From Market Segmentation to Customer Segmentation: Opportunities for Competitive Advantage and Growth, Part 3
This is the third article of this multipart series on strategies and tactics to help retailers of all kinds find growth opportunities. The value of market segmentation and brand strategy is explored in this installment.
When looking to develop or penetrate markets, market segmentation helps identify opportunities.
Syndicated research, agencies and publishers help you identify growth opportunities. Experian Simmons, for example, provides information on market segments. Market Research Insight, Claritas and others help identify how to reach market segments and identify the best opportunities.
By developing markets and increasing market share, you're better able to identify market segments where you're most competitive. You can also determine how to reach consumers cost effectively and where to test-market for a national rollout.
Given the importance of your brand strategy to customer acquisition and sales growth, consider these ways of leveraging brand equity — even if you don’t have a large research budget:
- With low cost research, I’ve identified what drove purchase intent, changing how we merchandised products and branded. Instead of only launching the Fifty State Quarters based on education and history, for example, we took advantage of consumers’ interest in collecting.
- With regard to website visitor research, I uncovered how to leverage brands to more effectively compete with a larger competitor based on unmet needs. I also avoided potentially costly mistakes positioning a brand in a new market.
- Unless you acquire a significant number of customers with performance-based marketing, such as affiliates and pay-per-click search advertising, customer acquisition is expensive.
- By analyzing your product portfolio, you find 20 percent of your products generate about 80 percent of your profitable customers. Pull a list of your customers, include the product each bought first and how much revenue each customer has generated since acquisition. Sort the list in descending order by the number of customers acquired with each product. Then create another list sorted in descending order based on the total revenue per customer based on the first product bought. Then look for the sweet spot.
- The most successful short- and long-term competitive strategies I’ve been a part of included product development, pricing, identifying opportunities to better meet market needs, leveraging the 80/20 rule, integrating channels and identifying competitive advantage.
- Product portfolio analysis helps identify new product opportunities. Price testing can have a major impact on short-term sales conversion. Low cost research can identify opportunities for competitive advantage. And leveraging the 80/20 rule and multichannel marketing can produce short-term sales growth.
In the next installment of this series, I'll provide tactics, resources and examples of how product positioning, multichannel marketing, buying cycles, shopping behavior and customer segmentation are opportunities for competitive advantage and growth.