You are talking to Mr. Bosserson at the company where you are doing an internship. He mentions that he is thinking of doing a segmentation and targeting analysis of the company’s market. He is eager to learn what potential customers, especially the millennials, might be looking for in the products that the company sells. Happy to be able to contribute to this conversation, you mention that you are able to do a segmentation and targeting analysis that uncovers market segments and each segment’s collective preferences and persona. Intrigued with your capabilities, he asks you to describe the entire process for him, from data collection to analysis. How would you describe the segmentation and targeting analysis process that you have learned in our course for him?

QUESTION

You are talking to Mr. Bosserson at the company where you are doing an internship. He mentions that he is thinking of doing a segmentation and targeting analysis of the company’s market. He is eager to learn what potential customers, especially the millennials, might be looking for in the products that the company sells. Happy to be able to contribute to this conversation, you mention that you are able to do a segmentation and targeting analysis that uncovers market segments and each segment’s collective preferences and persona. Intrigued with your capabilities, he asks you to describe the entire process for him, from data collection to analysis. How would you describe the segmentation and targeting analysis process that you have learned in our course for him?

I suggest that you first write the answer for yourself and then check out the answer at the bottom of this page.

Notice that I will be looking for specific key ideas in your writing. I have highlighted these key ideas in blue font in my answer below. Different students may mention the key ideas differently, but your answer should explicitly or implicitly show that you are considering those ideas. There will be some flexibility in grading questions like this; as long as you have mentioned the most important ideas, I would be able to give you the credit. Note that segmentation and targeting WILL NOT be on exam 2.

Answer: We will need to collect data from a representative sample of people in our target market using a questionnaire/survey. To determine what questions to ask, we need to do an exploratory analysis (by talking to customers, brainstorming, focus groups, etc.) to first determine what needs and preferences our target market has when it comes to using our products. After we list all those needs and preferences, we can ask our survey respondents to rate the importance of those needs and preferences using a Likert scale. These data will allow us to segment customers based on their preferences and needs, which would later allow to us to target each segment with the product that best meets their preferences. We will use hierarchical cluster analysis and describe and develop a persona for each of our segments. We will also determine our segment sizes.

In addition, we will collect data on some targeting variables on the same survey. The targeting questions will help us learn where or how we can reach out to our target market: what forms of media they consume, where they shop, get their news, what services they’re subscribed to, etc along with some demographic information and other useful information such as what type of mobile phone they use, iOS vs. Android, their favorite social media websites, etc.

After we have divided people into different segments with the segmentation analysis, we can take a look at the targeting data for each segment and uncover patterns specific to each segment that would allow us to target each segment most effectively. For example, if a certain segment is more likely on average to use Facebook vs. Instagram, we can tailor our marketing messages on Facebook to fit the needs and preferences of that particular segment.

We would also be able to decide which segment(s) we find more attractive based on their sizes, how well-defined they are and their members’ preferences and needs, among other criteria. We can then focus our marketing efforts on the segments with the highest potential or the best match with our products.

ANSWER

Segmentation and Targeting Analysis: Uncovering Customer Preferences for Effective Marketing

Introduction

In today’s competitive business landscape, understanding customer preferences and effectively targeting their needs is crucial for business success. Segmentation and targeting analysis provide businesses with a strategic framework to identify distinct market segments and tailor their marketing strategies accordingly. In this essay, we will explore the step-by-step process of conducting a segmentation and targeting analysis, from data collection to analysis, to uncover valuable insights about potential customers and optimize marketing efforts.

Data Collection: Understanding Customer Needs and Preferences

The first step in conducting a segmentation and targeting analysis is to gather data that provides insights into customer needs and preferences. This involves a comprehensive exploratory analysis to gain a deep understanding of the target market.

Exploratory Analysis: Gathering Insights

During the exploratory analysis, businesses employ various methods to gather insights into customer preferences. Customer interviews play a vital role in directly engaging with the target market. Through open-ended questions and active listening, businesses can capture customers’ perspectives, uncover their preferences, needs, and pain points, and gain valuable qualitative data.

Brainstorming sessions involving internal teams also contribute to identifying key customer needs and preferences. By pooling diverse expertise and perspectives, businesses can generate innovative ideas and develop a holistic understanding of their customers’ preferences and desires.

Additionally, focus groups provide a platform for in-depth discussions among a selected group of individuals from the target market (Kabir, 2016). These sessions encourage participants to share their opinions, experiences, and insights, facilitating the identification of patterns and trends in customer preferences.

Designing the Survey Questionnaire

Building on the insights gained from the exploratory analysis, businesses design a comprehensive survey questionnaire. The survey aims to capture specific customer needs, preferences, and attitudes, and to quantify their importance.

The survey questionnaire should be structured to elicit responses that cover various aspects of the customer experience. Using a Likert scale, respondents can rate the importance of each factor, enabling businesses to quantify and prioritize customer preferences.

To ensure the survey accurately represents the target market, it should be administered to a representative sample of customers. This ensures the collected data reflects the diversity within the target market, providing a comprehensive understanding of customer needs and preferences.

Data Analysis: Segmentation and Cluster Analysis

With the survey data collected, the next step is to analyze the data to identify distinct market segments based on customer preferences and needs.

Data Collection from the Survey

The survey responses provide valuable quantitative data that can be analyzed to uncover insights about customer preferences (Sullivan & Artino, 2013). The Likert scale ratings allow businesses to quantify the importance of different factors and identify commonalities and differences among customers.

Hierarchical Cluster Analysis: Grouping Customers

To effectively segment customers, businesses employ statistical techniques like hierarchical cluster analysis. This analysis method groups individuals based on similarities in their preferences, needs, and characteristics. By clustering customers with similar profiles, businesses can create distinct market segments with specific preferences and requirements.

Targeting Variables: Refining Marketing Strategies

In addition to segmentation, businesses gather data on targeting variables that provide insights for effective outreach and marketing strategies.

Targeting variables encompass demographic, behavioral, and psychographic information about customers. They include factors such as media consumption habits, preferred shopping platforms, preferred news sources, and other relevant indicators. This data allows businesses to identify patterns and preferences unique to each segment, enabling them to develop targeted marketing strategies tailored to the specific needs of each segment.

Conclusion

A thorough segmentation and targeting analysis is critical for businesses to understand customer preferences and effectively tailor their marketing strategies. By conducting an exploratory analysis and survey questionnaires, businesses can gather valuable insights about customer needs and preferences (Camilleri, 2017). Leveraging statistical techniques like hierarchical cluster analysis helps identify distinct market segments with unique characteristics. Incorporating targeting variables refines marketing strategies and enables businesses to reach the right customers with the right messages.

A well-executed segmentation and targeting analysis ultimately empowers businesses to optimize their marketing efforts, enhance customer satisfaction, and achieve sustainable success in the marketplace. By aligning their products and messaging with customer preferences, businesses can create stronger connections with their target market and establish a competitive edge in the industry.

References

Camilleri, M. A. (2017). Market Segmentation, Targeting and Positioning. In Tourism, hospitality & event management (pp. 69–83). Springer International Publishing. https://doi.org/10.1007/978-3-319-49849-2_4 

Kabir, S. M. S. (2016). METHODS OF DATA COLLECTION. ResearchGate. https://www.researchgate.net/publication/325846997_METHODS_OF_DATA_COLLECTION 

Sullivan, G. M., & Artino, A. R. (2013). Analyzing and Interpreting Data From Likert-Type Scales. Journal of Graduate Medical Education, 5(4), 541–542. https://doi.org/10.4300/jgme-5-4-18