Marketing, Advertisting & Communication in Iowa

Given the diverse array of firms that fall into the small business catrgory, propose an approach staples might use to segment this market.
Describe how marketing managers at staples could use your segmentation plan to develop marketing strategies for each of the key market segments you have defined.

Three Levels of
Segmentation QDI Strategies, Inc.
Highly successful marketers can:
• Define market segments that
provide a competitive advantage
• Develop value propositions that
are unique to each segment
• Convey the right value
proposition to the right customer
segment
QDI’s Three Levels of
Segmentation provides support
across the organization to make
decisions that better allocate
scarce resources.
To Fully Exploit Your Market, It’s Important to Understand All Its Segments
The ability to segment markets effectively is essential to a company’s success. Segmentation has
big pay-offs when you use it in strategy development, product and market planning and sales
targeting.
However, our experience reveals few companies utilize segmentation in all the sets of decisions
that impact profitability. Segmentation drives three critical sets of decisions:
Segmentation is a well-accepted concept. Many companies use segmentation to define their markets and direct product development.
However, it’s common to fall into the trap of using one segmentation strategy to address all the decision sets, which leads to less than optimal
product development and sales effectiveness.
What are the results of inadequate segmentation? That depends on where your business is in its market
life cycle.
If you’re deciding to enter a market, Structural Segmentation can help identify the markets that offer a
higher than average return. Once you’ve made that evaluation, Needs-Based Segmentation drives your
product and service development. Sales- Effectiveness Segmentation builds sales momentum by
targeting hot prospects and those customers most likely to switch.
Segmentation research is critical because of its ability to improve the return on your investments at each
decision level. Identifying segments and measuring their potential produces insights and opportunities
that would otherwise be overlooked and avoids costs that would otherwise be spent chasing
unprofitable markets.
Should we
play?
What
should we
offer?
Who’s our
next
customer?
Three Levels of Segmentation
Structural Segmentation
Defines market opportunity
Needs-Based
Segmentation
Drives product / service
development
Sales-Effectiveness
Segmentation
Identifies the best prospects
Structural Segmentation
follows a "Porter" type
analysis — answers the
question, "Should we
invest in this business?"
Needs-Based Segmentation
identifies the
customers’ needs and
drives product / service
development.
Sales-Effectiveness
Segmentation focuses
resources on prospects
most likely to buy your
product.
Page 2 Three Levels of Segmentation
Each segmentation level drives its own set of distinct decisions.
The table below demonstrates where and why to use each form of
segmentation:
Structural
Segmentation
Needs-Based
Segmentation
Sales-Effectiveness
Segmentation
Segmentation Outcome Defines a Market Opportunity Identifies Customer Needs -
Drives Product Development
Identifies Buyer Behavior of
Hot prospects and Switchers
– Drives Targeted Sales
How big is the market? How fast
can it grow? Can we be a force
in the market? Should we
invest?
What customer needs motivate
buying behavior? Which needs
can we convert to features and
benefits?
Determines how you will
distinctively craft the total value
proposition to target and win the
highest percentage of early
prospects.
Decision Owner President / Board of Directors General Manager / Vice
President of Marketing
Vice President of Marketing /
Vice President of Sales
Economic Impact Six Figure + Decisions Returns That Can Double
Industry Average
Successful New Products –
Lower Marketing Costs by
50%
Often acquisitions. The cost
goes up as the “newness of the
market” increases.
Superior performance results in
industry leading products and
programs. Poor performance
will result in business / product
failure.
Short term: good launch targeting
can turn potential losers into
winners. Mid- to long-term:
greater sales and marketing
efficiency. Sales momentum can
carry you to new markets.
When to Use To Answer the Question, "Can
I Be Successful in This
Business?"
To Develop Superior Products
and Services for Your
Customers and Channels.
To Ensure Product Launch
Success
Define business opportunities
and the competitive market
dynamics.
Targeting customers with a high
level of interest in and ability
to buy your product, increases
sales force effectiveness.
Valuable when sales effectiveness
has slipped or is at risk.
Focuses On Understanding the Market Product / Service Development
Issues
Selling Momentum
How big – how fast? Competition;
Channel Structure; Market
Power
Customer requirements -
Platforms - Potential
Crafting offerings, messages
and channels to win early
adopters and switchers
increases sales force effectiveness
& is the key to achieving
marketplace success.
Decisions Value Defines Long-Term Success Defines Your Market
Advantage
Defines Marketplace Success
Focuses on resource decisions
that will either determine potential
for business success - or
demonstrate a segment is not
worth pursuing.
This ultimately is measured by
returns above or below the
industry average.
Winning the hot prospects /
switchers, builds sales
momentum and overcomes the
barriers that frequently stall new
product sales.
Page 3
Evaluate Your Current Segment Strategy
Take a look at your own planning processes. Do you have a segmentation strategy that goes all the way to
the customer or does it stop short? Use QDI’s Three Levels of Segmentation, and you’ll be on track to drive
up your revenue and profits.
1. Structural Segmentation defines your market opportunity and the competitive market dynamics. It
answers the questions:
• How big is the market?
• How fast can it grow?
• Can we be a force in the market?
• Should we invest?
2. Needs-Based Segmentation focuses on identifying current and potential wants that exist within a
market including:
• Needs satisfied by current offerings
• Needs current offerings fail to adequately meet
• Needs not yet recognized
3. Sales-Effectiveness Segmentation identifies perspective customers to target to achieve sales
momentum:
• Hot prospects
• Switchers
When the stakes are so high, don’t you want to use segmentation to your advantage?
By utilizing segmentation in all three dimensions, you make more efficient use of your sales and marketing
resources.
Each level of segmentation must be based on the realities of the market. Don’t fall into the trap of basing
your segment strategy on information gained from flawed market perceptions. Invest in QDI’s proven
segmentation planning research, and you’ll discover how to successfully use segmentation to maximize
your profits.
QDI’s Value Management WorkbookTM is not your traditional
market-planning tool. Every marketing plan is based on a series of
assumptions. But what if your assumptions are unclear,
underdeveloped or unrealistic? The Value Management Workbook TM
is a diagnostic tool designed to organize, evaluate and challenge the
assumptions you base your segment strategies upon. It’s all about
creating and capturing value. By completing the exercises, you drill
down on specific areas where you can improve your performance
relative to your competition.