Bo Bäckman: Segment of behaviour and urge.
18/11 2010
The Process: Define the segment (What?). Identify and find the most appropriate target group in the customer database and on the market (Who?). Reach in selective, effective media (Where?). Influence by understanding the drivers (Why? – With a ‘Wow! This is for me!’).
In short: “What? To whom? Where? Why? (And Wow!)”.
Different segmentation parameters:
• Behaviour – What you do.
• Urge – What you desire.
Analysis:
You need a survey with information about brand penetration and loyalty together with values, activities, interests and target group information. This is often available in your tracking studies or can be found in cost effective open surveys.
Cluster analysis – splits the market in clusters that are exclusive. A customer can only belong to one cluster/segment. Internally the clusters are homogenous, externally as different as possible from the other clusters.
Chaid – forms a prioritized tree of wishes, preferences. First the kitchen is prioritized then the living room. …… This way we can find priorities and segment the priorities. Prioritizations are often correlated with willingness to pay. This way profitability is built in to the segmentation.
RU – segmentation (R=Revenue U=Urge). It is based on taking many different values (general and product specific) correlating them with loyalty and thus identify the drivers. These drivers are then transformed into a continuous variable and “sliced” into (often) 3-4 segments based on tradeoffs between urge – spending. The rationale is of course that it is more profitable to acquire a new customer that spends more and to serve and protect your own profitable customers.
Factor analysis – finds the patterns in what the markets wants and allows the customer to have more than one “wish” at a time. You might like a large kitchen but you might as well have a smaller kitchen and a dining area when you need a new home.
Output: Of course there will be a lot of tables, a lot of statistical factors that need to be interpreted, transformed into actionable conclusions/recommendations.
Example: Phone Behaviour.
The phone operators make money on traffic. Many of the new applications are provided by the mobile manufacturers through outside innovators. The applications generate traffic. The basic for the operator is to measure behaviour – how much do people spend on their mobile. Below is behaviour segmentation based on spending. The largest segment is “The silent Majority” –they spend very little on their mobile. Less than 20 euro per month. That´s where the challenge is – to make the Silent Majority heard and listened to. The smallest segment today is those who use many applications/services.
Source: Orvesto Sweden. 16 000 interviews. Open survey.
Urge.
Maybe there is no such thing as a pure need (if we ignore drugs). There is often an urge present that shows as preferences for different concepts – brands. Life Style Magazines is an urge product. Superbrands are urgedriven. Below an example for Amelia – one of the leading Life Style Magazines in Sweden. An RU-segmentation (Revenue and Urge)
Drivers/Anti drivers for Amelia:
Drivers – City Pulse: Enjoy shopping, follow trends in fashion, active to change their life, Want inspiration, responsible – personally and to the environment.
Anti Drivers – The small world: Don´t want change, avoid the city, hesitant to fashion, need confirmation of their life style
Segments: Spending on Life Style magazines and have City Pulse Drivers. Consumer Base: Women 15 – 79 years.
High spenders – 3.6%: The Core segment: High spenders with the right Drivers.
Medium spenders – 4.3%: Probably need a price incentive. The drivers are right
Low spenders – 7.6%: Like to read about their drivers but not to pay
Never – 9.7%: Forget theese. They probably have an attitude towards glossy magazines but might well read with a scorn.
Bo Bäckman
Rather nice blog you’ve got here. Thanx for it. I like such topics and anything that is connected to this matter. I would like to read a bit more on that blog soon.
Truly yours
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Very informative.