Segmentation an Essential Ingredient for O-Growth Ssd 020509

8/8/2019 Segmentation an Essential Ingredient for O-Growth Ssd 020509

1/20

Segmentation an Essential

Ingredient for Organic Growth

February, 2009


2/20

2

2009 EMM Group

Todays choices

The first mobile phone call ever - April 3rd, 1973

As categories evolve, segments emerge

As customers get familiar with a product category,market segments emerge with distinct needs.


3/20

3

2009 EMM Group

Why should we care?

19%

33%

26%

21%

37%

18%

20%

25%

# of customers $ Revenue

Segment 1

Segment 2

Segment 3

Segment 4

41%

15%

17%

27%

$ Profit

The customers in some segments represent adisproportionate amount of profit pool available

Consumer electronics segmentation

Segment 1 customerstend to:Buy the latest

equipmentBuy higher-end

equipment

Are generally moreexpert and have alower cost to serve

Are less price-sensitive


4/20

4

2009 EMM Group

Segmentation has been an essentialingredient for many companies

Drive Growth

Example

Focusing efforts towin with non-travelrelated segment

Focus

Improve Innovation Success

ExampleFocus

Creating product &

business modelinnovations withhighest relevance tothe Do it all for mesegment.

Improve Marketing Performance

ExampleFocus

Setting clearobjectives formarketing tomaximizeeffectiveness &efficiency

Enhance Profitability

Creating efficient valuechain to meet knownneeds of the young atheart segment

ExampleFocus
http://images.google.com/imgres?imgurl=http://art-barn.com/josh/newlywed/20070625_wdp_logo_old.png&imgrefurl=http://newlywedindubai.blogspot.com/2007/06/walt-disney-pictures-logo-change.html&h=192&w=480&sz=80&hl=en&start=9&sig2=5rQ1FxqWtrmFNY5tdh-oHQ&um=1&tbnid=DfKCoSW84_BIHM:&tbnh=52&tbnw=129&ei=gC_LR9epIKqYoQTw4IEM&prev=/images?q=walt+disney+logo&um=1&hl=en&rls=GGLJ,GGLJ:2006-43,GGLJ:enhttp://www.enterprise.com/car_rental/home.do;jsessionid=F3skN1LYgs6Lpjndzvh9x6Pb1vnmd848Qnxvp1FSQ3QQ8StzN0T2!-2066127639


5/20

5

2009 EMM Group

Segment 2

Segment 3

Segment 4

#

20%

12%

28%

40%Segment 1

$

27%

30%

4%4%

39%

Segments Vendor AMargin

3.2%

2.8%

2.5%

2.8%

Vendor AWin Rate

8%

7%

6%

20%

Segmentation can help you find profit focusSegmentation can help you find profit focus

Just reallocating sales and marketing resources towards the moreprofitable segment, led to higher productivity and profitability.

Segment 2 customersrepresent almost 28%of the companies inthis market.

However their spend isonly 5% of the

market.When they do spend,Vendor A makes theleast amount ofmargin on the deal.

And the win rate withthis segment is thelowest at 6%.

Construction Industry Segmentation


6/20

6

2009 EMM Group

1. Market segmentation is the subdividing of a market intodistinct subsets, where any subset may conceivably beselected as a marketing target to be reached with a distinctmarketing mix.

Kotler

What is Segmentation?

We first find segments that exist in the market and then weselect our target segment(s).

2. Targeting is the selection of segment(s) to serve.


7/207

2009 EMM Group

DemographicsE.g. age, income, location, etc.

Product SegmentsE.g. Silver, Gold, Platinum

Purchasing approachesE.g. individual/joint decision, existing

relationship, etc.

Situational FactorsE.g. immediacy of need, specific

applications

How is most segmentation done?

Each approach seems logical

but could be misleading


8/208

2009 EMM Group

Our sales team analyzed ourpast deals

This is the way we areorganized

We have always looked at ourmarket this way

This is the way data isreported in our industry

Seems logical

Our product has a realadvantage in segment x

Why Do We Segment the Way We Do?


9/209

2009 EMM Group

What is Key to Successful Segmentation?

ffectiveSegmentation

tructuralSegmentation

-olt OnSegmentation

-ales BasedSegmentation

rganizational IntegrationHighow

High

Low

: . ., ,Source Jenkins M and McDonald M European Journal Of Marketing 1997


10/2010

2009 EMM Group

Needs-based Segmentation

Focus on needs that are

Homogenous within

Heterogeneous across rganizationalIntegration

CustomerDriven

Needs egment 1 egment 2 egment 3 egment 4Functionality 117 101 101 101Reporting 121 103 97 98

ase of Use 103 121 101 99anagement Ease 101 109 99 94

ime to Implement 97 104 105 100Support 94 95 103 112Price 88 93 113 99

usiness Expertise 108 94 91 98

CRM Software Example

= .Index Segment mean divided by sample meanScore of 100 means that the segment s needs match that of the average market


