aim segmentation

Segmentation – What is it good for?

Leighton Jenkins

©the Jenkins Partnership

Booz Allen Hamilton

� As every market matures, choice increases. Then competition drives up quality and convenience to the point at which offerings become commoditized. The only businesses that then thrive are those that move beyond "me-too" or incremental offerings to marketing more-relevant and more-differentiated products and services. The only way to accomplish this is to focus on a narrower target.


Where to apply segmentation

Market granularity

Flexible

Offers

Mass Market

Market Segmentation

‘True’ 1-to -1

marketing


Marketing Process

Define Segments and Value

Deliver Value

Determine Value Proposition

Monitor Value


Fitting it together

Market framework

(segmentation)

Sales & Marketing

Programme

Marketing plan


Unstable Foundations

Market framework(segmentation)

Sales & Marketing

Programme

Marketing plan


Top 5 Marketing Capabilities

1. Profound understanding of the market-place

2. Creative segmentation and selection

3. Powerful differentiation positioning and branding

4. Effective marketing planning processes

5. Long-term integrated marketing strategies

* McDonald, M, Cranfield University School of Management


Agenda

�Questions

�Examples

�A model

�Blindspots


Audience Questions

�Role

� Industry

�Customers


If you had a dollar to spend on marketing, would

you know where to spend it for:

�Maximum revenue

�Maximum margin

�Best impact on loyalty

�Highest ROI

�Best value

� Immediate business

�Future business



Structure

Needs-based

Sales Effectiveness



Structure

Needs-based

Sales Effectiveness

Is this an industry/Market we should be in?

What are the current and potential wants that exist within aMarket?

What customers to target to achieve best results for sales, loyalty, marketing?


Questions ( that segmentation can answer)

�Who

�What

�Why

�When

�How


Questions ( that segmentation can answer)

�Who to talk to

�What to say

�Why say it

�When to say it

�How will they buy


Dimensions of Segmentation (Consumer)

� Segmentation by products and services

� Segmentation by demographics

� Segmentation by geography

� Segmentation by channel

� Segmentation by psychographics

� Segmentation by customer needs


Dimensions of Segmentation (Business)

� Segmentation by products and services

� Segmentation by geography

� Segmentation by channel

� Segmentation by industry

� Segmentation by size, strategy, complexity or structure of business

� Segmentation by psychographics (in sales process)

� Segmentation by customer needs


Dimensions of Segmentation (Business)

If in doubt –Price, Value

or Pigs


Business v Consumer

V

Data vs focus


CONVERTING INFORMATION INTO

TARGETED ACTIONS

Targeting

Communications

Customer data

Research data

Geographic data

•16 points of resolution

WHO to target?

WHERE to target?

HOW to communicate to them?


Some examples

�Sales

�Loyalty

�Sales productivity


COMMUNICATION DIAGNOSTIC - ROCHFORD CASE

STUDY

GREY BLACK

OCHRE GREEN PINKORANGE

LIMEBROWN YELLOW

BLUE TURQUOISENAVY

MAUVE

WHITE

RED CRIMSON

ColourGrid®

© 2003- 2007 XAX/IPH pfIn conjunction with Dr Colin Benjamin© - The Horizon Network

Rochford Customers

ALL

n=1012BPI=32

Two target lists selected based on two distinctive Mindsets

Email communication created for each Mindset

INCREASED RESPONSE RATE OF 580%!

5.8 times more Club members responded to the Mindset aligned and targeted email


Each Mindset responds differently, so we may need

different communications to relate, engage and drive

response.

COMMUNICATION DIAGNOSTIC – FINANCIAL SERVICES

ColourGrid®

© 2003- 2006 XAX/IPH pfGREY BLACK


LIMEBROWN YELLOW

BLUE TURQUOISENAVY

MAUVE

WHITE

RED CRIMSON

ColourGrid®



LIMEBROWN YELLOW

BLUE TURQUOISENAVY

MAUVE

WHITE

RED CRIMSON

ColourGrid®



LIMEBROWN YELLOW

BLUE TURQUOISENAVY

MAUVE

WHITE

RED CRIMSON

ColourGrid®



LIMEBROWN YELLOW

BLUE TURQUOISENAVY

MAUVE

WHITE

RED CRIMSON


CASE STUDY: RETAIL SITE SELECTION Product: Apparel Retail

GREY BLACK


LIMEBROWN YELLOW

BLUE TURQUOISENAVY

MAUVE

WHITE

RED CRIMSON

ColourGrid®

© 2003- 2007 XAX/IPH pf

Somewhere

2 km radius

n=122

GREY BLACK


LIMEBROWN YELLOW

BLUE TURQUOISENAVY

MAUVE

WHITE

RED CRIMSON

ColourGrid®

© 2003- 2006 XAX/IPH pf

Site A

n=143BPI=26

2 km radius

GREY BLACK


LIMEBROWN YELLOW

BLUE TURQUOISENAVY

MAUVE

WHITE

RED CRIMSON

ColourGrid®

© 2003- 2006 XAX/IPH pf

Site D

n=193BPI=28

2 km radius

Optimal Demand Profile

Existing Site -Demand Profile

SITE RELOCATION INCREASED WEEKLY SALES BY 320%

Selected New Site

DECISION; Vacate current lease and

find a better aligned location


QUANTIFYING LOCAL DEMAND

CHARACTERISTICS

Define catchment area (s)

