Do Your Customers Get Satisfaction?
Leo Aspden on effective marketing
LESS than 10% of new products succeed (over 90% of them fail), according to Christensen et al. (2005). This is mainly because companies don’t understand the principle of effective market segmentation.
Despite the growth in Customer Relationship Management (CRM), which research company Gartner predicts will be worth £22bn by 2017, it seems we still have much to learn.
n Successful segmentation: This is based on a clear and detailed understanding of decision makers and their needs. No market or industry can dictate to customers any longer, but must learn to deal with them on their terms. With world-wide information a click away, customers can make better informed choices between competing products and services, selecting those which give them the benefits they want, at best value price.
‘I can’t get no satisfaction’: Often companies may seek to determine themselves how to divide and segment their market through predetermined categories. This may lead to segments or categories based on application type, company type, industry classification, products or services offered, geographics or demographics. Many of these, in isolation, are flawed because the assumption is that, for example all architects have the same requirements or respond to the same marketing propositions.
Companies should focus on segmentation driven by customers, i.e., understanding needs customers seek to satisfy and key motivators driving their choices.
Market segmentation in its truest sense, is the grouping of customers or prospects within a given market into segments where the same needs can be satisfied by a specific marketing offering.
The right needs?: How much time and money does your company spend on promoting products and services? How much of this is effective and how much wasted? Ask yourself:
1. Do we understand how our market works? 2. Who are the key decision makers? 3. At which stages in the process are decisions made?
Market mapping is a method to identify and understand the distribution or value chain from supplier to final end user. Even if your company does not deal directly with end users, it is important you understand the value and importance of each key players (decision makers and influencers) throughout the process.
Identifying key leverage points of where critical decisions are made, and their importance, is crucial to successful segmentation and, thereby, effective marketing. If we haven’t identified the key decision makers correctly, we may not be satisfying the correct set of needs.
Too often the focus is on the promotional mix, which may be why, according to Christensen, over 90% of new products fail. A view of the wider market is needed, and an understanding of all key decision makers, and the needs they seek to satisfy when considering competing products and services.
Leo Aspden is a Chartered Marketer, High Growth Business Coach and former North West Ambassador for SMEs for the Chartered Institute of Marketing.
Christensen, C., Cook, S. and Hall, T. (2005) ‘Marketing malpractice: the cause and the cure’. Harvard Business Review.
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This article has been reproduced from the Contract Flooring Journal website. You can find them at www.contractflooringjournal.co.uk.