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Two Purposes of Segmentation |
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Optimizing resources: segmentation
as a strategy you use to concentrate, and thus optimize your
resources within a overall market.
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Understanding customer needs:
segmentation as the group of techniques you use as a vendor to
segment your target market to develop insights into customer needs.
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Market Research
Defining
Market Segment
& Customer Profile |
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Demographic (education,
occupation, income level, age, gender, etc.)
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Geographic location
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Business markets (type, size,
location, turnover, etc.)
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Consumer behavior characteristics
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Market Segmentation by
Consumer Behavior1 |
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Consumer Characteristics: who buys
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Geographic (e.g., region – urban or rural)
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Demographic (e.g., age, gender, and marital status)
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Socioeconomic (e.g. income, social class, and occupation)
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Cultural (e.g., lifestyles and
culture)
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Consumer responses: what is bought
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Why Market Segmentation?
Divide and conquer!
Successful marketers qualify their current and
prospective customers. By doing so, they can better target their
value propositions to different
customer groups, which results in higher sales.
Yin-Yang of Customer Value Creation
Selling
Is Problem Solving
Success
Story
Michael Dell
Discovering
the Power of Segmentation at the Age of 16
Michael Dell, the Founder of
Dell Computer Corporation, discovered the power of market segmentation
when he was 16. Michael got a summer ob selling newspaper subscriptions to
The Houston Post. "At that time the newspaper gave its salespeople a of
new phone numbers issued by the telephone company and told us to cold call
them. It struck me as a pretty random way of approaching new business", says
Michael Dell.3
Michael soon noticed a pattern,
however, based on the feedback he was getting from potential
customers during these conversations. There were two kinds of people
who almost always bought subscriptions to The Houston Post:
people who had just moved into new houses or apartments and people
who had just married. having discovered this trend, Michael wondered
how he could find all the people who were getting mortgages or
getting married. He hired two of his high school buddies to identify
sources of such information. Michael created a personalized letter
for high-potential customers offering them a subscription to the
newspaper. Within a matter of weeks, Michael created a steady income
stream. The subscriptions came in by thousands. His income was about
$18,000 that year. Actually, he made more money that year than his
economics teacher did.
Creating Sustainable,
Profitable Growth
Creating Customer Value: 9 Questions
Surprise
To Win: 3 Strategies
Innovative segmentation and resegmentation of
your target market is the starting point of your
sustainable
profitable growth. Any market is the sum of many segments. Each segment
fulfills a need, and these needs are constantly changing.
There are many ways to segment a market. You
can resegment a market by consumer age,
culture, motivation and buying behavior, customer value sets,
value proposition, technology,
price points, distribution channels, line extensions, and the like. You can
also define a new segment, i.e. define a customer need that nobody else has
thought of or addressed before. Besides, segmentations is not once and for
all, it's a dynamic, ongoing exercise and state of mind.
When you break your market down into segments,
you've got a powerful methodology for developing insights into customer
needs and generating growth ideas. Think expansively,
observe people,
learn everything you can about customers' needs, including those that the
customers haven't yet identified.
Think outside-the-box
to generate market stretching concepts that will change the name of the
game.
Types of
MarketSegmentation...
Case in Point
Ford Motor Company...
Case in Point
Black & Decker (B&D)...
Case in Point
Dell Inc...
Case in Point
Nike...
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