11/2011

2009 EMM Group

Barriers to Organizational Integration

Organization Structure

Power Centers & Business Silos

Culture

Communication

Rewards & IncentivesMisaligned Business Priorities

rganizationalIntegration

CustomerDriven


12/2012

2009 EMM Group

Activating Segmentation

Segmentation Innovation

Communications

Value Proposition

Pricing

Sales Strategy


13/2013

2009 EMM Group

Element Starbucks Examplearget To young urban customers

/ore need s ( Who seek a third place other than work and) ,home for working socializing and leisure

activityffering Name Starbucksrame of Reference Is a caf

enefits That offers the comforts and joys of a home away from homeoint of

ifference ,Trendy and convenient environment-consistently high quality beveragesSupport ,Largest global chain of coffee shops(amenities for patrons ample electricity

, , - ,outlets comfortable chairs wi fi access

- )highly trained staff

at an affordable luxury

ValuePropositio

nStarbucks The Third Place
http://en.wikipedia.org/wiki/Image:Starbucks_Coffee_Logo.svg


14/2014

2009 EMM Group

Fulfilling needs of the Targeted Segment

ValuePropositio

n
http://rds.yahoo.com/_ylt=A0Je5wv9qYpFrYYAm_CJzbkF;_ylu=X3oDMTBkY2IwMGkxBHBvcwMzOARzZWMDc3I-/SIG=1h59gqdnp/EXP=1166801789/**http:/images.search.yahoo.com/search/images/view?back=http://images.search.yahoo.com/search/images?p=starbucks+beans&btn=Search&tab=Images&ei=UTF-8&fr=my-vert-img-top&b=21&w=166&h=176&imgurl=www.jlamp.com/blog/images/beans.jpg&rurl=http://www.jlamp.com/blog/2004/11/22/1101140273000.html&size=5.8kB&name=beans.jpg&p=starbucks+beans&type=jpeg&no=38&tt=450&oid=a9a7ac051ce7f4a2&ei=UTF-8http://rds.yahoo.com/_ylt=A9G_Rqoevm9FpxkA2cKJzbkF;_ylu=X3oDMTBkdjI4bXVrBHBvcwMyNARzZWMDc3I-/SIG=1gr6e4mgj/EXP=1165037470/**http:/images.search.yahoo.com/search/images/view?back=http://images.search.yahoo.com/search/images?p=starbucks+environment&btn=Search&tab=Images&ei=UTF-8&fr=my-vert-img-top&b=21&w=400&h=321&imgurl=anthonyriva.com/images/smokefree.jpg&rurl=http://prophecyboy.diaryland.com/starbucks.html&size=50.6kB&name=smokefree.jpg&p=starbucks+environment&type=jpeg&no=24&tt=124&oid=75ff31f30885def4&ei=UTF-8http://rds.yahoo.com/_ylt=A0Je5x6Dj29FXPUA3xeJzbkF;_ylu=X3oDMTBjcDR2NTN2BHBvcwM2BHNlYwNzcg--/SIG=1i3gpbtju/EXP=1165025539/**http:/images.search.yahoo.com/search/images/view?back=http://images.search.yahoo.com/search/images?p=starbucks+wifi&ei=UTF-8&fr=my-vert-img-top&x=wrt&w=170&h=170&imgurl=www.wanadoo.co.uk/images/editorial/generalarticle/communicate/starbucks_wifi_aug05_170.jpg&rurl=http://www.wanadoo.co.uk/time/wirelesstalk_glossary.htm&size=8.3kB&name=starbucks_wifi_aug05_170.jpg&p=starbucks+wifi&type=jpeg&no=6&tt=273&oid=d76458e7e8051d3c&ei=UTF-8http://rds.yahoo.com/_ylt=A0Je5xZLj29FFiABTFuJzbkF;_ylu=X3oDMTBlMjFiOW9wBHBvcwMxNTcEc2VjA3Ny/SIG=1j8doe10q/EXP=1165025483/**http:/images.search.yahoo.com/search/images/view?back=http://images.search.yahoo.com/search/images?p=starbucks&btn=Search&tab=Images&ei=UTF-8&fr=my-vert-img-top&b=141&w=500&h=375&imgurl=www.japanwindow.com/gallery/images-urb/tokyu_starbucks.jpg&rurl=http://www.japanwindow.com/cgi-bin/showpicture/sp.pl?/gallery/images-urb/tokyu_starbucks.jpg&size=66.7kB&name=tokyu_starbucks.jpg&p=starbucks&type=jpeg&no=157&tt=126,316&oid=b9054fdef315fe0e&ei=UTF-8http://rds.yahoo.com/_ylt=A0Je5mWYjm9FaPUA8keJzbkF;_ylu=X3oDMTBkdjU2cm9hBHBvcwMyMQRzZWMDc3I-/SIG=1gqv18m6q/EXP=1165025304/**http:/images.search.yahoo.com/search/images/view?back=http://images.search.yahoo.com/search/images?p=starbucks&btn=Search&tab=Images&ei=UTF-8&fr=my-vert-img-top&b=21&w=750&h=500&imgurl=www.simonharephotography.com/adm/photo/224_Ben_Starbucks.jpg&rurl=http://www.simonharephotography.com/&size=67.7kB&name=224_Ben_Starbucks.jpg&p=starbucks&type=jpeg&no=21&tt=126,316&oid=266d17c08509aff0&ei=UTF-8http://rds.yahoo.com/_ylt=A0Je5mwIjm9FP_cAtkyJzbkF;_ylu=X3oDMTBkYTNwY3VnBHBvcwMxNgRzZWMDc3I-/SIG=1hcr5nk29/EXP=1165025160/**http:/images.search.yahoo.com/search/images/view?back=http://images.search.yahoo.com/search/images?p=starbucks&btn=Search&tab=Images&ei=UTF-8&fr=my-vert-img-top&w=1024&h=692&imgurl=www.thomashawk.com/hello/209/1017/1024/Night%20Starbucks.jpg&rurl=http://thomashawk.com/hello/209/1017/1024&size=102.0kB&name=Night+Starbucks.jpg&p=starbucks&type=jpeg&no=16&tt=126,316&oid=1e74a3d1c5b2896e&ei=UTF-8http://rds.yahoo.com/_ylt=A0Je5mwIjm9FP_cArEyJzbkF;_ylu=X3oDMTBjcDR2NTN2BHBvcwM2BHNlYwNzcg--/SIG=1gjtc5s31/EXP=1165025160/**http:/images.search.yahoo.com/search/images/view?back=http://images.search.yahoo.com/search/images?p=starbucks&btn=Search&tab=Images&ei=UTF-8&fr=my-vert-img-top&w=278&h=337&imgurl=www.lazygeek.net/images/starbucks.JPG&rurl=http://www.lazygeek.net/archives/2005/03/starbucksing_my_life.html&size=12.4kB&name=starbucks.JPG&p=starbucks&type=jpeg&no=6&tt=126,316&oid=fd3fab7684c5cdbe&ei=UTF-8


