly different personalities, causing consumers with different values, styles, aesthetics, and demographic characteristics to have common needs in the same scene.

The value of scenes lies in finding commonalities among different groups; the commonality of scenes transcends group differences. As long as there is commonality in life scenes, it means there is commonality in their needs and purchasing behavior, which is the most direct value for marketing.

This involves a new concept—"people group by scene."

It has two meanings: first, consumers have different needs in different scenes, so brands entering different life scenes can reach different segmented groups. Scenes divide group circles and lifestyles.

Second, different consumers have common needs in the same scene, so as long as a brand captures this big scene, it can gather different segmented groups to the greatest extent.

Scenes both divide and unite people; scenes can define target audiences. Let's illustrate with two cases.

First, Jiangxiaobai.

When mentioning Jiangxiaobai, many people think it is "positioned" as "young people's baijiu." But do young people have to drink Jiangxiaobai, and middle-aged people have to drink Moutai and Guojiao? The key factor here is the scene.

Different groups have different lifestyles, so their life scenes are also different. Where are the typical drinking scenes for young people? Probably small gatherings with a few close friends, or having a drink alone after work to relax.

Young people have just entered the workplace, haven't risen to middle or senior positions, and have insufficient social resources, so they don't have many business entertainment occasions (which is why some liquor companies believe that young people will drink baijiu when they get older).

In the scene of daily small gatherings and casual drinking, there are no strict rules; just drink your favorite brand.

In contrast, the typical drinking scene for middle-aged people is business entertainment. As mentioned earlier, business and government banquets are formal social occasions with soft constraints.

In this scene, choosing alcohol cannot only consider personal taste, but must take into account everyone's acceptance and feelings, the host's identity, the guests' face, and the rules of the table. So there are many considerations about what type of alcohol, what brand, and what price and grade.

Therefore, the best choice is to avoid mistakes and pick a socially recognized, currently popular brand.

Drinking is a typical social activity, and scenes as social norms outweigh individual preferences. Even if a young person is at a business entertainment occasion, they might have to drink traditional baijiu.

For a baijiu brand, focusing on business entertainment scenes in communication will reach more middle-aged people; focusing on informal drinking scenes will reach more young people.

Of course, this doesn't mean middle-aged people don't have daily small gatherings; it's normal for middle-aged people to drink Jiangxiaobai at small gatherings, but young people have a higher concentration in this scene.

For example, the pre-mixed wine brand RIO's "Weixun" series focuses on the "one person's small drink" scene, with the appeal "being tipsy is returning yourself to yourself," and uses Zhou Dongyu and Zhang Zifeng as spokespersons. Obviously, this won't resonate with middle-aged men.

Jiangxiaobai's founder Tao Shiquan once said: "Jiangxiaobai's development is based on opening up new consumption scenes, including small gatherings, small drinks, small moments, and small moods."

From a business scale perspective, the "four small scenes" are larger than the young people group; theoretically, anyone with these scenes in their life can become Jiangxiaobai's target consumer.

From a brand communication perspective, since young people have a higher concentration in the "four small scenes," have more voice online, and greater social influence, Jiangxiaobai chooses young people as the source group to occupy the "four small scenes," and from there, involves more consumer groups to drink Jiangxiaobai.

So, Jiangxiaobai's success is not first about capturing young people, but about capturing informal scenes. In fact, even if positioned at young people, brand building doesn't just shout "I'm young people's baijiu" and young people will buy it.

Jiangxiaobai needs to understand the emotions, behaviors, and relationships of young people in the "four small scenes," speak their hearts, and make them resonate and identify, then they will accept Jiangxiaobai.

This is the logic of scenes: scene first, people second; use scenes to find people, use scenes to involve more people.

Second, Wuling Motors.

In April 2022, Dr. Lv Juncheng, then General Manager of SAIC-GM-Wuling Technology Center (now the new leader of Wuling), said in a media interview that Wuling Motors unified its thinking across the company and implemented a new car-making concept—comprehensive "2C" (Customer & Cost), scenes define cars.

In the past, many car companies' logic for making cars was to first select a market segment, such as A-class/B-class, sedan/SUV, price at 150,000/200,000, young people/middle class, etc.

After setting the market segment, in the product development stage, they pursued indicators and benchmarked competitors, specifically by stacking functional configurations, trying to make functions the most complete and configurations the most numerous, thereby comprehensively surpassing competitors. Car companies believed that this way, consumers would choose them in the market.

But in reality, this approach deviated from users' actual car usage scenes, developing many chicken-rib functions that were not useful or loved by users, and forcing them on users. This led to poor market performance and increased manufacturing costs.

So Wuling required focusing on users' most important and concerned car usage scenes, accurately grasping user needs in the scenes, to develop products, and strengthen platform design and cost control, accelerating the transformation from engineer thinking that defines cars by parameters and configurations to user thinking that defines cars by scenes. So, scenes are the underlying logic of Wuling's comprehensive "2C" and the fundamental foothold.

For example, the new generation "divine car" Wuling Hongguang MINI EV is a model of "scenes define cars."

Wuling research found that 80% of Chinese car users have travel needs with an average daily mileage of no more than 30 kilometers and a speed of no more than 30 km/h. In this short-distance travel scene, they face pain points such as difficult parking, unsafe conditions, and high usage costs. Therefore, Wuling launched the Wuling Hongguang MINI EV.

Dr. Lv said more directly in a media interview: "When ordinary people go to buy groceries, it's just one or two kilometers. For the car they use, if you give it high configurations, tell them how good the handling is, how excellent the braking performance is, how dazzling the appearance is, these are not what they need most; they won't necessarily spend the money to pay for it. Where is Wuling's demand? It's what users need; we design car market demand that fits the scene."

The Wuling Hongguang MINI EV found the right car usage scene, accurately insight into user needs, and after its launch, it won the global sales champion for small electric vehicles, remained the sales champion for pure electric cars in China for 28 consecutive months, and topped the global new energy single model sales seven times. It can be said to have created a phenomenal market performance.

According to the past segmentation logic, when we see this car with various Macaron colors, a convertible version, very personalized and bold communication and promotion, and cross-brand collaborations with Heytea, Pantone, etc., we might think the target audience for this car is young people.

But friends familiar with the car market know that this two-seat micro car was initially called "old man's joy," and many elderly people use it to buy groceries and pick up grandchildren from school.

From the audience segmentation logic, post-00s, elderly, urban white-collar, middle-aged, etc., have no commonalities, but in the scene of daily short-distance travel, they have common needs and can all choose the Wuling Hongguang MINI EV.

Earlier this year, I went to many cities for consumer interviews, and sometimes I asked users about the car brand they purchased.

One interviewee told me that when buying a car, the first thing to consider is who drives it? How many people sit in it? What do you usually drive it for? That's what determines what car you buy.

I strongly agree with this view. Different car usage scenes have very different requirements for cars, like city short-distance vs. long-distance highway, personal commuting vs. family outings; you definitely need to buy different cars. This is the hard boundary of scenes.

Doing marketing undoubtedly requires finding people first, but enterprises don't do business with one person; they need to find a group of people. This group has its own differences compared to the overall market, but there are commonalities among the group. Audience segmentation is both dividing differences and finding commonalities. We need to understand the relationship between difference and commonality.

People group by people is to find the common needs of the same consumer group; people group by scene is to find the common needs of different consumer groups in the same scene.

Marketing is not only about continuous segmentation, but also about finding commonalities. In marketing work, we need to combine these two ways of thinking.

When people have less and less in common, what we should do is not further segment, but find commonalities from scenes to find more target audiences. Scenes are the greatest common divisor of different target audiences.