If it's going to work, you need to involve people outside the marketing function. Actually, you have a change management project on your hands. See why. Please credit the author if you use the material. Some images are subject to copyright.

1. Segmenting for Success Designing an implementation plan Presented by: Susan Abbott

2. Valid and reliable doesn’t always mean useful … 200 CEOs surveyed in 2004 59% had conducted a major segmentation exercise within the past two years 14% said they derived value from it Yankelovich and Meer, Harvard Business Review, 2006, reporting on study by Marakon Associates and Economist Intelligence Unit 59% Paid for segmentation project 200 CEOs 14% “ Valuable”

3. The most critical point of this presentation … For segmentation to be useful, you must be able to act on it… Then you need to coordinate action in the organization. Marketing can’t do it alone.

4. Consider all operational levers…

7. Mobil Oil Example Benefit Matrix Ask yourself: can you still buy gas here if you are not in the target segment? Yes, of course. But they are not tailoring their offering to you. Spend USD $1200 per year Spend average of USD $700 per year Behaviour 80% of market 20% of market Size of segment ? ? Demographics Something besides price (Service? Convenience stores?) Lowest price of gasoline at the pump Principal Benefit sought Price Insensitive Price Sensitive Basis for Segment

9. Segment Focus Strategy: Whole Foods 4 “ We Sell the Highest Quality Natural and Organic Products Available”

11. Competing with Starbucks 6

13. Life stage Segmentation: Umpqua Bank 8

14. Umpqua’s Day-to-Day Banking Segments Bright and full bodied to bring out all the flavor of your better years A rich blend with those who have achieved their goals with room to grow A crisp and lively blend for those working toward their dreams Specially blended to give a quick lift to those just starting out Description High spending, low balances, no investments yet Young Families in asset acquisition stage Unlimited transactions $7.50 monthly. Includes safety deposit box. Reach Moving into retirement, or semi-retirement Have savings and investments Low balances Behavioral Correlate 50+ Well-established, mid-life. Building investments Students and young adults Demographic Correlate Low or no charges on most services, unlimited transactions Membership in Club Carefree $10 monthly, but accounts earn interest Free notary services Free investment consultation Low service charges Low minimum required balance Principle Benefit Sought Cruise Savor Go Label

15. Differentiated Communication 9 Same product

17. It sounds just like a change management project! Get organized to build model Deepen Learning Build Model Use How segmentation strategy fits with overall business strategy How might you act on the learning. Eliminate non-starters right away. Who needs to be involved Stakeholder identification It’s not just a marketing & research department project! Choice of model needs to fit business strategy and options Must fit organization’s ability to identify and respond to segments OR – start building the needed data Spread the learning throughout the organization Integrate all marketing activities with the segment strategy Integrate data collection and management Integrate channel strategy, metrics Integrate all other research

19. Choosing a Model

32. The most critical point of this presentation … For segmentation to be useful, you must be able to act on it… Then you need to coordinate action in the organization. Marketing can’t do it alone.

33. Thank you! Susan Abbott Web: www.abbottresearch.com E-mail: [email_address] Blog: www.arc.typepad.com/customercrossroads Phone: 416-481-7409 or 888-244-0285