Segmentation Video Series: Episode 11
Using Segmentation in Strategy

 

Segmentation: Episode 11 Transcript

Hi, I’m Bonnie Janzen, and an Executive Vice President at Decision Analyst, and we’re here today to talk about applying your segmentation to strategy. So, thank you for joining us.

Initially, before you undertook the segmentation work, you would have sat down with each of your key stake holders and spent time with them one-on-one to understand how they use the segments, and then what they wanted out of the new segmentation, or maybe, how the segments could be improved.

With that information, you then did all the segmentation work, did all the weeks and weeks of work, and now you have socialized and shared all that information within the company to all the key groups and departments. That would include employees, franchisees, distributors, and agency-partners outside of the company. So now your down to the really fun part, which is the positioning work.

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  So, positioning is to help you achieve a sustainable competitive advantage, preserving what is distinctive and unique about your company or your brand and performing those activities either differently or similar activities in a different way. And this was mentioned by Michael Porter, and he’s from the Harvard Business School.
  
  So the whole idea behind segmentation, the reason you did all this work in the very first place, was to increase your competitiveness. We’re looking at market expansion, customer acquisition and retention variables, how to communicate, and the bottom line is to drive profitability and improve the return on investment.

 

So after the segments have been established, you may have 5, 6, 7, 8, 9 (what ever they are) number of segments, you have now looked at the size of the segments, and their buying patterns, and, kind of, what their make up is, and how they interact with their product and categories. And now you can decide which of these segments you’re are really going after.

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  With that information, now you are ready to go to work on product line portfolio and various other variables that we will talk about one at time. Very first off the bat is the product line portfolio, and your going to look at ‘What are the needs of various segments?’’ and then ‘Where do they overlap with your products in your categories?’ This will help you identify ‘What is the whitespace for those segments’? And then now you know where to innovate and where to drive your new product innovation work, and so, that will help you fully develop further line extensions and new product ideas.

 

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  The next would be Pricing strategy. And so your going to, want to look at, and you may have just one or two pricing strategies, (its not that you need 5, 6, 7 of them), but essentially, what your looking at is, ‘What does it take to get new customers into the brand or into the business?’ And you may have to do that at a lower price than what you would ideally want, and then with a plan to move them up over time, or migrate them to higher margin products.

 

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  Promotional strategy is very interrelated to the pricing strategy. Again you may have very large segments where you don’t even have to take a lower price, or have a big promotional activity, they’re just loyal consumers, loyal customers, and that’s great. But you may have other smaller segments where they’re highly valuable, and they look very attractive long term, and you may decide that you need more promotion around those smaller segments.

 

The place and the location are very important as well, so we’re looking at distribution channels, as well as retailers, looking at a mix of brick and mortar and online. You may want to consider some exclusivity agreements with specific retailers depending on who they are and how much they overlap with your segments.

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  And then the last place where you’re really going to think hard about your segmentation and how segments will affect this variable is communications. So, we have an entire video on this topic that is coming up. But essentially, you’re finding the optimal messaging, for each segment, and then you want to think about the optimal media, as well as, what time should those media occur in the customer journey or in their purchase decision process.

 

So there’s a lot of overlap between the communications, potentially you could have a consumer who is seeing TV, listening to the radio, as well as seeing social media, but you want to think about how these things build up on one another, and how they work together.

Thank you so much for joining us, and I hope this is helpful in the sense that you get a chance to think about how you might want to apply segmentation to your strategy. Join us for our next video which is specifically on communications and how that applies to your segments.

Contact Decision Analyst

If you would like more information on Marketing Segmentation, or if you have any questions, or about the videos, please contact Bonnie Janzen by emailing bjanzen@decisionanalyst.com or calling 1-817-640-6166.