Stereotypes Are Bad! Or Are They???

It is generally known that stereotypes are bad. We are taught as young children and we teach our children that stereotypes are bad. As an undergrad at Keene State College, I majored in Social Science with an emphasis on Sociology. As you can imagine, I spent many semesters trying to understand the root causes of many stereotypes and how they were unfairly and unjustly applied to individuals and groups of individuals. It wasn't until I was in my fifth semester of my MBA program that I realized that the use of stereotypes were not all bad.

From my sociology days, it was apparent that stereotypes are largely true. Stereotypes are society's way of grouping (fairly or unfairly) people. There are many stereotypes that we use everyday. More importantly, stereotypes are used by businesses in almost every decision made. Auto insurance company charge a higher premium for certain drivers and even certain cars. Consumer Packaged Good (CPG) companies target certain products to certain groups of people, for a certain purpose. Marketing is notorious for using stereotypes. McDonalds is aggressively targeting the African-American population with recent ads by using a Rap song to promote their new Mango and Pineapple Fruit Smoothie (the stereotype that all African-Americans listen to Rap).

Stereotypes provide marketing people with a foundation of individuals that could possible be interested in their products. A value is then assigned to that group of people (based on the size of the market, economic demographics, spending habits, etc) which translates into how much a company thinks they can sell, or Expected Commercial Value (EVC). Many of our business processes would not exist if it were not for stereotypes. We wouldn't be able to target advertising to a specific group of people without using stereotypes. Although many stereotypes have changed, the majority of them have stayed the same. Take the recent commercials for Swiffer Duster. One commercial shows two women as dirt and mud on a kitchen floor waiting to meet the love of their life (a mop) and be swept off the floor. Another show a man as dust in between keys on a keyboard. Pretty clear where these two stereotypes are. How successful is the use of stereotypes? P&G shares rose 130% in Swiffer's first year.! P&G is the largest CPG company and reported $78 billion in revenue last year - I would say that is pretty successful.

Because of the negative connotation that goes with the word "stereotypes" it is politely relabeled as "Market Segmentation" in the marketing world. In Business-to-Consumer (B2C) as well as the Business-to-Business (B2B) markets segmentation is hugely important. Marketers are rewarded and more valuable depending how much knowledge they possess about their markets. This starts with getting a deep understanding of who your existing customers are:

• What do they buy 
• Why do they buy 
• What are the motivators (drivers) for purchases 
• How do they buy (bulk, on credit, impulse, planned and evaluations) 
• When do they buy (seasonal, life-events, delegated) 

The answers to these questions (and there are thousands more) are extremely important. These answers are then applied to existing stereotypes that are common in the market and products are marketed to those groups of people that fit the buying habits as well as the stereotypes. Get these wrong and your new product will not be successful. This is a huge challenge for marketers. A challenge that extends to new product innovation (NPI) as well as advertising and product launches.

Even before a product makes it to market, millions of dollars are spent on a concept that marketing is saying customers (or potential customers) want and R&D is saying is feasible (see my post in InnovAAAAAtion!). Add on millions of dollars in marketing, test case, product positioning strategies, graphic designs, packaging, distibution and many other complex functions of launching a product to the wrong market - you'd better get your resume ready!

Make no mistake about it, marketers are masters at understanding and using stereotypes to position products to the right groups of people.