Posted tagged ‘Segmentation’

And in summary…part 1

May 1, 2009

Our session to the housewares association is less than a week away. It seems appropriate to review the lessons that we have learned and the strategic underpinnings for our recommendations.

The challenge that was posed was this:

What should you do if you find your company to be one of those that now must sell its products to a handful of superstores such as Wal-Mart, Target and Bed, Bath and Beyond and these “clients” are now in a position to dictate your pricing, the way that you do business and even your margins?

Underlying this big question was a series of smaller but no less important ones:

  1. Are there alternative marketing channels that can be leveraged?
  2. Where does the social media fit into addressing this challenge?
  3. Is there a way to identify products that need to be invented and how can we test them faster and better?

With the help of several very talented, knowledgeable and experienced friends and business colleagues, we sought to develop and create a framework, if you will, for addressing these questions.

Here is a quick review of the lessons that we learned.

Lesson 1: There is Nothing New Under the Sun. What the housewares industry is experiencing now has happened to many industries before it. This is not meant to be cold comfort and it is important. It teaches us that there are historical experiences and prescribed and proven methods that can be incorporated in our plan and framework.

Lesson 2: The Only Way to Fight the Tyranny of Kings is with Creativity. When we live inside a problem, it can be very difficult to identify the way out of the problem. All is likely not lost. Brands can be reinvented through consumer franchising, where the goal is to communicate distinctive brand attributes, develop and reinforce brand identity that is consistent with the image of the brand, build long-term brand preference, encourage repeat purchase and long-term patronage, and engage active consumer involvement.

Lesson 3: Know Your Segment and Know Your Category. Those products that add value and are successful are often so because their manufacturers and marketers understand to whom they are selling. Many companies segment broadly hoping that they can earn a “small slice of a large pie.” However, all too often, the solution is realized by segmenting finely and catering to a very defined and discrete group. We learned some tried and true ways to do this.

Lesson 4: Think Beyond the Obvious. One of the easiest and most difficult exercises to do – at least by one’s self – is to challenge what one knows to be a “fact.”  We have difficulty doing this because as intelligent and educated people, we learn and we learn well. While effective for many, many circumstances, this mechanism actually works against us in addressing these issues because we naturally self-edit and discard options that. although inappropriate at a particular time, are now valid and appropriate. (This is why when brainstorming, really top flight facilitators will not allow anyone to eliminate an idea when people are putting them up for consideration). Marketplaces change. Technology eliminates one issue but generates another. These are new opportunities for inventors. There are some wonderful books on rethinking the marketplace such Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant by W. Chan Kim and Renée Mauborgne if you wish to explore this thinking in more detail.

Lesson 5: A Brand Community is a Business Strategy. Reconnecting with your customers will alter everything about your business. It will change the way your products are designed, delivered, marketed and supported. If done well, it will generate passion and excitement for you and your staff as well as for your customers. To effectively accomplish this, you will need to be vulnerable and open.

In our last post before Tuesday’s session we’ll review the remaining lessons that we learned.

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Lesson 3: Know Your Segment, Know Your Category

March 27, 2009

Since Carl had been successful in dramatizing the importance of research, analysis and creativity, the next logical step was to learn how best to perform this activity. To discover more about these techniques, I turned to Suzy who has been a Senior Vice President for many, many years at a global, multinational advertising agency.

Suzy began our conversation by emphasizing the importance of segmentation. Today, more than ever, it is important to segment finely. She explained that selling to someone who loves to create in the kitchen is simply not good enough. For what types of dishes are they specialists? Are they novices or “hard-core” pros at what they do? Are they cooks or bakers?

Once a segment has been defined, you can begin to define the key opinion leaders (KOLs). Inventing the future is always a unique challenge so asking the hard-core baker what would make things easier for them is sometimes not the best way to learn what to invent. Suzy recommended that when interviewing these KOLs, one should try to get them to complain. Ask them what frustrates them in the process and delve deeply. (Is it the rolling pin? The surface?) These types of questions can create great opportunities.

We began to explore more deeply the other elements that go into understanding the target market segment. Suzy explained that a meaningful market research program will discuss the sentimental and emotional aspects that are so integral  to the design and marketing of the product.

Suzy classified this effort in the context of ethnography. Ethnography is founded on the idea that a system’s properties cannot necessarily be accurately understood independently of each other. Context is decisive and so one often needs direct, first-hand observation of daily behavior. This may lead to a discussion about the role of the family and the meaning of home. Such a process may also include participant observation. Sometimes this involves conversations with different levels of formality such as small talk to long in-depth interviews.

In our circumstance, this might mean going into several homes to observe how a housewares product is being used and in what context. While quantitative research can provide data, this type of research creates knowledge founded on intimacy, the connection between the mind and the heart and the way it is manifested in behavior. (These types of interviews are sometimes videotaped and used in campaigns to convince retailers to carry a product because of its emotional value to the consumer.)

All of this knowledge is valuable in so many contexts but none may be more important than this.

Understanding your product and the context within which it is valued allows you to know your product category and once you do, you can develop line extensions across multiple dimensions such as the target segment or whether your product is a time saver, problem solver or part of a suite of solutions that integrate with one another.

When you are very clear about this aspect, you are now ready to begin to build your consumer franchise…which will be the subject of our next post.


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