Market Segmentation
Do you have the same value proposition and sales pitch to every customer (or consumers in B2C companies)?
Do you classify your customers according to demographics, industry vertical or other such variables hoping that each segment will respond to the same strategy?
Do you have the capability to identify and prioritize your most profitable customers and prospects and use that as the driver of your organic growth strategy?
Most business managers intuitively know that not all of their customers and prospects are the same. Yet many have the same pitch for all their customers. Even when marketers and strategists decide to focus on certain sections of the market, they define the target segment for their products/services. The pitch goes something like - “Our sweet spot is relatively wealthy, middle-aged consumers who are tired of using the older generation of products and want something new to address their life-stage.” There are two issues with this kind of approach:
- You find segments, not define them – segmentation is a property of the market and exists irrespective of the product/service provider’s actions. Our attempt should be to find clusters of customers with similar needs who will respond to a common strategy not define the ones that we think will most respond to our product/service.
- Segmentation and targeting are two different things – You first find segments and only then select your target(s). Segmentation is an act of discovery and targeting is a decision that we make.
Market segmentation is a foundational step in EMM Group’s framework for driving organic growth. We start with segmentation for a simple reason; unless one understands how customers are segmented or, more accurately, how their needs are segmented, it is impossible to build an effective go-to-market strategy.
Many marketers make the fundamental error of overlooking segmentation or of assuming they understand their market well enough to bypass rigorous segmentation research. More marketing campaigns fail because of this omission than almost any other mistake.
Even when marketers do take the time to segment the market, many focus on segmenting by behavior, by demographics or "firm-o-graphics," easily available profiling characteristics that have no immediate relationship to customer need. This segmentation approach also usually yields sub-optimal results.
EMM Group believes in needs-based segmentation (customers and occasions) and on using a rigorous, step-by-step approach to develop reliable, actionable, profitable segmentation.
EMM Group's comprehensive segmentation approach consists of four major steps, each with proprietary tools, customized workshops, and specific inputs and outputs.
