Marketing Case Studies: Segmentation Strategy

Synopsis: Roofing Manufacturer – Needs-Based Segmentation Strategy

We helped our client, a roofing shingles manufacturer, save money by appropriately marketing to two segments. We learned some customers needed morning job site delivery while others required afternoon warehouse delivery. Each customer required a different type of sale with different pricing. Our client saved money by using the same infrastructure to serve both customers which spread overhead over a much larger volume base.

 

Synopsis: Label Division of an Equipment Manufacturer – Sales Effectiveness Segmentation Strategy

Our client captured approximately 10% of the potential label business used by their equipment. The wide range of customers, label materials, and applications made it difficult to determine where the best opportunities existed. Through in-depth, end-user research we learned that the label purchase for common labels shifted from the equipment decision maker to the supplies purchasing agent. By targeting the supplies purchasing agent, the sales force became more effective at winning new business.

 

Synopsis: Data Communications IBM: Technology in Search of a Market – Structural Segmentation Strategy

"DARTS" was a code name given by IBM to its data radio project in the mid-1980s. IBM developed a nationwide data network to move all classes of internal data. In addition, IBM entered a joint venture with Motorola to develop radio frequency data transmission capability. This very successful technology venture gave Field Service Technicians access to virtually any information they needed to more efficiently and effectively service customers.

The DARTS group was formed to commercialize the technology. The team introduced the technology to many beta customers and received enthusiastic feedback. Based on this research, the project team projected a $2 billion market, defined the offering as a product (a small PC with RF communications capability), and developed a pricing scheme based on selling time on the nationwide network.

As the team began to develop a launch strategy, it needed to identify the applications and markets that would be the best targets, project the market size, and determine how fast customers would adopt the applications. To do so, the team brought in outside consultants headed by Steve Bassill to evaluate the beta sites. The consultants learned that beta test customers had a wide range of perceptions about what they were testing, why they were testing it, and how the technology fit into their businesses. These perceptions varied from customer to customer and were not the same as the venture team’s initial projections. As the chart below demonstrates, the value of the technology was different for each application segment.

.In reality, every end-user required a substantially different hardware configuration. Unless IBM was willing to enter the custom hardware business, no opportunities existed for IBM within this market.

The project team determined the market would not be ready to adopt the "data" radio benefits for another five years. Secondly, the business model IBM had created would not work. A model based on the radio frequency network as the product was deemed to be the most appropriate. IBM saved millions of dollars by segmenting the market on its technology requirements.

 

Synopsis: Factory Automation – Programmable Controller – Sales Effectiveness Segmentation Strategy

Maxitron was the first company to marry the brains of the personal computer to the functionality of a PLC. This was an exciting technology advance. However, initial sales efforts generated substantial product development and engineering expense but few sales. Maxitron had to find a way to focus on customers who would actually buy instead of ask for prototypes with different features – a cost, not a revenue enhancer.

Maxitron commissioned research to find the near-term market -- the early adopters for its smart PLC product. Research across the manufacturing environment discovered a clear behavioral segmentation model that would work to Maxitron’s advantage. Two discreet manufacturer segments were identified. From the outside, the two segments looked the same. They were not found in any one industry segment or geography. Instead, they were scattered across industries and geographies, but shared an organizational approach to factory control and were experimenting with technologies to solve their control problems.

By taking an in-depth look at the market and developing a segmentation strategy, Maxitron was able to jump-start its sales effort. Without sophisticated targeting, Maxitron would have continued to struggle using its valuable marketing dollars to attract shoppers instead of buyers.

 

Synopsis: Construction Equipment – Needs-Based Segmentation Strategy

Our client was looking to grow share in an underserved portion of their market. It became critical to understand the needs of the market. Our needs-based segmentation exercise identified two distinct customer groups. The first group purchased products based on their overall relationship with the supplier. The second was a “benefits / features” buyer. QDI identified and measured the relative importance of our client’s performance on five buying criteria. With this information, we helped our client develop strategies to win both key segments.

 

Synopsis: Process Equipment – Segmentation Strategy

A process equipment manufacturer turned to QDI to evaluate its existing channel structure’s ability to deliver long-term growth. Through primary research with end-users and the distribution channels, we identified the needs of end-users and categorized them into segments based on buying behavior and the type of purchase: new construction, retrofit and MRO. Based on this segmentation model and an understanding of the capabilities of the channels, we developed a channel strategy that put the manufacturer on track to grow its business.

 

Synopsis: Power Transmission Equipment – Needs-Based Segmentation Strategy

Our client had been developing the power transmission equipment aftermarket opportunity for several years.  They posed the question,” What do we need to do to dramatically grow our aftermarket business?”  Our research, which was conducted across a broad cross-section of industries and plant sizes, identified three drivers of customer behavior: quality, speed and reliability.  While our client was known as the quality leader, they were not the speed leader and only deemed reliable by those who knew them well.  By segmenting the market based on these buying criteria, we determined the size of each segment and the strategies and investments needed to become the number one vendor on each criterion.  This analysis led our client to increase their investment in the operational resources necessary to improve their scores on these criteria.  Within 24 months of launching the new program, sales were up 25%.

For solutions to your Segmentation Strategy challenges, contact
Steve Bassill or Mike Barr at QDI Strategies, Inc.

Steve Bassill -- 847-566-2020 Ext. 229

Mike Barr -- 847-566-2020 Ext. 225