Chadwick Martin Bailey’s Brant Cruz and Jeff McKenna presented best practices of market segmentation based on their years of experience working with clients like eBay, Electronic Arts, Plantronics, and Microsoft.
2. Today’s Webinar
• Who is Chadwick Martin Bailey?
• Today’s Speakers
• Segmentation Best Practices
• eBay Buyer Segmentation Case Study
• GE Healthcare Case Study
• EA Sports Case Study
• Q & A (please enter questions into the webex Q & A feature and we’ll answer
them at the end)
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3. Poll Question #1: What is Your Biggest Challenge to
Successful Segmentation Projects?
A. Convincing the organization to prioritize some segments over others
B. Creating internal buy-in
C. Getting information used by front line employees
D. Naming the segments
E. Keeping the segmentation “fresh”
F. Creating globally-relevant segmentation
G. Sizing the segments
H. Back strains associated carrying with 100+ slide .ppt decks
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4. Chadwick Martin Bailey:
Company Facts
• Founded in 1984
• 55 Employees
• Headquartered in Boston
• Global, Full-service Provider
• Fully Dedicated
Retail, eCommerce, Technology,
Financial Services, and Travel
and Hospitality Practices
• Sweet Spot: when you want a
supplier who will provide
original ideas, not just a
response to an RFP
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6. Chadwick Martin Bailey:
Our Specialties
Finding the high potential growth opportunities and providing
Segmentation
direction on ways to realize the growth
Customer / Brand Driving customer acquisition and market share by linking customer
Experience experience to the brand message
Product and Service Research to support the development, positioning, and launch of
Development new products and services
Customer Experience and Research to enhance (retain and build) relationships with key
Loyalty customers
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7. Today’s Speakers:
Brant Cruz and Jeff McKenna
Brant Cruz Jeff McKenna
Vice President Senior Consultant
Chadwick Martin Bailey Chadwick Martin Bailey
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9. Poll Question #2: Your Last Segmentation Was Like
Which TV Show?
A. Cheers: Great when it was done and lived on successfully after the fact
B. Lost: It was complex, oft confusing, and enjoyable - and you’re still hoping
that it ends well
C. Two and a Half Men: It was fun while it lasted but ultimately useless
D. American Idol: Picking a scheme became a popularity contest, not a merit
contest
E. The Jay Leno Show: The findings were good on paper but it didn’t quite work
in reality
F. All in the Family: The core team was happy with it, but the rest of the
company thought you were “Meatheads”
G. Buffy the Vampire Slayer: Just one nightmarish scenario after another
H. The Hills: Lots of style, very little substance
I. This is a stupid question, let’s move on
10. There Are Several Approaches to Creating Customer
Segmentation
Attitudinal /
Psychographic
or Lifestyle Behavior-
Demographic /
Based
LifeStage
usage patterns
and purchase /
sales volume
Feature
Preference
Geographic /
Household
Motivational-
Based
core needs, attitude,
or barriers
10
11. Best Practices of Segmentation:
Rules of Thumb for Best Results
• Start with the End in Mind: Determine how the segmentation will be used
before you begin
• Allow for Multiple Bases: Take a comprehensive, model-based approach, that
incorporates all potential bases
• Have an Open Mind: Let the segments define themselves
• Anticipate Tradeoffs: Segmentation schemes have different strengths and
weaknesses
• Leverage Existing Resources: Harness the power of your internal databases
• Create a Plan of Action: Focus on internal deployment from the start
11
12. Start with the End in Mind:
Create a Plan And Stick To It
Business Decision Information Needed to Decide
Choose the optimal • What are the needs, goals preferences, experiences, knowledge, barriers, occasions
#1 segmentation scheme/ which and characteristics for agents and consumers?
high potential segments to • Which basis for segmentation will strike the best balance between being predictive
focus on of preference/behavior and reachable, scalable and sustainable?
• What is the size of each segment?
• What is the realistic potential for each segment?
Align Marketing / Sales • What are the needs, goals preferences, experiences, knowledge, barriers, occasions
#2 strategies with target and characteristics for agents and consumers?
segments • Where is there disconnect between current marketing/sales activities and the facts
above?
• What are the “Themes” (product groupings; others?) that run through the
segments?
• Which positioning will best resonate with and motivate each segment?
• Which segments should be served by sales staff?
• What are the preferred marketing/sales communication channels, by segment?
Choose high potential new • Which new products/services have the greatest potential with which segments?
