MARKET SEGMENTATION

…how to cut costs and increase your margins - by grouping your customers differently

Tom Peters says he bought a Ford Taurus because it had a coffee cup holder. This is typical of the subjective personal way that major decisions are often taken. If Ford had found all other car owners who are addicted to coffee and told them about the coffee cup holder, then they might have been able to sell them a Ford Taurus too.

So you know which products your customers buy, but do you know why they buy them? What is it that spurs a customer to buy your particular product? You may think it is because of your superior customer care and the image of the product, but perhaps it is just because of a small detail you couldn't predict.

We can use such nuances in customer motivation to increase profitability, with a unique package called 'SCAN' ('Segmenting Customers According to their Needs' ©Leading Edge Management Consultancy Limited). This looks at the way that your customers buy rather than just what they buy. Sophisticated clustering analysis enables us to re-define your markets into new logical segments of customers that can be targeted according to their specific needs. By grouping customers according to the way they buy, your offering can be more tailored for them, which means that you can appear to have no competitors.

Focusing on customers' motives and behaviour is particularly important to those in commodity markets that need to resist price pressure and increase margins. It can show you where to cut your costs, yet please your customers by giving them exactly what they want, no more and no less.

Case Study - Segmentation

In the past this company had always targeted its customers according to the product they bought, but this was proving to be expensive. They asked us to help them define a new service structure to generate better margins, but without them abandoning large chunks of business open to competition.

Using SCAN we critically re-assessed the market for them, undertaking a major research programme on buying behaviour and motivation, which enabled us to construct three more-logical segments based on customer benefits. This way the company could concentrate its highly technical sales effort on the customers wanting high level benefits, and use lower cost routes for the other new segments that were more price sensitive.

What our clients have said when using us for Segmentation consultancy

Focussed knowledge of the "construction industry"