The "Mint" financial newspaper in India is covering a 33 part article covering all the consumer segments identified via market survey. The series of article is really good and a must keep for anyone interested in B2C business. You can find the articles till date at this link on the mint epaper.
The following diagram shows the map of the segments identified and that will be covered in this series by mint.
Today's blog covers the role of such market-survey driven segments and the statistically driven segment. Each has its own use.
When a company is entering a new segment or when it is new to the market, knowledge of the market is key in deciding the entry strategy. At this stage, not much is known "intimately" about the consumers in the target market. This is the stage when a market defined segment is useful. The company can evaluate the segments so defined and decide on appropriate strategy for entry as well as sustenance and growth.
Over time the company becomes successful and garners a decent size of customer base. Depending on the type of product being sold and the purchase and consumption pattern this time could vary from 6 months to 3 years or more. At this stage, the company has a significant number of customers in its fold as well as its able to capture data related to demography, transactions and interactions with the customers.
A clustering exercise at this stage to understand homogenous groups of customers will often lead to a completely different definition of segment. The following diagram is a representation of this scenario.
The new customer segment definition does not match the market defined segment. This is primarily because:
1. The culture of the company parentage (for example, different profiles of people get attracted to a Reliance or a TATA or a Future group),
2. The culture of the geography (for example, a retail outlet customer base will be highly influenced by the street from which it is accessible),
3. The culture of doing business (the business process followed will attract specific set of customers).
When this happens and a company is able to define and identify its customized segment, the stage is set to discard the market defined segment. The company need to realign its strategy to the identified segment of customers and plan to grow in this niche segment. Another strategy would be to identify market segments that got completely left out and define surrogate offerings to attract this segment.
I hope I have covered the role of market survey based segment and statistical segment in this brief post. In case you need to discuss on this further do drop a line at michaeldsilva@gmail.com
The following diagram shows the map of the segments identified and that will be covered in this series by mint.
Today's blog covers the role of such market-survey driven segments and the statistically driven segment. Each has its own use.
When a company is entering a new segment or when it is new to the market, knowledge of the market is key in deciding the entry strategy. At this stage, not much is known "intimately" about the consumers in the target market. This is the stage when a market defined segment is useful. The company can evaluate the segments so defined and decide on appropriate strategy for entry as well as sustenance and growth.
Over time the company becomes successful and garners a decent size of customer base. Depending on the type of product being sold and the purchase and consumption pattern this time could vary from 6 months to 3 years or more. At this stage, the company has a significant number of customers in its fold as well as its able to capture data related to demography, transactions and interactions with the customers.
A clustering exercise at this stage to understand homogenous groups of customers will often lead to a completely different definition of segment. The following diagram is a representation of this scenario.
The new customer segment definition does not match the market defined segment. This is primarily because:
1. The culture of the company parentage (for example, different profiles of people get attracted to a Reliance or a TATA or a Future group),
2. The culture of the geography (for example, a retail outlet customer base will be highly influenced by the street from which it is accessible),
3. The culture of doing business (the business process followed will attract specific set of customers).
When this happens and a company is able to define and identify its customized segment, the stage is set to discard the market defined segment. The company need to realign its strategy to the identified segment of customers and plan to grow in this niche segment. Another strategy would be to identify market segments that got completely left out and define surrogate offerings to attract this segment.
I hope I have covered the role of market survey based segment and statistical segment in this brief post. In case you need to discuss on this further do drop a line at michaeldsilva@gmail.com
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