Here at W5 we stay busy developing custom market segments for clients spanning a variety of categories (Check out our Segmentation White Paper). So last week, while attending TMRE in beautiful Boca Raton, FL, I made a point to attend as many segmentation speaking sessions as possible where I noticed a few common threads, regardless of the category or segmentation methodology. For a successful segmentation:
- The end-clients must understand the methodology from the beginning (not the end, when it is too late). When it is time to present the segments to the client, do they know the difference between a demographic, geographic, or behavioral segmentation? Are they aware a single segmentation can include a mix of demographic, geographic, psychographic, and behavioral variables? If they are expecting a relatively simple demographic segmentation, where segments are a similar age, gender, or income, it may be difficult to explain a more complex segmentation approach. It is much easier if everyone is on the same page from the beginning.
- The proposed methodology is appropriate for the desired learning. It is important to understand what learning needs to come from the segmentation. For example, if a client wants to understand how to better target consumers of large trucks, in developing the methodology, consider limiting the number of consumers from densely populated, urban areas, such as San Francisco. Would it be helpful to have feedback from consumers who live in areas where large trucks are less popular?
- The developed segments are actionable for multiple departments. We’ve all seen it. After weeks of swimming in data, conducting factor analysis, cluster analysis, and discriminant analysis, JACKPOT. The segments come together. Here are 4-5 beautiful segments that make perfect sense. But how are they actionable for the marketing department, product development, etc.? While a single study will not answer every question, it is helpful if the segments are actionable for key stakeholders. To help make this happen, they need to be involved from start to finish, beginning with questionnaire development to ensure questions are included to address their specific needs. This level of involvement will allow the research to go beyond simply defining segments, to understanding how they interact with specific categories and brands, allowing stakeholders to better develop tools, products, and services to cater to the needs of their target segments.
A successful market segmentation requires teamwork and clear communication from all partners, client and consultant. Laying out the framework from the beginning, keeping everyone informed of potentially evolving research objectives, and collaborating on the study design will greatly increase the likelihood of a successful market segmentation that delivers actionable results for everyone.
Keep an eye out for 2016 TMRE Highlights from W5: Part Three!