Market Segmentation Is Key To Success

Posted on 19/11/2011. Filed under: Business, Reviews, Technology-التقنية | Tags: , , , |

With new competing products coming to the market daily in many product categories, the key to businesssuccess often boils down to effective market segmentation. Since business and consumershave multiple choices to meet very specific needs, starting entrepreneurs and established businesses would benefit enormously from investing in market segmentation research.

Market segmentation research can answer questions such as:

  • Which market segments have unmet needs that our products or services could meet?
  • Which customer segments have the highest revenue and profit potential?
  • How should we position our products or services in order to reach target segments?
  • How can we communicate with target segments?
  • Which segment would give us the highest ROI for our marketing and media investment?
  • Which new products should be develop to reach potentially profitable target segments?
  • Should we adopt different pricing strategy for different target segments
  • What customer segments exist in our customer base?
  • What retention programs should we develop for the different customer segments?

Depending on the objectives of the segmentation and how the results will be used, market segmentation research may include different types of variables specific to an industry or consumer market. Overall, most consumer market segmentation studies have questions aimed at capturing needs, values, attitudes, behaviors and demographics. For business-to-business markets in addition to needs and behaviors, we often also include firmographics (e.g. company size, revenues, product category, etc.) that are relevant to the industry in question.

Market segmentation studies can be of great value as long as they reveal information about a market segment that is:

  • Actionable: Segments can be identified through defined metrics (e.g. buyers of a certain product/brand) and can be reached through different distribution and communication channels.
  • Sizable: Segments should be large enough to make the investment of resources worthwhile
  • Unique: Segments should reflect different needs, attitudes and behaviors in order to develop tailored offerings and effective communication strategies
  • Stable: Although some industries experience changes faster than others, segments should be based on core differentiators that have a relatively long shelf-life to avoid constant changes in strategy and its associated cost

Market segmentation allows businesses to be more effective and efficient in their marketing efforts. A company who thinks that they products are for “everybody” is out of touch with the market. Without market segmentation companies are shooting in the dark and wasting valuable bullets. They may hit a customer by accident, but they surely would miss a lot of others.

Benefits of Market Segmentation

  • Providea comprehensive profile of customer groups in your industry:
    • For consumer products and services – their attitudes, psychographics, behavior, demographics and media consumption.
    • For business-to-business – company size, sales volume, number of employees, credit rating, SIC or NAICS codes, geographics, buying process and requirements, buyer characteristics, year founded, product lines/services offered, etc.
  • Estimate market size for your product and services.
  • Help to uncover any “untapped” value added areas that could be part of a product or service.
  • Offer guidance on how to position products/services to reach the most profitable segments and what messages resonate with them.
  • Identify the most effective media vehicles and distribution channels that should be used to reach the target segments.

Our Approach

In our market segmentation studies we combine information about needs, attitudes and behaviors that are relevant to the product category to identify discrete and targetable market segments.

Data is collected primarily through survey instruments (online, phone or mail). A qualitative research phase may be necessary if the client has not conducted previous research or if the available research is deemed outdated or insufficient.

Different multivariate statistical techniques are used to define the segments, and candidate models for the final segmentation solution are discussed with the client prior to final delivery.

Questions You May Have

  • Who are my potential and current customers?
  • How do they use our competitors?
  • Are there any “untapped” needs that we could address with a product or service?
  • How should we position our products/services to reach the most profitable segments?
  • What messages should we send to trigger conversion?
  • How do we reach these target segments? Via which media vehicles? Via which distribution channels?

 

http://www.bestmarketadvisor.com/market-segmentation-is-key-to-success.php

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