Tag Archives: market segmentation

6 Things of Note For Segmentation

Segmenting seems straightforward but is something that most companies fail at. Gretchen Gavett explains in her article that it is harder than it appears to break down segments. Segmenting is the separation of customers with different needs into a subgroup of customers with similar needs. 

Overcoming Obstacles:

John Forsyth, of Mckinsey’s, describes three pitfalls that companies fall into when thinking about segmentation:
1. Companies rarely create a segment, they usually uncover one

2. Segmentation and demographics are very different things

3. Asking why you want to segment and what decisions will be made based on the info

Approaching Insights:

There are six characteristics to consider when coming up with a useful segmentation.

1. Identifiable – You should be able to identify customers in each segment and be able to measure their characteristics

2. Substantial – A segment must be large enough to be profitable

3. Accessible – You should be able to reach you segment via communication channels

4. Stable – A segment should be stable enough to be marketed to effectively

5. Differentiable – The people should have needs that are visibly different from other segments

6. Actionable – You have to be able to produce products catered to your segment

These are basic explanations for a more complex set of characteristics, but they are essential in figuring out segments. There are other things to consider when searching for a segment including such as learning from prominent failures. Forsyth also mentions that focus groups are antiquated and the best way to learn about customers is to spend time with them in their homes. Segmentation is far more difficult than people assume and companies are not even close to being adequate at it yet. 

About the Author:

Ryan Polachi is a contributing
writer concentrating his focus on Marketing, Finance and Innovation. He can be
reached at rpolachi@IIRUSA.com.

Save $300 on TMRE this week only

The $300 early bird discount expires this week for TMRE 2010. This year’s agenda covers: Segmentation, Media & Measurement, Shopper Insights, Social Media & Community Research, Culture & Research Trends, Market Research Leadership & Strategy, Marketing Research & Brand Insights, Insight Driven Innovation, Data Analysis & Measurement, Business to Business Market Research, the EXPLOR Awards, The New Insights Toolbox, and more.

Click here to visit the TMRE webpage.
Click here to visit the agenda to find out more about the tracks, sessions.

Find your consumers footprints and then seek them out

In this slide show I recently found, it looks at finding your consumers’ footprints. Look at where they are and what they’re doing and create your segmentation according to that. Upon hearing your consumers, you can take that information and divide them in four different ways: behavioral, geographic, demographic, and psychographic. Which of the four ways do you think is the easiest way to divide your customers up?

Speakers of TMRE 2009: Tony Cardinale, NBC Universal

In the weeks leading up to The Market Research Event 2009, we’re going to be hearing from the speakers of The Market Research Event. This week we have Tony Cardinale, Bravo, Oxygen, & Women at NBCU, NBC Universal, who will be presenting “Segmentation reveals new ways to Connect Optimally with Consumers in an Economic Downturn,” in the Segmentation Track on Monday, October 19, 2009. To learn more about The Market Research Event, download the brochure here!

1. Tell us about a project you are working on or recently completed that you are proud of?
Cardinale: Very proud of the New Economics Planning Tool that we created in partnership with Simmons. The tool is a customized version of the syndicated Simmons National Consumer Study which is used at many media companies and media agencies. It allows a user to create segments of consumers based on their reaction to the economic downturn of the past year-plus. Some consumers are more resilient brand spenders and big-ticket spenders, either because their personal financial outlook remains positive or because they just highly value brands, or prioritize their plans to buy a home or take a vacation. Other consumers are looking to spend less overall, or spend less in specific categories. The tool is designed to isolate the consumers who are in each of these groups, category by category, allowing a marketer to add that layer of intel to their targeting process. It’s the only tool of its kind that we know of.

2. Think ahead 5 years, what major changes for MR/Consumer Insights do you see?
Cardinale: I’d love to see traditional age/sex targeting replaced or augmented by a real marketing industry focus on behavioral and/or attitudinal targets.

3. What inspired you to get in the field? What keeps you motivated?
Cardinale: I love tooling around with numbers to see what stories pop out of them. It’s my hobby. Knowing that there’s always something new and innovative to try just around the corner keeps me motivated.

How are you reaching out to your customers?

The Economist wrote an article recently about segmentation and how it’s spread beyond it’s origins at the consumer level. Everyone is segmenting the people they are targeting, including employers. The article focuses on the importance of hitting your audience in the right places and through the right channels.

Are you having a hard time reaching one of your targets? Are you finding them through the appropriate channels?

Don’t underestimate your market

At the Speak Without Interruption blog, Jack B. Rochester discusses a concert he chose to go to over a Red Sox/Yankees game. He points this out because he was going to see the band The Decemberists, and he is a 64 year old. He also noticed many other older fans sprinkled throughout the crowd in addition to the clean-cut younger generations that made up the majority of the audience. He concluded two things from this very diverse crowd:

1) As marketers, we should never assume – presume? – we understand the who and what of our market.
2) Don’t let your mindset too closely define your the segmentation or differentiation product or service – otherwise, you might not ‘get it.’

Read his full post here.

Breaking down your market

At HandMade News, they recently took a look at how to successfully identify who your customers are and what the target market is shaped like. It’s obviously a very small market within your population, but how is a small business to find the market?

They start by identifying market segments:
Age: Are your customers young, middle-aged, or elderly?
Gender: Male or female?
Education: Have they graduated from high school? College?
Income: How much money do they have to spend? Are you targeting people with more or less disposable income?
Marital Status: Single, married, divorced, or widowed?
Ethnic and religious background
Family life cycle: Newly married, new baby, married for years, how old the children are

And then they go on to narrow it down further:
Lifestyle: trendy, conservative, pinching pennies, extravagant?
Social class: lower, middle, upper?
Opinion: open-minded or set in her ways?
Activities and interests: how does she spend her time? Reading? Watching TV? Riding her bike?
Attitudes and beliefs: is she interested in green products? Is she a community activist?

Figuring these things out can help you narrow down your target market and successfully find the right people to market your product to. If you’ve already done this, how have the demographics above changed with fewer customers spending less money these days?

African immigrant segment untapped in US

According to a recent study performed by US African Chamber of Commerce, there is a large number of African immigrants whose needs have not been fulfilled in US markets. This study did find out that this market generally patronizes supermarkets and they have their own checking and savings accounts, along with the untapped Islamic segment that is frequent among the immigrants. For a further look at the report, read about it here.

A deeper look at the country music listener

The American Chronicle recently took an in-depth look at the country music consumer, with the goal of defining both the country music radio listener and consumer. Over 7,000 participants weighed in, giving the study a high statistical reliability.

They took these three things into consideration when trying to define the market:

  1. Isolate, and if necessary, segment current core customers on relevant criteria
  2. Among those remaining, segment on most relevant criteria to create various growth potential groups
  3. Define and remove various groups of poor prospects

For the full report, read here.

Your view on market segementation

At Ad Age, they ask a very interesting question? Is market segmentation discrimination in disguise? What do you think as a market researcher? If your product will appeal to only one market, why advertise to many others? But, on the other side of things, what if one or two people in another market would like to know about what your advertising? What are your thoughts?