You are at a conference and a man is standing at the front of the room. He begins to present an explanation as to how time travel might be possible. Is this person crazy? Did he jump up there before the real speaker or is he a genius who is telling you something credible? Well, this is the same dilemma we have with innovation insights when there is no real perspective as to whom we are intently hearing discuss their desires and needs. Sure, you need solutions that reach a mass of consumers but consumers are not one blob of needs. If that speaker had been introduced to you as a lead scientist, possibly an astrophysicist who has studied black holes all his life, you would react to his presentation a lot differently than if he was the lead writer for Star Trek: The Next Generation with no science background. Why treat innovation insight any differently?

Bring clarity to marketing, strategy and innovation. Consumer and market segmentation is a critical study to understand whom you are trying to serve.

Innovation begins by knowing to whom we are listening. Segmentation is the method for separating individuals into groups. Segmentation brings order to understanding the various needs and unmet needs of a target population. From there, it is as if you are elevated to a strategic vantage point to see the big picture. With segmentation, we have a better understanding of why a diverse set of products exists in a particular category and what possible substitutes and gaps might exist in the marketplace. Consumer segmentation should include the following elements in understanding:

Attitudes

The psychological factors in why we do what we do; motivations, beliefs, social influences, etc. drive this set of factors

Behaviors

What we actually do; our product usage, lifestyle, habits, choices actually made, etc.

Needs

The bundle of insight into our desires and wants; there are both met and unmet needs

Descriptive Information

Other information that helps identify a group such as demographics, geography, situations and other factors

Segmentation may focus on consumer segments (which we aptly name a WHO study), situations, or even needs. A segmentation study must have a strategic objective for learning. There is extreme value from segmentation insight such as:

• I now know who my unique target segment is so I can better serve their needs
• I understand the logic of the product set offered today and the differences in needs that the various products serve
• I can now focus on an underserved market and focus my behavioral ethnography and other unmet needs discovery work on a group with which I know we can win
• I know the segments that our portfolio of brands serves and I can better differentiate and cover the market needs with this brand/product portfolio

Segmentation provides clarity with whom we should get to know better to uniquely serve their needs. Even with a product solution already in mind, we have to step back to evaluate and analyze whom this would best serve and why it might serve a segment of the population better than something else. While you will likely execute a quantitative study for segmentation, you shouldn’t start there. The value in segmentation thinking can begin today just by observing a category and what products exist. Here are the key steps to conducting a best practice project:

Market Insight

A segmentation study should begin with a strategic analysis of the positioning of the products in the marketplace, what need(s) they uniquely (or not so uniquely) serve, various motivations and other behavioral, attitudinal factors identified. A strategic segmentation that identifies initial segments can be a very valuable start. Set the learning objectives and determine what other insight you may want to bundle with segmentation, such as prioritizing unmet needs, satisfaction or benefits desired, etc.

Consumer Insight

Conduct qualitative discussion groups to hear the language of consumers and the relevant set of attitudes, behaviors and needs to prepare for drafting of the quantitative segmentation questionnaire. We may utilize Accelerated Learning Groups to quickly gain insight across several groups.

Quantitative Segmentation Study

Design and execute the quantitative study; you will need enough individuals for analysis of segments, usually a minimum of 750 – 1,000 completed surveys.

Strategic Analysis and Recommendations

We match study data to market data, sales, competitor product positionings, etc. to bring to life the logic of the marketplace, unmet needs (if this type of analysis was included in the research work) and other key insights to meet your objectives.

To discuss how segmentation might bring clarity to your market intelligence and provide a direction for competing whether in your core market or new growth markets, contact us at +1 513 842 6305 or info@valengroup.com.