Research Applications
Market Segmentation in IT Decision-Making
Client Issue:
"We need to be more targeted. We need different marketing and sales approaches and product development for different groups of customers to be successful. Our current segmentation is administrative – country, industry and enterprise size – and these groupings are not sufficiently different than one another. It is easy to use but does not offer any competitive advantage." This was RONIN's challenge – develop a more useful segmentation.
RONIN Philosophy:
Market segmentation has to be statistically valid but must also be pragmatic. It must be seen as being useful, accepted by all levels of the organization and used to determine actions to address the major business issues being faced. This implies being able to demonstrate the value from its use and "selling" it to management across the client organization. As well, management need to be able to believe in the segmentation with their "gut feelings." Rather than collect data and use statistical methods to "boil the ocean," hypotheses of possible segmentation structures are developed, and these are then tested using data collection and statistical techniques.
The Project:
A series of case studies of decision-making in large companies was the start of the project. These were presented to client management, and a set of hypotheses developed revolving around the behaviors and attitudes of decision-making units (DMU). These were explored with a broader set of one-on-one interviews and a series of focus groups. From these, the hypotheses were resolved down to a questionnaire that could be administered to a large group of companies on a worldwide basis. The quantitative data was analyzed using cluster analysis and CHAID to develop the segmentation. Based on the statistical analysis, only three variables were required to classify the DMUs into one of the eight segments. Rich profiles were developed from the data for each segment and presented to management.
This is where most research firms would have stopped. RONIN did not. From the profiles we then developed insight in terms of the marketing messages that were appropriate for each segment, the sales approaches which could be expected to work best and the products and models which would be most attractive to each segment. An expert-system-based tool was developed for use by the salesforce to classify prospects and to recommend products and sales messages. RONIN conducted 40 marketing workshops for various product groups and country marketing management to develop campaigns that would be directed at each of the segments, and 1,400 of the client's staff were trained in the segmentation and its use. The segmentation also formed the basis for a new product development organizational structure.
The Bottom Line:
The value of any market segmentation comes only from the value derived from its use. RONIN's focus on the ultimate use provided a significant better payback than many segmentation projects.