Business

Saturday November 7, 2009

Addressing consumer needs

By LEE KIAN SEONG


MARKET segmentation or segmentation marketing is important in today’s business world, as it helps in addressing the needs of consumers from different segments.

However, getting the right market segmentation strategy is always challenging and involves a lot of effort, study and ideas generation in order to attract a large base of customers and improve the sales.

Bates 141 Malaysia managing director Wong Fatt Weng says in consumer marketing, segmentation means defining a winning participation strategy for the brand.

Wong Fatt Weng... ‘Segmentation requires the brand to choose its battlefield and decide where to play or compete with the best ability to win.’

“This requires the brand to choose its “battlefield” and decide where to play or compete with the best ability to win,” he tells StarBizWeek.

He says some companies or brands are successful in their segmentation strategy as they understand where and why ‘value’ is being created, and they are consciously making choices on where and to whom they want to market their products and services.

“Segmentation often drives focus and, in turn, breeds differentiation, a critical factor that pulls consumers over the preference line for the brand or service,” he explains.

Different brands will have different marketing segmentation models as the types of segmentation used may vary from one brand to another.

“Some of the common types of segmentation are consumer needs, selling channel, packaging format, geographic region, gender and age,” he says.

He points out that a good example of channel segmentation is observed with a leading worldwide personal computer brand.

“They are very successful because they choose to sell customer-specified products through direct distribution channels, as opposed to selling their best products to as many customers as possible for less in mass market channels,” he says.

He says brands in the confectionery market, for example, divide the market into segments that have meaning for their consumers, i.e. “consumer needs” based on their purchase motivations, such as treats, gifting, sharing, refuel or medicated.

“It is also crucial for new brands or new products to determine the segments of market to participate in if they wish to break successfully into a new market or category in which competitors are already established,” he says.

He says that delivering a differentiated participation strategy in terms of consumer offer and trade channel often increases the chances of success against established competing brands.

“Segmentation makes advertisers’ investment choices more effective and efficient. Advertisers are able to prioritise marketing investment in the selected but relevant media channels to reach the specific target consumers, rather than ‘touching all’,” he adds.

Wong says sharper focus on a target segment, be it consumer or selling channel, will allow brands to understand more intimately the consumer needs states, attitudes, motivation, usage and buying behaviour, purchase decision criteria, media consumption behaviour, etc.

“Brands are no longer interested in being everything to everyone, everywhere. They want to choose and prioritise their core target audience, tailor-make the right messages to these target consumers and be able to interact and engage them at places where they spend most of their time,” he says.

He says successful segmentation increases the competitive advantage of a brand over its rivals.

“When consumers are faced with two or more undifferentiated competing products or services, they may choose randomly or alter their choices freely,” he says.

However, according to Wong, a product or service offering which is tailored to the needs of a target segment will give the consumers a positive reason for buying it and for remaining loyal to it.

“This element of competitive advantage increases sales, customer loyalty and eventually brand equity,” he adds.

Asked on the criteria that are essential in bringing success to this type of marketing strategy, Wong says the key is to be clear about the need for segmentation, how the company or brand wants to use it, what kind of customer information the company has and how the segmentation findings can be linked back to the existing customer information or database.

Firstly, based on your objectives, identify the kind of segmentation study you want to do and implement – demographic, attitudinal, etc.

Secondly, advertisers must be clear about prioritisation, not trying to be everyone and to do everything all at once.

The brand advertisers must be willing to make tough choices, choosing the segments that deliver best economic returns. Stay focused, consistent and faithful to the segmentation and its marketing strategy.

Third is the investment behind data and market intelligence. Brand advertisers must be willing to spend on market research to determine consumer behaviour and motivations, and also be able to validate the potential size and growth of the market segments.

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