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8/8/2019 Segmentation an Essential Ingredient for O-Growth Ssd 020509
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Segmentation an Essential
Ingredient for Organic Growth
February, 2009
8/8/2019 Segmentation an Essential Ingredient for O-Growth Ssd 020509
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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.
8/8/2019 Segmentation an Essential Ingredient for O-Growth Ssd 020509
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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
8/8/2019 Segmentation an Essential Ingredient for O-Growth Ssd 020509
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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!-20661276398/8/2019 Segmentation an Essential Ingredient for O-Growth Ssd 020509
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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
8/8/2019 Segmentation an Essential Ingredient for O-Growth Ssd 020509
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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.
8/8/2019 Segmentation an Essential Ingredient for O-Growth Ssd 020509
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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
8/8/2019 Segmentation an Essential Ingredient for O-Growth Ssd 020509
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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?
8/8/2019 Segmentation an Essential Ingredient for O-Growth Ssd 020509
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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
8/8/2019 Segmentation an Essential Ingredient for O-Growth Ssd 020509
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
8/8/2019 Segmentation an Essential Ingredient for O-Growth Ssd 020509
11/2011
2009 EMM Group
Barriers to Organizational Integration
Organization Structure
Power Centers & Business Silos
Culture
Communication
Rewards & IncentivesMisaligned Business Priorities
rganizationalIntegration
CustomerDriven
8/8/2019 Segmentation an Essential Ingredient for O-Growth Ssd 020509
12/2012
2009 EMM Group
Activating Segmentation
Segmentation Innovation
Communications
Value Proposition
Pricing
Sales Strategy
8/8/2019 Segmentation an Essential Ingredient for O-Growth Ssd 020509
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.svg8/8/2019 Segmentation an Essential Ingredient for O-Growth Ssd 020509
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-88/8/2019 Segmentation an Essential Ingredient for O-Growth Ssd 020509
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=en8/8/2019 Segmentation an Essential Ingredient for O-Growth Ssd 020509
16/2016
2009 EMM Group
Segmentation in Product Development
A purpose-designed phonewith unique
value fortargeted users
Innovation
8/8/2019 Segmentation an Essential Ingredient for O-Growth Ssd 020509
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
8/8/2019 Segmentation an Essential Ingredient for O-Growth Ssd 020509
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
8/8/2019 Segmentation an Essential Ingredient for O-Growth Ssd 020509
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
8/8/2019 Segmentation an Essential Ingredient for O-Growth Ssd 020509
20/2020
2008 EMM Group
ThankThankYouYou
If you would like to find out more, please contact:
Satprit DuggalPhone: 408-202-6244E-mail: [email protected]