We frequently help our clients with their customer segmentation strategy. This includes identifying key customer segments, understanding these segments better, gaining insight into the products or services they need, and fine-tuning the marketing message. 

Segmentation Strategy

Marketing strategy is the prioritization of limited resources on the greatest opportunities in order to increase ROI and achieve a sustainable competitive advantage.

Perhaps the most important decision in market research is that of selecting a segmentation strategy. Segmentation is the art and science of dividing a population of customers into actionable sub-populations. Actionability is key to any segmentation approach. To be successfully actionable, a segmentation approach must satisfy a set of Content Criteria and a set of Usage Criteria. 

1. Content
   • Size/Economic Potential – Are They Worthwhile?
     One of the most important requirements in determining the viability of a target market segment is economics.
   • Identification – Are They Different?
     • The segments must provide significant differentiation on behaviors like brands purchased or used, usage frequencies and volumes, occasions, or other behavioral characteristics.
     • Segments should also help indicate why these differences exist. The segments must differ significantly on things like needs and requirements, perceptions of products, attitudes and situational variables.
     • Finally they should explain who the customers are, and contain defining characteristics of customers in each segment allowing us to know more about them, in addition to their behaviors and motivations.
2. Usage
   
   Usage relates to how distinctive/homogeneous they are. Members of a segment need not be identical, but to be compelling, individuals in one segment must be readily distinguishable from individuals belonging to other segments. This directly affects how easy they are to understand and manage against.
   
   The segments should be describable in fairly straightforward terms, in order for them to be well understood and acted upon by managers. Also segmentation should provide a way in which they can be found and identified. We must be able to target specific segments, and to somehow classify customers outside of our study into the appropriate segment.
    
   
   • Product Offering and Messaging – What to give them?
     Actionable in terms of marketing strategy
   • Reachability – Are They Reachable, How?
     Accessible/reachable (Where to advertise etc.)
     
     Thus Segmentation Procedures Must Address:
     • Identification of influential characteristics within multiple domains: Behaviors (incl. Value), Attitudes, Preferences, Psychographics, and relevant Demographics.
     • Determination of relationships, simultaneously, among characteristics within each domain, and among characteristics across all domains
     • Delineation of common dimensions that account for these relationships, with special emphasis on those attitudes and behaviors that account for high ‘Value’
     • Segmentation of consumers on the basis of actionability and value
     • Profiling segments on characteristics that differentiate among segments
     • Prioritization of segments on a set of value based criteria

AA-Segmentation^SM Background

During his career in market research, Tom H. C. Anderson, Anderson Analytics’ founder and managing partner, managed several customer segmentation projects. Having “looked under the hood” to understand the strengths and weaknesses of each of these segmentation methodologies developed and touted as ‘best’ by the some of the foremost market research suppliers in the industry, he felt that they were lacking in both depth of data input and analytic planning. As a result actionability was often limited.

Tom merged the best parts of these primary research data segmentation approaches with techniques from the field of data mining and text analytics, as well as to techniques developed in the field of psychology.

The result, AA-Segmentation^SM, is a new breed of segmentation. AA-segmentation incorporates aspects of human behavior that most firms ignore, thereby opening up the black box and avoiding a one-size-fits-all segmentation approach. Instead it is a segmentation which has several methods of validation, and is also flexible enough to incorporate variables which may be specific to a company.

Selected AA-Segmentation^SM Testimonials:

“Anderson Analytics surpasses expectations…The market segmentation tactics which in turn provided me with the most responsive messaging have given me the ability to zero in on the consumers who would best benefit from the products my store offers. I will use Anderson Analytics again.”

Kristina Haas, CMO, Gigi’s Closet and Haas Women Endeavors

“Most recently we contracted Anderson Analytics to help us with a complicated consumer segmentation. We were very impressed by the quality, speed, and strategic insights of the work; Anderson Analytics really does understand how to deliver the Information Advantage”

Juan C. Garcia, Director, Marketing To Hispanics Practice, Zyman Group

“Anderson Analytics delivered our market segmentation research results on time and on budget. They provided expert advice on study design, analysis, and reporting of actionable recommendations. They are a pleasure to work with, too. I highly recommend Anderson Analytics.”

Marilyn Siderwicz, Director, Advancement Communication, Babson College