#3 product/service concepts for • What “permissions” will be granted by each segment?
further development
12
13. Allow for Multiple Bases: Account for Everything that
Might Influence Behavior
2
4
Customer Goals
Products/Services
Competitors
1 Unmet Needs Preferences
Image
Value Drivers
Competitive Position
Initial Purchase
Re-purchase (Loyalty)
CHARACTERISTICS Cross-Purchase (Loyalty)
Psychographics Advocacy
Attitudes Relative Brand
Knowledge Choice Behaviors
Demographics Value
Values
Lifestyle
Relationship
Performance
Staff
Satisfaction
Expectations &
Problems 3 Availability
Product
Support Services
Channel Features
Competitors
13
14. Have an Open Mind:
Let the Segments Define Themselves
Segmentation
Criteria
INDEPENDENT PROFILE &
EXPLANATORY MODEL USE OF
SEGMENTATION ANALYSIS SCHEME EXPLANATION OF
LINKED TO BUSINESS DECISIONS SEGMENTATION
BASES IN Q’RE SEGMENTS
Company View Prospect View Goals & Needs Optimization Hierarchical Company View
•Mission •Specific
Performance
•Market Strategy Goals Occasions & Gains
Narrows Goals
(Acquire, Re- (Needs) Decision Making
(Needs)
sell, Cross-sell, many •Market Strategy
new products, potential (Acquire, Re-sell,
advocacy) Behaviors & schemes And/or Cross-sell, new
Behaviors Behavior down to a Matrix Behaviors products,
•Value Intentions few that advocacy)
Behavior work
Proposition(s) Behavior
Intentions
Intentions
•Value
•Pricing Strategy Preferences for Proposition(s)
Decision products & Decision
Making
•Tactics pricing models And/or Making
•Pricing Strategy
Communication Clusters
Performance Expectations
s Performance Expectations •Tactics
POP Company & Communications
Product Competitor Operations
Portfolio Evaluations Product Portfolio
Channels Channels
Sales Sales
Characteristics
14 COMPANY PROSPECT
15. Anticipate Tradeoffs: Solutions Will Have Different
Strengths and Weaknesses
Clearly Defined Marketing Strategy Database Scoring
Addressable Targets Clarity Accuracy
Scheme 1
Scheme 2
Scheme 3
Scheme 4
15
16. Create an Action Plan: Involve Stakeholders Who You
Need to Buy Into the Results
AGENDA ITEM 1 AGENDA ITEM 2 AGENDA ITEM 3 AGENDA ITEM 4 AGENDA ITEM 5
Introduction & Segmentation Defining the Hypothetical Segment Confirm Project
Warm up Basics & Process Business Decisions Brainstorming Alignment
(15 minutes) (30 minutes) (1 hour) (1.5 hours) (45 minutes)
• Name • What is it? • Explanation of Business • Goals: to accelerate the • Review original
• Title • Why do you do it? Decision Worksheet questionnaire design process; proposal and anything
• Stakeholders split up and ensure we don’t miss any that has come up from
• Responsibility Area • Different types important segment-defining the previous steps
into their core teams
• Zodiac Sign • Different bases concepts • Do the sample groups
(this does have a • Each team brainstorms
purpose)
• Guiding principles the decisions you want • Each team: brainstorm and sizes still make
to make based on this segments you think exist sense?
• Evaluation Criteria
research, your current • Put each segment on a post-it • Are there new decisions
• How long does it take?
hypotheses, and note with some defining that must be made that
• Where we’ll want information you need to characteristics are not covered in the
involvement from the make decisions proposal?
• Together, we brainstorm a
broader team
• Regroup and compare long list of measures that may
notes; supplier define each segment for
consolidates possible inclusion in the
questionnaire
16
17. Create an Action Plan:
Choosing the Best Scheme Is a Team Effort
The “Mrs. Cavanaugh”
Homework pre- and post- plane that allows you to get to know schemes we’ve
narrowed down
The “Daniel Webster”
Start by letting anyone who wants to make a compelling case for their scheme
The “Keanu Reeves”
Force people to defend a scheme they don’t like
The “Crossword Puzzle”
Find segments from your favorite scheme hidden in other schemes
17
18. The Beauty of Predictive Questions
What are they? How can I use them?
