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Analytics & Methods

Strategic Focus Through Segmentation

Posted On  December 17, 2012

At LRW, we see segmentation not as a study, but as a strategic process that can focus and improve the efforts of an entire organization. On a high level, segmentation is about finding your “best customers.” Taken further, however, it can help you effectively prioritize resources, develop new, highly specialized marketing strategies, and even improve product offerings.

The first (and easiest) step in segmentation is uncovering the ideal target market for your product or service, which requires:

  1. Understanding the needs that drive demand for your product
  2. Identifying high-potential groups of consumers (or “segments”) that possess those needs
  3. Devising effective strategies to attract more of those consumers

But why segment when you can use simpler, cheaper research methods to uncover consumer needs and test effective marketing strategies? A great segmentation goes far beyond simply finding the target market for a product. It looks for the relevant differences among consumers in that market, allowing businesses to tailor their strategies even more closely to the needs of their customers.

Here are the kinds of questions that provide truly actionable answers:

  • Are we delivering the kinds of products or services that meet the specific needs of our different target segments?
  • How will we develop the right communications plan to reach each segment?
  • And most importantly- how can we achieve a ROI from these insights that makes the research worthwhile?

Use segmentation to provide your organization with focus.

The next (and most difficult) step is deciding how to connect your company’s product offerings and marketing strategy with the targets segmentation research has uncovered. Companies often perform elaborate, expensive segmentation studies that wind up sitting on a shelf. The internal challenge lies in getting everyone on board to deliver compelling business solutions for each segment, integrating corporate needs and customer needs so you can increase your “best customer” pool.

The most difficult part of this step is getting the right people in the room. Before you talk to a single consumer, expectations must be set within the organization by lining up key stakeholders, defining strategic objectives, and agreeing to a process that translates the insights from the research into tactics.

Once you agree to the above steps you’ll be amazed at the clarity that follows. Too often, even after companies segment their target market, they try to target virtually everyone they can reach. Real targeting is not about turning away business – no one wants to do that! Rather, it is about prioritizing resources where they will do the most good and making sure that what you are communicating is in line with what the “right” people want.

An actionable, well-planned segmentation becomes a strategic filter that can focus the efforts of your entire organization. You may very well be surprised by the positive financial results of this fuller, better integrated approach. And isn’t that precisely what you’re looking for?

Written by LRW
For 40 years, LRW has been asking so what?® to help our clients use market research to have significant business impact. Learn more about us at LRWonline.com.

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