Building success with segmentation
MARKETING: Andrew Hawkins looks at the how and why of market segmentation.
Now that for most of us the calendar of boat shows is over for 2017, it is a good time to reflect on shows being the best location for actually observing your customers and the wide range of personalities they represent.
Consumers of marine product are a broad and varied group. Think of your companions from the last time you went fishing, paddling or sailing. I often relate my story of chatting to crew next to me whilst hiking on the rail on a racing yacht. One was the CFO of a large media company, the other a train driver. How do you cater for each of these consumers?
One of the very first subjects taught when studying marketing is the how and why of market segmentation. “Market segmentation is the process of dividing a market of potential customers into groups, or segments, based on different characteristics. The segments created are composed of consumers who will respond similarly to marketing strategies and who share traits such as similar interests, needs, or locations.”
The ability to understand your market, the existing and potential customers, and know what makes them tick is what makes a business successful.
One client I worked with was convinced that the smaller boats they represented would never work in the Australian market. They continually told me that their market was only the mature, older market, successful business people who were interested in the large luxury vessels. So I sat them down and we segmented.
My client very soon realised that the younger market was just as likely to buy a brand new boat, in many cases a smaller one, and of course with the ongoing benefit that they could be upgraded as their needs changed. They just had to target them specifically with a marketing campaign that met their expectations. The salespeople were given the strategy and the collateral designed to trigger the buying impulse of those specific consumers and one of the smaller boats in question went on to be an Australian best seller.
How to segment
To start the segmentation, we need to clearly define the needs, wants and demands of the target market. These will obviously be different across the segments, and consequently may require different products, or different product features highlighted to satisfy them.
Then we must measure the actual size of the segment. Is this national or restricted by sales territory? Is the segment size worth the effort in terms of return? With certain markets the size may be there, but companies may not have the resources to identify them easily, or may not have access to promotional vehicles that can effectively reach them. Consider again the eclectic nature of the market. How do you reach the range of personalities gathered on the deck of a fishing boat? What is the commonality of their needs and wants?
The marketing textbooks then ask you to look also at your company’s policies. Generally, is the segment that you have identified an appropriate one to be associated with? The four main types of segmentation you need to consider with this process are:
- Demographic – age, gender, family structure, income, occupation, religious beliefs, and culture.
- Behaviour – how they behave in terms of using the product and deciding on the product.
- Psychographic – their lifestyle, actual or perceived social standing.
- Geographic - not just the actual location, but also such things as the climate in that location.
As with all marketing, you must decide on how much you can apply, what your ultimate return on investment will be, and also how much you are actually doing already that could be refined. Just don’t miss out on a sale because you assumed you knew already. There is always more to learn.
About the author
This article was first published in the October-November 2017 issue of Marine Business magazine.