Segmenting for Success: Understanding the Consumer at a Deep Level as a Foundation for Strategy and Go to Market Actions

Segmenting for Success: Understanding the Consumer at a Deep Level as a Foundation for Strategy and Go to Market Actions

Is growing a business simple?  Is positioning a brand straightforward?  Can a ‘so-so’ job of meeting the needs of all consumers or customers lead to success?

No.

Today’s slowly recovering economy makes understanding consumers on a deeper level even more important.  Yet today we see more brands and companies who want to skip over the step of really understanding their consumer at a detailed segment level. They rush products and services to market that are not ready and don’t strongly appeal to any particular market segment.

This year for instance, a large multinational company invested tens of millions of dollars to buy a business in a new product category (shoes) in a market where their overall company brand was not yet established (China). With such a bold move in their business strategy, one might assume they might want to segment the market and develop a targeted plan for this business.

Not really.

Segmenting for Success in ChinaThe global marketing team wrestled with the best brand entry pricing strategy to choose, e.g., premium, mainstream or value, along with the long-term impact on the China market brand perceptions of this initial pricing approach.  At the same time, the team was already committed to rolling out a larger mega brand marketing campaign to make the company’s brand a mega brand across global markets and categories.  No consideration was given to altering the global campaign or reevaluating it in light of the new business in China.

Meanwhile, the local Chinese management had taken an entirely different approach. They established an existing shoe brand at a mainstream price point, and it was selling well.

In the end, the global marketing team decided to use their mega brand in China for the shoe business at a mainstream price tier and abandoned the (successful) local brand. Senior management questioned the lack of segmentation and deep insights that resulted in this decision.  And with good reason.  It’s very hard for a brand to go up market, from a mainstream or value tier to the premium segment.  Even with a sub-brand strategy, it’s likely that the company’s mega brand will lack credibility in the minds of consumers for the premium segment.

As growth strategy consultants and branding experts, we worked with the company to suggest market sizing of the price tiers, forecasting of demand, and understanding the decision process and drivers for the customer segments. We also advocated conducting focused trade retail, business-to-business customer and end consumer research to develop a fact-base to make the decision.  Additionally, we recommended examining competitor mega-branding strategies and their success.

Yet the ultimate decision was that the business was too small to merit investment and that no deep market segmentation or primary insights need be gathered.   The branding decision was made without a real understanding of the customer segments, their needs or the market dynamics.  The company took the time and resources to buy the business, but didn’t follow through with the investment required to help the business succeed and to build a strong megabrand.

Despite the challenging times, I advocate investment in understanding the market, and the needs of the target segment before making major branding, product and service strategy investments.  I believe this is even more critical in today’s challenging economic climate.  Organizations who have invested in this disciplined approach greatly increase their chances that drive growth. Unfortunately, companies that choose to ignore the facts can’t say the same.

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    Michal Clements

    Michal is co-author of Tuning Into Mom and an experienced consultant. Michal develops winning growth strategies and detailed go to market plans for some of the world’s outstanding organizations including McDonald’s, Gatorade, Abbott, Barilla, Tylenol, Clorox, Key Bank, Eagle Ottawa, Quaker and the Baker Demonstration School.

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