Thursday, September 27, 2018
Do you fully understand your customers' purchase patterns? Do you know how often they buy? Do you know what puts them in a ready state to buy? Do their purchases follow a regular pattern? Are they seasonal? Do you know what events or stimuli can trigger a purchase? Are their purchases sensitive to pricing or promotions? Are their purchases planned or impulsive? Are your customers brand loyal or are their purchases driven by something else such as convenience, price sensitivity, variety or entertainment? Can you get your customers to "stock up" on your product? Can you sell your product in different quantities? Will this make a difference in purchase likelihood? What can you do to get your customers to purchase more frequently? Do you know if there are any substitute products for your product? How much does channel of distribution or location come into play regarding purchase of your product?
Is your product a necessary staple or is it a discretionary spend? Is your product purchased as an indulgence? Do you know what customers' expected price for your product is? Do you know the highest price customers are willing to pay for your product? Will customers buy your product while in any state of mind or will they need to be in a specific state of mind to buy your product? Some products are more likely to be purchased when customers are in a euphoric state, while depression stimulates the purchase of other products. Are people more apt to buy your product at a specific time of day or on a specific day the week? Are they more likely to buy your product when they are alone or with friends? Some products are more likely to be purchased when people are on vacation. Is yours one of those products? Some products are purchased in conjunction with other products. Do you know what other types of products, if any, are purchased with your product? Are there certain barriers that cause customers to think twice about buying your product?
Regarding all of the questions listed above, would you answer them differently for different customer segments?
You should be able to answer the majority of these questions. If not, you need to gain greater insight into your customers and their purchase patterns.
Market segmentation is often necessary to effectively meet the needs of different customer groups. Different segments will value different aspects of your products, services, and brands differently. You should have a good understanding of the following dimensions of each market segment:
- Its overall size and its growth rate
- Its price sensitivity
- The benefits that are most and least important to it
- How well it is served by existing products and brands
- How brand loyal it is
- How it selects and purchases the product
- How accessible it is
- The distribution methods it prefers
- How it uses the product
- Its product usage/replacement rate
- Its longevity and projected evolution over time
Markets can be segmented in the following ways:
- Product Usage Segmentation. For instance, some people use baking soda to deodorize their refrigerators, while others use it as a surface soft scrub, to treat insect bites or itchy skin or as a toothpaste.
- Purchase Behavior Segmentation. In many industries, four groups than often emerge to one degree or another are:
- Brand loyal consumers
- Convenience-driven consumers
- Price-driven consumers
- Consumers that enjoy seeking out new brands and products within the category
- Benefit Segmentation. People might buy a sailboat to race, for a daysail, to cruise on a vacation, to live aboard, to entertain friends, or as a second home.
- Price Segmentation. Price segmentation will yield higher overall revenues and profits if designed properly. Airlines have made a science out of price segmentation. First-class travelers pay more. Business travelers with tight schedules will be less price sensitive. Tourists with fixed budgets, flexible schedules, and a long planning horizon will look for lower fares. Some people will only travel taking advantage of last-minute seat-filling bargain prices. Other last minute travelers have no choice and behaviorally (but probably not attitudinally) are virtually price insensitive. Seats are less expensive on slower days (Saturdays, December 25, etc.).
- Lifestage Segmentation. There is a system of segmenting adults into eight distinct mindsets using a specific set of psychological traits and demographics that are proven to drive consumer behavior. Consult: Strategic Business Insights VALS (values and lifestyles) at www.strategicbusinessinsights.com/vals/ustypes.shtml, and U.S. MONITOR at http://www.kantarfutures.com/products/us-monitor/.
- Cohort Group Segmentation. Refers to people who were born at approximately the same time and who have experienced the same events at the same lifestages.
- Psychographic Segmentation. Refers to segmenting people based on their values, attitudes, and lifestyles.
- Geographic Segmentation. Segmenting people according to their geographic location can help target people in the same socioeconomic bracket who may share interests or concerns.
- Geodemographic Segmentation. Refers to segmenting people based on their location—typically zip or postal code—and demographics, such as age and income. Consult: Claritas’ PRIZM® Premier, P$YCLE® and ConneXions® segmentation tools (https://www.claritas.com/products-solutions) and CACI’s ACORN (acorn.caci.co.uk).
Reprinted with permission from Brand Aid, second edition, available here.
Wednesday, September 5, 2018
When considering brands, customers value some personality traits more than others. Below is a rank ordered list of desired personality traits. I have derived this list from numerous sources over the past thirty years.
- Honest/Possesses integrity
- Customer-service oriented
- Easy to work with
- Takes responsibility
- Hard working
- Has a sense of humor/Funny
- Attention to detail
- Strategic/Big picture thinking
- Good listener
- Learns from mistakes
You should consider which of these personality attributes would work best for your brand. And it is not a bad list to consider for yourself.