Successful segmentation should be meaningful, actionable, targetable and all the other ‘-ables’ we can think of to evaluate the solution.
In most cases, there are objective or subjective ways to measure each of these criteria, so logically, we can prove which of many solutions are the ‘best’. But this approach rarely satisfies what is a much bigger challenge – will the segmentation actually work for the client?
It is true that marketers will have confidence in a segmentation solution if, and only if, they LOVE the solution. For something to ‘work’, we have to have a consistent view of what working means and in a business context, the biggest challenge no one way is necessarily right for all, and simply finding the points where the needs are similar across ALL stakeholders, generally means reversion to something mediocre or rather boring.
So what is the right segmentation solution?
Is there any solution which is ‘perfect’, or even ‘great’, considering that we want something we can use across the business in a consistent and powerful way?
The best Market Segmentation approach requires a new way of thinking and three fundamental changes.
This requires us to view segmentation solutions like strategic growth horizons – the first segmentation we have won’t answer everything, but it WILL be most congruent with our existing knowledge, beliefs and ways of working, whilst the second and third solutions will represent more disruptive ideas, sizing and scoping market opportunities for the future.
They will be scarier, requiring the business to take a leap and potentially change itself to adapt to and use the new framework. To some extent, therefore, the desire to embrace a consumer or customer segmentation model brings with it the parallel challenge of assessing a corporate or brand’s aptitude for risk.
The second change required is that we don’t rely on market researchers to develop the segmentation. This is a pretty tough thing to write as the owner of a market research business, but the reality is that researchers are generally not business people or even marketers. Instead, they are sometimes statisticians, or more commonly, smart people who have adapted sophisticated multivariate statistics to everyday application through cleverly designed, user friendly data analysis packages. The result is that most researchers will have a ‘favoured’ approach (one they know how to use) .
So if the segmentation is NOT going to be driven by a market researcher, who should businesses turn to?
Our view is that there are three important stakeholders in a successful segmentation:
- The client (driven by a key sponsor who is responsible for understanding and challenging the various applications of the segmentation to the business)
- The analyst – creative with numbers
- The salesperson who can pressure test it
These three parties must work collaboratively to develop the three segmentation horizons with each having an equitable contribution in terms of the outcome.
The third and final change in thinking required is the letting go of current rules, products, brands and consumer behaviour. Most behavioural segmentation processes ultimately aim to predict and explain current behaviour, then identify targetable demographics or attitudinal proxies that help interpret that behaviour.
Whilst this process is robust in its thinking, it is only robust in the context of the market as it stands today and not what the market might look like should a new entrant or competitive offer emerge. As such, these approaches will naturally lack longevity and the ability to help identify early whitespace opportunities.
An opportunity-based approach, on the other hand, combines current behaviour with broader understanding of needs and motivations to distil a series of strategic growth platforms against which brands and innovation needs can be overlaid. This does not mean that clients need NPD ideas to put into the segmentation process (although this is not discouraged either!), but the solution needs to help predict the winning combination of marketing mix variables of the future, based on a comprehensive understanding of the segment needs, motivations and contextual behaviour.
So What Does Successful Segmentation Look Like?
It is one you can make work within your business with your people. It is one you can activate internally and externally. One that allows you to target media, align products and services and develop clear messaging.
One that everyone in the business intuitively gets from the CEO down the line.
The purpose of segmentation research data is to empower businesses by offering deep and insightful analysis of their target market. It’s all about dividing the market into distinct groups based on shared characteristics, preferences or needs.
At Ruby Cha Cha, we use segmentation research data to help our clients understand their audience on a more granular level. This approach ensures that marketing efforts are not only well-targeted, but also yield maximum returns.
How segmentation assists market research is by breaking down the complexity of the market into manageable chunks. It allows businesses to understand their customers’ needs, preferences and behaviours in a more detailed and nuanced way.
This targeted understanding helps refine strategies, increase customer engagement and improve product or service offerings. Our team at Ruby Cha Cha harnesses the power of segmentation to provide valuable insights that drive strategic decision-making.
Segmentation is a pivotal aspect of quantitative market research. It’s the backbone of effective marketing strategy, allowing businesses to identify and target potential customers most likely interested in their products or services.
It also aids in the development of more effective and efficient marketing campaigns. With segmentation, it’s possible to communicate the right message to the right people at the right time.
Choosing the proper segmentation technique depends on various factors, including your business objectives, available data and the nature of your target audience. At Ruby Cha Cha, we believe there isn’t a one-size-fits-all approach. Instead, we collaborate with our clients to understand their unique needs and leverage our expertise to recommend the most appropriate segmentation technique.
Whether it’s behavioural, demographic, psychographic or geographic segmentation, we align our approach to your specific goals and requirements.
Utilising segmentation in market research has a multitude of benefits:
- It enhances customer understanding, providing detailed insights into consumer groups.
- It enables tailored marketing strategies that speak directly to customers’ needs and wants.
- It improves product development and innovation by highlighting the desires and expectations of different customer segments.
At Ruby Cha Cha, we leverage segmentation to help our clients stay competitive, understand their customers better and ultimately boost their bottom line. And yes, we’re fun to work with too!