1. A short list of questions (1-2 minutes) • They are a tool that can live long
after the segmentation study
concludes, and can be used in a
number of ways. Typically we see
? ? clients use them in…
? ? • Qualitative or quantitative follow
? ups to learn more about ‘target’
segments – such as ad testing,
concept development, etc.
2. That feed an algorithm
• Sizing target segments
3. That scores respondents into a segment
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19. Poll Question #3: How Often Should You Refresh Your
Segmentation?
A. Every year
B. Every 2-3 years
C. Every 4-5 years
D. Every time a significant change in your business occurs
E. It should live on forever
19
20. A Few Details About Our Approach
• Multi-faceted questionnaire • Multiple state of the art analytical
• Allows us to look at multiple bases for techniques
segmentation • Headlined by Latent Class modeling
• And to profile them thoroughly • Backed up by CHAID/CART
• Employ trade-off techniques • Efficient tools to quickly evaluate
• Discrete Choice (a form of conjoint) every potential scheme
and/or Maximum Difference Scaling • Magic questions and database
(elegant in its simplicity)
scoring for ongoing targeting and
• Provides great variation on the increasing your knowledge base
measures, and therefore great as a
base for segmentation
• Usually reserved for key real estate
(like “needs”)
• Eliminates by-country scale use biases
20
21. Comparing Approaches
Issue Common Approaches Our Approach Benefits of Our Approach
Trying to make the • Actionability is guaranteed because engagement is focused on
Focus entire decisions from the start
study relevant to
Decision Making decisions after
engagement on
• Questionnaire stays on-topic and is focused
business decisions
the fact • Reporting is concise and relevant to business issues
• Develop the best segmentation scheme from each base (and
Focus on one base combination of bases). Evaluate them against each other along
Segmentation Multiple bases of
(e.g., a priori, needs / several key business criteria
Base(s) segmentation
preferences) • Benefit: we choose the best scheme without preconceived
biases
• Commonly used analytical techniques have advantages and
disadvantages
Analytical Use multiple
Use single technique • Our experience shows the best segmentation may come from
Technique(s) techniques
any of these techniques; learnings from one technique can be
used to inform the others
Mathematical results
Criteria for Choosing are the sole criteria Mathematical results • Actionability, Accessibility, Simplicity, and Consistency are also
a Scheme (e.g., homogeneity of are only one input key inputs
segments
• We detail the best candidate schemes and discuss the pros and
Final Recommended cons of each with you
Is developed
Segmentation Is dictated by you
with you • “Selling” the results is easier; we work with you and your
Scheme… stakeholders to determine the business criteria against which
each solution will be judged
23. Project Fast Facts
• Planning
• 10 group needs assessment interviews with 18 key stakeholders across multiple responsibility
areas and 3 countries
• 10 eBay team members where heavily involved throughout, representing all three markets
• Questionnaire Design
• Many iterations of the questionnaire, including 4 full days of onsite questionnaire planning and
“finalizations” (Boston and London)
• Shopping and Retailer Needs traded off using Maximum Difference Scaling
• Data Collection
• More than 20,000 interviews across US, UK and DE (25 minute online questionnaire)
• Analysis
• More than 20 schemes produced, profiled and evaluated by CMB
• Using multiple segmentation bases and multiple techniques (Latent Class, CHAID, Hierarchical/K-
Means)
• Choosing the Winner
• 3 Days in Berlin to discuss the 5 best schemes
• 15 people, 8 structured exercises, countless debates
23
24. Bringing Buyer Segments to Life at eBay
• Workshops and presentations to 2000+ employees
• Incorporation of target segments into annual strategy and leader’s meetings
• Employee online quiz with printable certificates
• 80+ hours of ethnographic research create a documentary and personas
• The “Ultimate Buyer Challenge” Offsite Program
• Buyer segments shared with Top Sellers at Annual eBay eCommerce Forum
24
25. How Are Things Different?
Outside of eBay
• New Internal Lexicon:
• Laser focus on the target buyer
• Understanding who you are ‘for’…priceless
• A lens to incorporate into
testing and analytics
• Data warehouse is scored!
• eBay now has a Buyer Building
• Buyer segments decorate the
buildings & cubes
• Segmentation extended to 8 total
countries
25
26. How Are Things Different?
Outside of eBay
• New Advertising Campaign:
• “Shop Victoriously” replaces “It”
• New “Windorphins” campaign
26
29. Making Segmentation Matter Among Primary Targets
Each group is profiled and named to attach a
personality to the market segments as shown
on the next slide
Making it matter Group 1 Group 2 Group 3 Group 4
For me, both gaming and I am so happy I bought I'm your stereotypical I love gaming - however
fitness is all about having the Wii! I would never gamer. I love video not quite as intensely as
a winner and loser! EVER pay for that games! I'm the guy in Group 3. Rather than
Segment Highlights expensive gym that line for the hottest new the challenge of a video
Groups 1 and 5 and go to. release, and I spend a game, I'm more about
fortune on technology. the graphics.
