There is no end in sight to the continual evolution of technology-related products and services. Hardware/software upgrades and new releases—more frequently than not accompanied by price changes—present an ongoing challenge to marketers: as the features and benefits of products evolve, so do their target audiences.
Market segmentations that provided an actionable way to "divide and conquer" the marketplace must be frequently revisited to ensure their relevance.
Market analysis and segmentation profiles assist in identifying the universe of prospects, providing the insight necessary to reach them efficiently. Marketing resources can be effectively deployed by matching investments to the segments holding greatest promise.
Segmentation models enable a business to gain an understanding of the geographic and demographic attributes of their target markets, allowing them to implement strategic sales and marketing initiatives.
Most importantly, segmentation models can be developed to identify "high value" attributes and clusters within a customer base. Identifying the most lucrative markets without the benefit of segmentation is often a matter of guesswork.
Well-executed segmentation projects will quickly identify customer profiles that have higher propensities to generate incremental revenue than the average. Once the characteristics of a promising segment are identified, the information can be used to target new customers with similar profiles.
By targeting these prospects directly, marketers gain higher and quicker return on their marketing investments. There is an additional benefit of market segmentation: identifying existing customers whose profiles are predictive of high value for targeted up-selling.
The following real-life case study provides a good example of how segmentation can improve marketing involvements and customer interaction as well as increase sales.
A Technology Company—Increasing Sales Through Market Segmentation
When a server storage solution provider was able to identify actionable customer groupings, it developed both customized marketing efforts and next-generation products and services.
Situation
A top-tier server backup provider found itself with:
- A market segmentation that omitted the profiles of its most profitable customers
- No clear means to identify, target and understand key customer needs
- Poorly targeted marketing and advertising materials
- Miscommunication among internal marketing teams that resulted in inconsistent marketing programs directed at the same prospects and customers
Solution
The company developed a new market segmentation through custom research efforts. The client's research objectives:
- Develop a needs-based segmentation model for the server backup market in North America and Europe
- Develop a clear, meaningful way to identify and understand key customer groups
- Increase the effectiveness of sales and marketing efforts
- Direct next-generation product and service offerings
Using a well-designed survey instrument, telephone interviews were conducted in the U.S., the U.K., France, and Germany. Using multiple regression and path analysis, the optimal segmentation solution was isolated.
A "segmentation calculator" was developed to quickly assess membership in different customer segments, and a day-long working session between analysts and the client helped the marketing and product development teams understand the customer segments and leverage the findings for product planning and promotion.
On-site visits by the client team with customers from each segment further increased the client's understanding of different segments and helped the organization internalize the segmentation.
Results
By identifying actionable customer groupings, the client was better able to target marketing and advertising efforts, which could not have be done without the knowledge and understanding of:
- The server backup market
- High-value and low-opportunity segments and their related sizes
- The issues challenging each customer segment
- Common customer issues along with critical regional nuances
This understanding of each segment's needs supports next-generation product and service planning. And with the efficient segmentation calculator, the client continues to quickly and easily target sales and marketing efforts while tracking all customers registering new products.
