Best Practices

Best Practices: Moving your business ahead with segmentation


Tips for finding the right segmentation framework for your brand

Different industries, different business types within an industry. There’s no “one-size-fits-all” when it comes to choosing the optimal approach to segmenting a market for brands. So how do you go about choosing the most meaningful segmentation for your brand—one that will provide the best ROI?

Based on the Radius experience with many industry leaders, we’d like to offer guidelines that you can apply when faced with choosing the right segmentation approach for your brand. The two situations outlined below speak to critical issues that may lead an organization to implement a segmentation.

Situation A: Brand sales have eroded and you need to better understand if your product benefits and marketing are targeting the right audience.

Situation B: An International brand is planning to enter the U.S. market. The company wants to understand engagement with its category and find opportunities to effectively position its offerings.
In both cases, the first step is to verify that segmentation is the appropriate means for addressing the issues and driving these businesses forward. To do so, Radius recommends asking the following questions about your goals:

  •  Do you need to more clearly define, and refine, your target audience?
  • Can you establish an efficient, yet effective, approach for allocating your marketing resources?
  • Are you looking to identify future growth opportunities?
  • Do you want to highlight new territory for your brand to explore?

Based on these criteria, both these situations are best addressed via segmentation. Success in both scenarios requires that the segmentation framework achieves at least two of the four goals set forth above.

The next step is to figure out the most actionable approach for creating that segmentation. The key to this is deciding what scenario will be most relevant to guiding your strategic plan for the brand.

There are a few simple, but essential, questions that must be asked to guide you towards this decision:

  • Are you looking to redirect the communications strategy and therefore need to explore attitudes and benefits? What category requirements define where my brand plays? Who are the consumers that have the needs that are commensurate with my brand offering?
  • Are you looking to redefine the brand’s positioning and, therefore, need to explore situations where the brand would be most appropriate? What occasions are most appropriate to target for my brand strengths and what requirements should my brand look to deliver on for those particular occasions?
  • Are you interested in exploring where you best fit into a marketplace given current behavioral patterns? What are consumers’ typical behavioral patterns within this category? Where does my brand fit into their usage/consumption?

Based on these questions, for Scenario A we may choose an approach that is driven by usage scenarios and behaviors, whereas for Scenario B we may choose one that is more benefits/attitudes oriented.

The most critical factor for the success of any segmentation is that it provides you with a structure to drive behavior and growth. This requires a research plan that clearly conveys how to:

  •  Illustrate the core reasons why consumers are in your category
  •  Illuminate the relationship between needs and behaviors
  •  Prioritize targets based on their potential value to your business
  •  Provide guidelines for developing targeting, positioning and/or product strategies to reach the priority segments.

Segmentation is equal parts art and science, and, therefore, the decisions you make will depend greatly on the types of actions you want to take and the nuances of your business situation. Asking the questions laid out above, and scrutinizing the issues we’ve discussed, will go a long way towards ensuring that you make the right decision for you. The multivariate techniques that are applied will emerge based on which decisions you make. Therefore, it’s essential to let the issues lead the way and not the tools.  

Since the choice is not always straight forward, leveraging a systematic approach that engages key stakeholders, early and often, to discuss these issues will enhance your ability to effectively integrate the segmentation into your organization.

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