Measure each

household in the area

Based on frequent / loyal;

shopper addresses

Using the data from

household profiles for the

area

Determine logical markets

Select markets that are

distinctive in the area

Quantify market sizes

Measure the number of households that fit market

criteria


PROFILE OF BANK CUSTOMER BY SAVINGS &

INVESTMENTS

GREY BLACK


LIMEBROWN YELLOW

BLUE TURQUOISENAVY

MAUVE

WHITE

RED CRIMSON

ColourGrid®


Amount In All Savings & Investments – 4thQtr

$100,000 or More

Layer: Westpac

wc=20 n=3,332

GREY BLACK


LIMEBROWN YELLOW

BLUE TURQUOISENAVY

MAUVE

WHITE

RED CRIMSON

ColourGrid®


Amount In All Savings & Investments – 3rd Qtr

$20,000- $99,999

Layer: Westpac

wc=157 n=2,420

GREEN, BROWN,MAUVE

BLUE, TURQUOISE,NAVY


EXAMPLE - CUSTOMER SATISFACTION BY SAVINGS &

INVESTMENT AMOUNT

GREY BLACK


LIMEBROWN YELLOW

BLUE TURQUOISENAVY

MAUVE

WHITE

RED CRIMSON

ColourGrid®


Satisfaction With Westpac Bank

TOTAL Satisfied

Layer: Westpac

wc=1,362 n=9,292

GREY BLACK


LIMEBROWN YELLOW

BLUE TURQUOISENAVY

MAUVE

WHITE

RED CRIMSON

ColourGrid®


Satisfaction With Westpac Bank

TOTAL Dissatisfied

Layer: Westpac

wc=193 n=1,281

Bank customers with the

greatest amount of

savings and investments

are more likely to be

DISSATISFIED with Bank

Bank customers with a

relatively low amount of

savings and investments

are more likely to be

SATISFIED with Bank

Satisfaction with BankSatisfaction with Bank


Business Examples


ABS Data $0 $0 $0 $0 ---- $5 M Annual Turnover$5 M Annual Turnover$5 M Annual Turnover$5 M Annual Turnover

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Mining

Manufacturing

Electricity, Gas & Water

SupplyConstruction

Wholesale Trade

Retail Trade

Accommodation, Cafes &

RestaurantsTransport & Storage

Communication Services

Finance & Insurance

Property & Business Services

Education

Health & Community Services

Cultural & Recreational

ServicesPersonal & Other Services

Mining – 1,040 Accommodation, Cafes & Restaurants – 32,262 Health & Community Services – 46,235

Manufacturing – 43,380 Transport & Storage – 28,470 Cultural & Recreational Services – 16,405

Electricity, Gas & Water Supply – 123 Communication Services – 4,330 Personal & Other Services – 33,020

Construction – 80,352 Finance & Insurance – 20,398

Wholesale Trade – 39,565 Property & Business Services – 134,459

Retail Trade – 101,191 Education – 8,612


ABS Data$200+ M Annual Turnover $200+ M Annual Turnover $200+ M Annual Turnover $200+ M Annual Turnover

Mining – 52 Accommodation, Cafes & Restaurants – Not Published Health & Community Services – 7

Manufacturing – 213 Transport & Storage – 33 Cultural & Recreational Services – 23

Electricity, Gas & Water Supply – 52 Communication Services – 10 Personal & Other Services – 4

Construction – 26 Finance & Insurance – 107

Wholesale Trade – 118 Property & Business Services – 54

Retail Trade – 59 Education – Not Published

-

50

100

150

200

250

Mining

Manufacturing

Electricity, Gas & Water

SupplyConstruction

Wholesale Trade

Retail Trade

Accommodation, Cafes &

RestaurantsTransport & Storage

Communication Services

Finance & Insurance

Property & Business Services

Education

Health & Community Services

Cultural & Recreational

ServicesPersonal & Other Services


PROPENSITY TO SPEND ($) &

PERCENTAGE OF SPEND ON BUSINESS APPLICATIONS

BY INDUSTRY

Agriculture, Forestry & Fishing -

Propensity to Spend ($)

