From Market Segmentation to Customer Segmentation: Opportunities for Competitive Advantage and Growth
This is the first installment of a multipart series on strategies and tactics to help marketers of all types increase competitive advantage and growth.
The strategies, tactics and examples I’ll share will address how to develop, cultivate and retain profitable, long-term customer relationships in these challenging economic times by integrating segmentation strategies that begin with market segmentation. I'll go through a seven-step process and culminate with customer segmentation.
What I’ll be covering can be used at the brand and corporate levels, by consumer and business marketers, and by one-step and multistep marketers. The first of the strategies in the seven-step process follow.
1. Market segmentation. The opportunities to gain competitive advantage and grow start by identifying, prioritizing, understanding and focusing on the market segments where you have the most relevant value proposition, greatest competitive advantage and highest barriers to entry.
Segment and target markets based on purchase motivations, needs hierarchies, shopping behavior, decision making and purchase behavior.
2. Brand strategies. The branding/rebranding strategy that's worked for me has been to first conduct market analysis that includes market trends; market attractiveness; market segmentation; and a competitive analysis incorporating value propositions, competitive advantage and branding.
You’ll know what market segments you’re going to focus on and who your competitors will be, allowing you to begin to develop a brand strategy to differentiate and position your brand(s).
3. Acquisition products. Whether working with a cataloger or other consumer marketer where direct marketing was an important driver of growth, I’ve encountered the 80/20 rule, where across a product portfolio of hundreds of products, a minority of the SKUs drove the majority of profitable new customer acquisition.
These driver items are the face of your brand/company with prospective customers. They position you in your markets. Use them to create share of mind for your brand(s).