Segmentation Research

Market segmentation research provides the information necessary to identify new markets, redesign marketing programs and increase sales and profitability. Market segmentation describes the division of a market into homogeneous groups which will respond differently to promotions, communications, advertising and other marketing mix variables.

Market segments are formed in terms of grouping like-minded consumers (or businesses) in meaningful ways. The touch-points used for segmenting a market are nearly unlimited and may deal with such attributes as preferences, values, product usage patterns, attitude toward brand names, brand-switching behavior, etc. For consumers, a market segmentation study may identify demographics, geography, lifestyles, and socioeconomic status. The purpose for segmenting a market is to allow your marketing/sales program to focus on the subset of prospects that are “most likely” to purchase your offering. If done properly this will help to insure the highest return for your marketing/sales expenditures.
Cluster analysis is an exploratory data analysis tool for solving classification problems. Its object is to sort cases (people, things, events, etc) into groups, or clusters, so that the degree of association is strong between members of the same cluster and weak between members of different clusters. Each cluster thus describes, in terms of the data collected, the class to which its members belong; and this description may be abstracted through use from the particular to the general class or type.
Cluster analysis is a group of multivariate techniques used to group objects (subjects, products, attitudes, etc.) based on the characteristics they possess. Each object within the cluster will be similar to every other object, and different from objects in other clusters. In other words, homogeneity is maximized within clusters and heterogeneity is maximized between them.

CHAID- an advanced statistical analysis tool:

CHAID is a “tree” based analytics technique to perform multi-dimensional market segmentation research. The technique is used to identify and quantify groups and subgroups with a propensity to engage in specific behavior (i.e. product usage level, purchase intent). At each step, statistical tests are made to determine if a significant split can be made creating subgroups, or a new level to the tree diagram. Subdivisions are determined by finding the survey variable that produces the greatest difference in the dependent variable among response categories or groups.
The CHAID technique fits well with market segmentation research because it permits a variety of attributes to be considered simultaneously. For example, a major symphony orchestra felt it was losing sales despite continued advertising. “What, or who are we missing?”, they asked. Using a CHAID study, strategic marketing consultants evaluated gender, age, geography, demographics, and even hobbies in search of more fruitful markets. The results identified a generational gap that helped the symphony find receptive new customers, and provided solid clues for the orchestra’s branding efforts.

Market Segmentation Research Yeilds A Positive ROI

Segmentation studies are one of the most cost effective practices a marketer can undertake to pinpoint the target market. The market for practically any product or service can be segmented. Market segmentation can incorporate your existing data or we can assist you in collecting custom survey information. Market segmentation has taken on an increasingly important role in developing business strategies because the intelligence it uncovers affords its owners with a competitive advantage. By implementing market segmentation research, you can accomplish the following:

  • Identify groups of like behavior
  • Identify data links and dependencies
  • Determine the products and services necessary to meet the needs of key market segments
  • Identify market segments offering the most potential for a new product/service
  • Segment populations for marketing and outreach purposes
  • Identify niches where that are most profitable
  • Appropriately allocate scarce resources

There are only two sales and marketing options for a company: mass marketing or market segmentation. In today’s competitive marketplace, locating and targeting unique market segments is both a reality and a necessity. The advent and universal acceptance of the Internet opens up still greater possibilities for target marketing.

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