A fitness alternative
Products/Services that’s less expensive than
to Build and Market the gym, that’s simple
and convenient to do.
Perceived cost
Barriers to
overcome
When found online they
are most likely on a
Where to find them shopping site like
Amazon.com
29
30. Graphics Greg
THIS IS WHO I AM…
Here we provide a profile of “Greg” in his own words. Segment size
VALUE
Likes, dislikes, media uses and gaming activities. Level of interest and spend
High
Segment profiles put a face on the segment in XX% % interested in
“their own words” so information users can
develop messaging and targeting strategies
XX% EA Sports Brand Awareness: XX%
product concept
more effectively FITNESS ACTIVITY
Level of fitness activity and types
of activity
High
WHERE TO FIND THEM…
Skew male (61%), middle-aged, and XX% % workout
weekly or daily
I’ll go to the gym as soon as slightly more likely than others to be
I finish this FIFA 2009 in Germany (13%).
game… the graphics are
When online they frequent shopping
insane! sites, weather sites, video sites, and Currently on a diet: XX%
movie review sites.
GAMING ACTIVITY
Level of fitness activity and types
Children living at home: 35%
of gaming activity High
XX% XX% XX% XX% XX%
XX%
AGE
% play games
13-17 18-29 30-49 50-64 65+
weekly or daily
GENDER
61% 39% CONSOLE OWNERSHIP
COUNTRY
66% 9% 4% 9% 13% XX% XX% XX%
Wii PS3 Xbox 360
31. Recommended Strategy
100%
Future Product
Consideration
HIGH
90% 9% Interest: xx%
9%
7% Interest: xx%
Interest: xx% 8%
80%
Gaming Activity
(% play weekly or daily)
Gateway
Product
Interest: xx%
70%
15% Interest: xx%
60%
50% 13%
LOW
Interest: xx%
40%
40% 50% 60% 70% 80% 90% 100%
LOW HIGH
Fitness Activity
(% work out weekly or daily)
31
33. Let’s start with a familiar story
• Have you heard your business use this combination:
Small
Segmentation & Medium-sized
Large
These statements lack customer values, beliefs, attitudes:
The language of marketing!
33
34. About GE Healthcare IT
• Unit of GE Technology infrastructure
• One of 6 Healthcare business units:
Diagnostic Imaging, Clinical Systems, IT, Medical Diagnostics, Life
Sciences, Surgery
• Is a provider of EMR, Physician Office, Radiology, Pathology, and other IT
systems
• Healthymagination: Reducing costs, increasing
quality & access to healthcare
34
35. About the product in question: PACS
• What is a Picture Archiving & Communication Systems?
• Digitally displays images from CT, MR, X-ray, Ultrasound, Flouroscopy modalities
• Replaces the age of manually hanging film on a light box
• Creates work lists for radiologist to manage case volume
• Provides advanced imaging analysis tools to diagnose
anatomical and metabolic disease pathways
• ~ $2 Billion global market
• Who are our customers?
• Hospitals (Radiologists, Technicians, CIOs)
• Outpatient Imaging Centers
• Physician offices
• Governments
• Non destructive Inspection applications
35
36. Use Practical Discussions…
• Who can you sell more hot dogs to?
160 lbs Kobayashi 380 lbs. Perry
vs.
Firmographics do not tell the whole story
36
37. GE Healthcare needed to change
• A classic firmographic split would drive decisions
<50,000 >50,000
vs.
procedures procedures
We knew that there were values…but we did not have
the right language to properly describe them.
37
38. GEHC Faced 3 Key Challenges:
Market How can we increase the size of the pie? And increase share
Challenge of wallet?
Information What values define segments? What are they buying? And
Challenge from whom?
We try to be a lot of different things to a lot of different
Identity
people, but we don’t know who we really are, and people are
Challenge out to get us.
