by Kenneth Rudich
Neil Rackham, a known speaker and writer in sales and marketing circles, is fond of advancing the idea that customers are not simply buying products and services; they are really looking for solutions that satisfy their needs, motives and/or preferences. In other words, they are searching for the created value I’ve talked about in several other posts. I’ve spent a good deal of time on this topic because it is the cornerstone to a good marketing initiative.
The search for solutions puts a premium on businesses who are able to pinpoint the motives of the customers they serve (both implicit and explicit), and then use those motives to fashion an offering that promises fulfillment beyond anything a generic product or service can provide. So much the better if the same information can also be used to establish a competitive advantage as needed.
The best solutions attempt to identify and tap the right set of customer motives even as – or when – they vary among a business’s current and potential customers. This includes being able to distinguish between those things that truly add value and those that only add costs. In today’s environment of spoiled consumers, the mistake of failing to provide a solid customer experience at every step along the way will almost always call attention to itself, even in cases where the lapse may be seemingly subtle.
the market characteristics analysis does matter
The market characteristics analysis observes the dynamics of the customer base in a manner that helps to regularly unlock insights about it. You may recall from an earlier post that the market characteristics analysis is part of the larger market opportunity scan. It, along with an assessment of the external forces, seeks to discover key implications for smartly fashioning the value chain into a complete (and competitive) end-to-end solution.
Consequently, the market characteristics analysis is of critical importance to businesses both large and small.
One popular method for performing a market characteristics analysis involves the application of market segmentation techniques.
The general intent of segmentation is to reduce goal ambiguity by moving away from a one-size-fits-all mentality. It does this by identifying groups of customers with similar characteristics, values, needs, aptitudes, motives, behavior patterns or preferences; and then using the information to improve the level and quality of interaction with each group, while also improving the effectiveness and efficiency of the marketing initiative.
Said another way, segmentation assumes each group has its own ideas about what constitutes value for them, and their perceptions carry implications for shaping and molding the value chain. The Balanced Scorecard authors Robert Kaplan and David Norton say, “Organizations that do not segment their market run the risk of doing nothing well for anybody.” In The Marketing Imagination, Theodore Levitt contends, “If you’re not thinking segments, you’re not thinking. To think segments means thinking beyond what is out there to see.”
using market segmentation
Market segmentation is a fairly expansive topic, and it will probably take at least a few posts just to convey an introductory level of information about it.
But even an introductory level of understanding will be enormously helpful to those currently unfamiliar with, or only slightly familiar with, this topic. It will definitely support your strategic learning cycle once you begin to frame your thinking in this manner, let alone begin to formally use it as a decision-making tool. And it will help bolster your business strategy not just a little, but to a substantial degree.
In future posts about market segmentation, we’ll explore the larger universe of concepts associated with it, how to choose the right approach for your business concern, and how it can be used to keep your value chain vibrant with end-to-end solutions.