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GO-TO-MARKET WORKSHOP COMMONWEAL VENTURES Integrated Marketing & Customer Segmentation Britain and America are two nations separated by a common language. George Bernard Shaw Customer Segmentation Identify Differentiation Segment Target Geography Validate Geographic Market Beachhead Customer Mapping Profitability – Fuelling Growth Logic of the Marketing Plan: Discovering Market Entry Model Core Concepts in Marketing Plan Industry Benchmarking Market Research Segmentation Target Market Identification Positioning & Beachhead Selection Reference Customer Clustering Market Planning Marketing Market Business Development Execution Sales Go To Market Logic of the Marketing Plan: Discovering Market Entry Model Designing the Market Attack: Integrating the Components Choosing targeting variables Substantial variation in terms of the chosen variable across segments. Purchase pattern (e.g. purchase intention, usage rate) Needs or benefits Little variation in terms of the chosen variable within a segment. Buying decisions triggered by targeting variable, i.e. what is important to the customer Designing the Market Attack: Integrating the Components Target Business Development Sales Attack Marketing Designing the Market Attack: Integrating the Components Market Planning: ▪ Industry Analysis ▪ Market Research ▪ Segmentation ▪ Target Market ▪ Beachhead ▪ Pricing Model Target Market Execution: Marketing ▪ Strategy ▪ Channels ▪ Collateral ▪ Measures/Metrics ▪ Promotion ▪ PR & Communication ▪ Budgeting 2 ROI Designing the Market Attack: Integrating the Components Benchmarking Industry Structure and Value Chain Business Development Identifying Go To Market Partners Suppliers Channels Alliances & JVs Strategic Partners Consider “Incubation” for Marketing and Financing Designing the Market Attack: Integrating the Components Strategy Sales Approach and Model Lead Generation Lead Cultivation Channel Selection Channel Acquisition Execution Sales Team & Partners Budgeting Goal Setting & Milestones Sales Protocol Tactics Incenting Team & Partners Sales Attack Designing the Market Attack: Integrating the Components Target Business Development Sales Attack Marketing Synchronize, Budget & Measure ROI on Customer Acquisition/Share Goals Developing Sales Strategy: Channel Selection Market Segmentation Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes. Proportion of company using market segmentation 11% 10% 17% 11% Legend: Yes – using market segmentation No – not using market segmentation Overall B2B industries B2C industries B2B & B2C industries Customer Segmentation Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes. B2C Segmentation Variables Geographic Demographic Psychographic • World region • Age • Lifestyle or country • Gender • Opinions • U.S. region • Family size • Attitudes • State • Family life cycle• Values • City • Income • Degree of • Neighborhood• Occupation Loyalty • City or • Interests • Education metro size • Activities • Religion • Density • Race • Climate • Generation • Nationality Behavioral • Occasions • Benefits • User Status • Attitude To Product • User Rates • Readiness Stage • Usage Rate B2B Segmentation Variables Geographic Firmographic • World region • Industry or country Sector • U.S. region • # Employees • State • Revenue • City • Market • Neighborhood Position • Regulatory • City or Issues metro size • Investors • Density • Ownership Type Role • Executive • Sales • HR • Finance • Marketing • Research • “Director” • “$$” Behavioral • Occasions • Benefits • User Status • Attitude To Product • User Rates • Readiness Stage • Usage Rate Segmentation: Strong Segmentation Scheme Choosing targeting variables Substantial variation in terms of the chosen variable across segments. Purchase pattern (e.g. purchase intention, usage rate) Needs or benefits Little variation in terms of the chosen variable within a segment. Buying decisions triggered by targeting variable, i.e. what is important to the customer Steps in market segmentation, targeting and positioning Market Segmentation Identify basis for segmenting the market Develop segment profiles Target Marketing Develop measure of segment attractiveness Select target segments Market Positioning Develop positioning for target segments Develop a marketing mix for each segment Target Marketing Break a market into segments and concentrate on one or a few key segments. Prioritize your limited resources on where the value proposition is most compelling. Segmentation Methods May Be Used in Combination 2 3 Needs-based segmentation Segments based on behaviors, needs and drivers, indicating how they think about the features of a product/service, what they