38
39. How Do We Get From…
…This …To This
“Dr. Smith makes our business
“Dr. Smith is better”
killing our “Why do we listen to “We should spend more time
business” Prestigious ACC with Prestigious ACC University
University” because they represent the
market segment we want”
“Maybe we are not listening “It’s OK to stop chasing segments
to a profitable part of the that we may not have the right
market” fit with”
39
40. Survey Breadth And Depth: We Considered Multiple
Bases To Segment The Market
Government
Details Collected Details Collected
Firmographics Specialty Future Goals Usage & Upgrade
Survey Focus
Firmographics Location Behaviors & Usage Modalities & Integration
Hospitals Firmographics Size & Type Buying Behavior Purchase Decisions
Values Strategic Direction Organization Staffing
Values Vendor Relationship Behaviors & Usage Teleradiology
Attitude IT savviness
OICs Sample of hypothesis explored:
Best-of-Breed Vs. Single Vendor
Self serve vs. Vendor Reliance
Physician Office IT Resources: Low/Basic vs. High/Complex
Upgrade Driver: Proactive vs. Reactive
Demand for Operational Efficiency: Low to High
Specialty focus: Strong vs. Weak
40 Source: GE PACS segmentation 2008/2009
41. The Quantitative Questionnaire Included Several Trade-
Off Exercises
• Maximum Difference Scaling to differentiate needs and preferences
• Selection Lists – thoroughly addressing elements of value (and not costs)
• Focus on how and why institutions make choices
• The tradeoffs between value (received) and costs (given)
41
42. Leverage Attractiveness Measurements in the
Segmentation Study If You Can
Segment C
Segment A
Segment D Market Average
Index Alpha
Segment E
Segment B
Market Average
Index Beta
Market sizes removed from graph; proprietary
42 Source: GE PACS segmentation 2008/2009
43. Tracking Results: Pilot Zone Program
Before After
Funnel Hit Ratio Funnel Hit Ratio
80% 80%
60% 60%
40% 40%
20% 20%
0% 0%
$1-4 $5 $1-4 $5
• Disproportionate sales and service • A quote on every segment 5 desk
focus • Executive presence & strategic
• No specific hunting lists account reviews
• One-for-all marketing strategy and • Growth strategies driven by data
programs • Try and Buy programs to leverage
• Shoot from the hip product radiologist user experience
investments • Marketing elaborating benefits of the
partners segment
43
44. Success was based on achieving a clear vision to serve
the right target
The Data Told Us Our Target… We Established Our Value Position…
• Buys on relationship
• Seeks strategic planning from vendor
• Expresses intimacy with GE executives Partnership Presence
• Wants to be heard and collaborate on ideas, features
• Increase volume with same amount of resources
• Have the highest PACS complexity (self ranked)
• Radiologist still most influential in purchase decision Always Efficient
• Leading technologies and protocols that don’t need the
kinks worked out
• Prefers focus on satisfying referring physicians
(vs. patients) and staff
• Seeks improved collaboration with referring on
complicated cases Satisfied referring & staff
• Looking for more efficient, but personal communication
• Looking to expand beyond inpatient services
44 Source: GE PACS segmentation 2008/2009
45. Q&A:
Enter Your Questions in the Webex Browser
Brant Cruz Jeff McKenna
Vice President Senior Consultant
Chadwick Martin Bailey Chadwick Martin Bailey
Bcruz@cmbinfo.com Jmckenna@cmbinfo.com
Follow us on twitter @cmbinfo , Read our blog at blog.cmbinfo.com or become a fan on Facebook
179 South Street, Boston, MA 02111 ● 617-350-8922 phone ● 617-451-5272 fax www.chadwickmartinbailey.com
Hinweis der Redaktion
There are differing preferences about “Best Practices” or some other term. People should use what they like.
Use this for less sophisticated audiences and/or those companies without the benefit of a data warehouse that may allow us to score people.
Three of the top four competitive eaters are under 200 pounds
Three of the top four competitive eaters are under 200 pounds
Three of the top four competitive eaters are under 200 pounds
Some Marketing Jargon: Mkt size shrinking, saturation, customers are buying a lot of stuff, but the could buy from us, right? (Over 90% Saturation, 96% Retention, Declining Growth Rates)Some office buzz: “Dr. ‘smith’ is killing our business. Why do we keep listening to KOLs? There’s a whole other segment of customers who are out there—do we even know what they want?The problem explained practically by a colleague: If we were a movie, we would be The Bourne Identity: We try to be a lot of things to a lot of different people, but we don’t know who we are and people are out to get us.