29%

53%

0%3%

3% 0%

12%

less than 20

20-50

50-100

100-250

250-500

500+

unknown

refused

Construction - Propensity to Spend ($)

16%

45%

5%

3%

20%

4%

3%

less than 20

20-50

50-100

100-250

250-500

500+

unknown

refused

Finance, Insurance & Real Estate -

Propensity to Spend ($)

0%

56%

2%

2%

16%

4%

9%

less than 20

20-50

50-100

100-250

250-500

500+

unknown

refused

Agriculture, Forestry & Fishing -

Business Applications

0% 18%

41%

6%35%

less than 20%

20-50%

50-75%

75-100%

unknown

refused

Construction -


0%

51%

1%

34%

11%

less than 20%

20-50%

50-75%

75-100%

unknown

refused

Finance, Insurance & Real Estate -


0% 16%

33%

2%

49%

less than 20%

20-50%

50-75%

75-100%

unknown

refused


Engineering & ConstructionHenry Walker

Group

McMahon

Holdings

McDonnell

Dowell

ABB

Engineering

United

Constructions

Kilpatrick

Green

Kvaerner John

Brown

Stork Wescon

Australia

Krupp

EngineeringFluor Daniel

Building ConstructionLeighton

Holdings

John Holland

Group

Concrete

Constructions

Multiplex

Constructions

Baulderstone

HornibrookABI Group AV Jennings

Barclay

Mowlem

Walker

Corporation

Watpac

Australia

AutomotiveToyota Motor

CorpGMH Ford Mitsubishi Nissan Mazda BMW Mercedes Benz Honda

Astre

Automotive

Banking NAB CBA Westpac ANZSt George

Bank

Macquarie

BankBank West

Bank of

QueenslandAdelaide Bank Bendigo Bank

Chemicals Orica Australia Wesfarmers Incitec Wattyl Pivot LtdRhone

Poulenc

Dow

Chemicals

Huntsman

ChemicalNufarm Dulux

Pharmaceutical FH FauldingAust Pharm

Industries

Merck Sharp &

Dohme

Glaxo

WellcomeCSL Limited Bayer Australia

Novartis

AustraliaAstra Pharm.

Smith Kline

BeechamParke Davis

Retail Coles-Myer Woolworths Franklins McDonaldsHarvey

NormanRetra Vision David Jones Mitre 10

Davids

(Include Jewel)BBC Hardware

Consumer ProductsCoca-Cola

Amatil

Goodman

Fielder

Nestle

Australia

Australia Meat

HoldingsUnilever

National Foods

Milk

Philip Morris

Ltd

George

Weston FoodsDairy Farmers

Fosters

Brewing Group

High Tech & Electronics IBM AustraliaHewlett

PackardFujitsu Compaq Tech Pacific CSC Australia

Edge

TechnologyRobert Bosch GEC Australia

Gerard

Industries

Life Insurance AMPNational

Mutual

Lend Lease

Group

Colonial

Mutual

Mercantile

Mutual

Industry - Top 10 Accounts


Summary of Segmentation and GTM

Direct

Hybrid –Direct/Indirect

Indirect

Channel to Market

Vertical Industry Solutions

Industry Solutions

Solutions

Go To Market

>$1Bn

>$200m<$1Bn

<$200m


C Level

VP Level

Director / Manager Level

Day to Day Operational Level

Who gains benefit?

Visibility, Risk

Knowledge

Coordination, Visibility,

Measurement

Coordination, Visibility, Risk

Shareholder Value

Managing Cost& Strategy

Managing Efficiency & Effectiveness

Efficient &Effective Work


Segmentation Process I

Stage 1- Your market and how it works

Stage 2- Decision makers and transactions

Stage 3- Segmenting the market

Step 1 – Defining the ‘market’

The scope of the project

Step 2 – Market mapping

Structure and decision makers

Step 3 – Who specifies what

Decision makers and their purchases

Step 4 – Why

The needs of decision makers

Step 5 – Forming segments

Combing like minded decision makers


Segmentation Process II

Step 6– Segment Attractiveness

Measuring market potential

Step 7– Company Competitiveness

Company strength by segment

Stage 4- Identifying your target segments


Outputs

�Product

�Price

�Place

�Promotion


Blindspots

�CRM = Segmentation

�Segmentation = Targeting

�Product markets = Segmentation

�Channels = Segments

�Big = Complex

� Small = Simple

�One Size = Fits All

� Sales

� Loyalty

� ROI


Contact

Leighton Jenkins

0412 799 899

[email protected]

www.thejenkinspartnership.com.au

aim segmentation

Business

buythe jenkins partnership

services segmentation

channel segmentation

psychographics segmentation

geography segmentation

industry segmentation

demographics segmentation

creative segmentation