15/2015

2009 EMM Group

Segmentation for Pricing

Who

Situation

Small requirement companiesseeking convenience in the purchaseand use of business applications

Many companies could not afford the costand time commitment to purchase and

implement business applications.Need for a short time to ROIThe emergence of the Internet

Problem: Current solutions too expensive toimplement

Solution: Software available for monthly rental withminimal set-up costs. Sales force automationsoftware at $1000/month

Implications

Pricing
http://images.google.com/imgres?imgurl=http://newsimg.bbc.co.uk/media/images/41006000/jpg/_41006009_nosoftware203.jpg&imgrefurl=http://news.bbc.co.uk/2/hi/business/4340947.stm&h=203&w=203&sz=10&hl=en&start=8&sig2=Q6N9VKHJ8RiHAAGJBimG-A&tbnid=jPEC4LHWFgwqyM:&tbnh=105&tbnw=105&ei=4tycRsmkCISsgAPvlLy3CQ&prev=/images?q=no+software+salesforce.com&gbv=2&svnum=10&hl=en


16/2016

2009 EMM Group

Segmentation in Product Development

A purpose-designed phonewith unique

value fortargeted users

Innovation


17/2017

2009 EMM Group

Packaging Innovation

Behavioral segment of heavy at-homeusers of sodas

Advanced analytics reveal importanceof convenient dispensing in-fridge

systemsFast-paced lifestyle customers seek

product at ideal temperature for graband go refreshment

Problem: Current dispensers not convenient

Solution: 2X12 package is convenient to keep inthe fridge without taking up too much space, andmeets customers needs.

At-HomeVending Machine

Innovation

Who

Situation

Implications


18/2018

2009 EMM Group

Fulfilling the Desired Experience

Customers primarily seeking .quick and flexible benefits

,Bank offices were very privatediscreet and unobtrusive and offers-were under utilized

:roblem Opportunity to redesign customerexperience

:olution - , Walk in bank front offices, ,convenient hours easy credit checks

, flexible products and loans total quick - .and flexible make over

Innovation

Who

Situation

Implications


19/2019

2009 EMM Group

Dove Communications

Women who seek inner beauty If Ifeel good, I look good

Many brands losing credibility with targetsegment

Classic hierarchy of needs analysis revealsaspiration of Self-Respect + Inner Harmony

Problem: Competitors portray an outer beautythat may be unattainable / not balanced againstinner harmony needs.

Solution: Dove real beauty campaign.

Communications

Who

Situation

Implications


20/2020

2008 EMM Group

ThankThankYouYou

If you would like to find out more, please contact:

Satprit DuggalPhone: 408-202-6244E-mail: [email protected]

Documents

Segmentation an Essential Ingredient for O-Growth Ssd 020509