Learn how market segmentation is changing and how to achieve effective segmentation that drives action and results in today's landscape.

1. Rethinking Market Segmentation
Achieving Effective Segmentation to Drive Results
May 14th, 2014

2. 2
Where market segmentation starts –
and often ends
Why we slice up markets
The New Guardrails
• Objectives
• Descriptive Tools
• Activation
Effective segmentation in action
Conclusion
Today’s Agenda
Scott Laing
Sr.Vice President
Today’s Presenter

3. 3
Let’s say you’re interested in
growing your sales of…
…or…

4. 4
Your team decides to conduct a
Market Segmentation study…
…a time-tested friend
and bedrock of
marketing!

5. 5
The Start of the Project…
What typically comes to mind as effective segmentation?
A universal, cross-company model – everyone is a stakeholder and
everyone is on the same page
Detail, detail, detail – interesting, novel descriptors that excite
Description drives action
So, what’s wrong?

6. 6
Let’s Take a Step Back
Through Market Segmentation, companies divide large
heterogeneous markets into smaller segments that can be
reached more efficiently and effectively with products and
services that match their unique needs.*
*From Kotler, Philip and Gary Armstrong, Principles of Marketing, Prentice-Hall.
Segmentation:
Key Market Segmentation Attributes
It’s about driving growth!

7. 7
Guardrails for Effective Segmentation
Define a growth-centered objective
Don’t get lost in the description
Don’t fear data integration

8. Dividing Markets for a Reason
Principle:
Specificity in objective will pay handsomely

9. 9
Flavors of Segmentation
There are two possible problems to address via Market
Segmentation. Each requires a very different approach.
A Market for
Your Product
A Product for
Your Market
VS.

10. 10
What Does it Look Like? A Typical Model…
Engaged
Customers
Strong
Prospects
On-the-
fence
Low-
Interest
Totally
Uninvolved
“Disengaged
David”
“Homebody
Holly”
“Questioning
Quentin”
“Nearly Retired
Richard”
“Polly the
Pensioner”

11. 11
Principle:
Define a growth-centered objective
Always remember the promise of market segmentation: Finding a
market focus and realizing efficient growth.
Projects typically go “off the rails” when objectives multiply.
A segmentation model designed to optimize channel selection will
likely look different than one designed to optimize revenue based on
price discrimination.

12. Identify Relevant Attributes
Principle:
Specificity in objective will pay handsomely
Principle:
Don’t get lost in the mechanics

13. 13
State of Segmentation Tools
TIME
“A diversity of
wants”
identified
(1912)
Demographics/
census
(1950s)
Psychographics
(1960s & 70s)
Emotional
response
(2010s)
Public/social
discourse
(NOW!)

14. 14
“Nearly-Retired Richard”
• Male head-of-household
• Senior manager, F500 firm
• 55 – 64
• 1 – 2 spendthrift children at top colleges
• Average earnings $150,000+
• Wife is aspiring socialite/traveler
• Lives in elite suburbs
• Active saver/investor
• Own home
• Graduate+ education
• Shop at high-end department stores, local specialty shops
• Enjoy gardening
• Read The Economist
• Drive mid-range sedan
Where does this fit into growth?

15. 15
Don’t Lose Sight of The “Why”
…[M]arket segmentation has become narrowly focused on the needs of advertising [and
increasingly skeptical management teams], which it mainly serves by populating
commercials [and corporate meeting rooms] with characters that viewers can identify with
– the marketing equivalent of central casting.*
*From Yankelovich, David with David Meer, Rediscovering Market Segmentation,
Harvard Business Review, February 2006
Rich descriptions are critical, but not the end game
Growth is the end game
• Requires description of an appeal/target
• But also clear reach proposition
When the next turn is unclear, people tend to focus on selling the idea internally,
forgetting the whole point of doing segmentation in the first place.

16. 16
Principle:
Don’t get lost in the description
Let the “Why” of segmentation (growth) drive the “What” of
segmentation (descriptors)
Often, segmentation studies morph into customer profiling studies
with little focus on a “target” to optimize.
It is useful to identify a single piece of the business that will
“activate” the segmentation

17. “Wonder Twin Powers Activate!”
Principle:
Specificity in objective will pay handsomely
Principle:
Don’t get lost in the mechanics

18. 18
So Many Sources of Data!
Data overload
Above logos are the property of their respective owners

19. 19
Alternatives Have Different Strengths

20. 20
Which Source is Best?
Why stick with one?
Historical temptation to choose one source, but we’re finding the power in
integrating two – one for description, one or more for reach
• Custom survey + syndicated database
• CRM + custom survey
• Syndicated database + CRM
Description
Reach
Make sure you are integrating sources to meet your objectives

21. 21
Use the best sources for descriptive power and reach
Choose descriptive elements based on path to growth
Identify a single piece of the business that will “activate” the
segmentation
Principle:
Don’t fear data integration

22. Segmentation in Action
Principle:
Don’t fear data integration

23. 23
Pharma
Principle #1: Focus on a single objective
Objective: Arm the direct salesforce with a tool to identify strong prospects
Potential Pitfall: A rich descriptive segmentation based on attitudes was
highly predictive of product interest & feature appeal, but attitudes not visible
to salesforce
Solution: A simple 3-question predictive segmentation model based on
“visible” attributes constructed, yielding big targeting efficiency gain

24. 24
Major Insurer
Principle #2: Simple, but powerful model
Objective: Narrow SME prospect pool to reduce marketing costs,
increase sales efficiency
Potential Pitfall: Deep attitudinal descriptors provided insight into
insurance appeal, but limited value in predicting uptake due to organizational
policy
Solution: “First cut” segmentation model based on purchase likelihood with
message appeal added for color resulted in tight prospecting list

25. 25
High-Profile Publisher
Principle #3: Application of extensive database
Objective: Identify younger target group to grow subscriber base
Potential Pitfall: Primary research study provided richness for
identifying lifestyle profile and high-value editorial, but no robust reach
mechanism
Solution: Scoring potential subscriber database allowed for highly-
targeted direct campaigns. Similar programs underway with additional titles

26. 26
Summary: Shifting Mindset for Effectiveness
Cross-company
segmentation model
where everyone’s a
stakeholder. High cost,
long life
More description
is always better
Assumptions about
response are good
enough
Segmentation must have
a single-minded objective
to focus action. Focus on
growth, nimble action
Combine data sources for
powerful description and
reach
Focus on the description
that matters – what
distinguishes good
prospects

27. 27
About ORC International
For 75 years, ORC International has
provided companies around the globe the
insight they need to solve their most
pressing challenges.Today, our focus
remains clear.We’re dedicated to driving
your success through innovative research
solutions in Customer Strategies,
Employee Research, Strategic
Research and Markets and Products-
all supported by our unique Integrate
Intelligence (i2) framework.

28. 28
Thank you!
Questions?
Scott R. Laing
Sr.Vice President
ORC International
Scott.Laing@orcinternational.com
To learn more contact us at : answers@orcinternational.com
Visit our website at www.orcinternational.com
Follow us onTwitter: @ORCIntl