prefer and for which reasons Usage-based segmentation What the customer needs and wants Segment based on past and current customer’s usage of channels and products What, where and how the customer purchases 1 Sociodemographic & life style / Firmographic segmentation Segments based on: B2C: Age, gender, interest and other aspects of their lifestyles B2B: Sector, number of employees, turnover, geographic location… Who is the customer 4 How much value the customer delivers Value-based segmentation Segment based on current/potential profitability-value and describes what kind of actions can be taken to maximize customer profitability by using quantitative criteria Segmentation Approaches Geographic segmentation Demographic/Firmographic segmentation Psychographic/Role segmentation Behavioral segmentation Selecting the appropriate segmentation method is a function of the business objectives Segmentation Schema Approaches to market segmentation: Geographic segmentation Demographic segmentation Psychographic Behavioral segmentation segmentation Segmentation Variables Geographic Demographic Psychographic Behavioral • World region • Age • Lifestyle • Occasions or country • Gender • Opinions • Benefits • U.S. region • Family size • Attitudes • User Status • State • Family life cycle• Values • Attitude To Product • City • Income • Degree of loyalty• User Rates • Neighborhood• Occupation • Interests • Readiness Stage • City or • Education • Activities • Usage Rate metro size • Religion • Density • Race • Climate • Generation • Nationality Segmentation Approaches DOMESTIC MARKETS: Demographic segmentation • Industry, company size, location Operating variables • Technology, usage status, customer capabilities Purchasing approaches Situational factors • Urgency, specific application, size of order Personal characteristics • Buyer-seller similarity, attitudes toward risk, loyalty GLOBAL MARKETS: Geographic segmentation Location or region Economic factors • Population income or level of economic development Political and legal factors • Type / stability of government, monetary regulations, amount of bureaucracy, etc. Cultural factors • Language, religion, values, attitudes, customs, behavioral patterns Segmentation Schema Dividing the total heterogeneous market for a good or service into smaller, more homogeneous groups. Discern between groups using segmentation variables. Criteria for Segmentation Segmentation Dimensions Homogeneous Within Segments Heterogeneous Among Segments Substantial Operational Profitable Useful to ID Customer Profitable Entrepreneurial Marketing Why is Segmentation Important? Heterogeneity Customers will prefer a product which approximates their preferences. Segment 1 Segment 2 Scatter plot of consumer preferences This position will attract all customers from both segments in monopoly Why is Segmentation Important? Differentiated Second Mover Occupies Profitable Segment Monopolistic First Mover in Unsegmented Market Segment 1 Segment 2 Scatter plot of consumer preferences First Mover Retreats to Second-best and Less Profitable Segment Segmentation: Combining vs. Dividing Combining Dividing Cons Pros Increase in target Difficult to develop effective market size Pros Easier to satisfy each segment very well Economies of scale Easier to achieve competitive advantage marketing mix Competitors can draw customers away by offering Less investment targeted as result of more marketing mix to homogeneous general sub-segments marketing mix Potentially less competition Potentially bigger sales within homogeneous segment Cons Decrease in target market size Selecting a Target Market and Establishing a Position in the Market Analyzing Competitors Types of Competitors New Ventures Face Target Marketing Break a market into segments and concentrate on one or a few key segments. Prioritize your limited resources on where the value proposition is most compelling. Beachhead Customer A position on an enemy shoreline captured by troops in advance of an invading force. A first achievement that opens the way for further developments; a foothold . . . Example Beachhead Customer Ultimus: Joe is the HR manager of a bank with over $100M in assets and 600+ employees. Turnover at the bank for entry level positions is over 20% and the employee on-boarding process causes his group a lot of pain. Joe has been with the bank for over 3 years and is ready to implement automated processes to reduce his pain. Segmentation 2 “Ideas must be tested against what people really want” Identify 2-4 Segmentation Schemes for Target Country Identify Target Sub-Markets and Prioritize Them by Strength of Opportunity Describe Beachhead Customer in paragraph form Customer Segmentation