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Strategy Question: How do I better understand the make-up of my overall market?Summary: Assuming that the market has been properly sized, it is important to also spend…
Strategy Question: How do I better understand the make-up of my overall market?
Summary: Assuming that the market has been properly sized, it is important to also spend similar effort to define segments and size these appropriately. This tool basically mirrors the approach of the Bottom-up Market Sizing Tool. At this stage, emphasis turns to breaking the overall market into actionable segments. Two to three iterations again are common to improve accuracy. The tool output casts the segments as a rectangular graphic, made up of one column for each segment. Segment width is representative of its size relative to the other segments. The width of all segment columns, added together, ties back and equals the overall size of the markets. The result provides guidelines for determining strategic market segments and niches, and how to best position the firm within those segments.
Strategy Question: Now that my market is sized and segmented, how do I better understand segment niches?Summary: The Segment Niching Tool gets to the next important level…
Strategy Question: Now that my market is sized and segmented, how do I better understand segment niches?
Summary: The Segment Niching Tool gets to the next important level of detail in the understanding of an organization’s environment. We use the Market Segmentation Tool output as a starting point. Here we further carve out key niches for further understanding related to product or service offerings. We add a scale to the segment columns of the Segment Niching Tool, and break the column further into sections whose size represents the percent of that niche to the segment. Like the segmentation tool above, understanding niches within the segments provides important information within the competitive environment. Here is where people can get mired down in infinite ways to niche a segment. We introduce our approach, based on numerous scars of wisdom, of niching based on only two questions: (1) “Why they buy?” — the main reason the product or service is purchased, and (2) “How they buy?” — the main way the product or service is purchased.
Segmentation is an important marketing concept that identifies and analyzes different needs and wants of buyers as well as their buying behavior. Two different…
Segmentation is an important marketing concept that identifies and analyzes different needs and wants of buyers as well as their buying behavior. Two different perspectives on how buyers and potential customers should be approached have emerged over the last two decades: the transactional perspective and the relational perspective. The two approaches differ in their overall understanding of the customer and how to address the customer. The two approaches therefore hold different implications for how segmentation should take place and how markets should be monitored.
Studies of the social construction of markets have not determined which social environments, which we refer to as proximate social space, are most likely to trigger social…
Studies of the social construction of markets have not determined which social environments, which we refer to as proximate social space, are most likely to trigger social construction processes. We find that U.S. nonprofit fiscal sponsors respond to greater potential for category emergence when proximate social space is defined by geography but not by market segment. Further, in addition to responding to potential claimants based on geographic peers, organizations also respond to actual claimants based on peers in the market segment. The pattern suggests that geographic social proximity triggers initial label claiming, which in turn triggers responses from market segment peers.
Strategy Question: Is there a simple yet comprehensive way to characterize the business health of my markets, segments, and niches?
Summary: Now that we have the markets segmented and niched, we need to research each segment relative to attractiveness. This can be simply an indication of segment growth prospects in the chosen planning horizon, or it can be a conglomeration of key elements important to the organization (market strength, opportunity for growth, margin yield opportunity, etc.). This tool takes the user through ways to evaluate the segments for use in prioritizing the importance of various segments to product/service and channel actions. We build on either the Market Segmentation Tool or the Segment Niching Tool by assigning an attractiveness code to the column heading (green, yellow, or red). We then recommend the organization rank order the segments, with the one chosen most attractive positioned on the far left, and those next bests located in decreasing order to the right. We have found the resulting one-page Market Map Tool output extremely helpful in simply conveying what is usually a difficult and very complex picture to explain and communicate.
Data-driven market segmentation is heavily used by academic tourism and hospitality researchers to create knowledge and by data analysts in tourism industry to generate…
Data-driven market segmentation is heavily used by academic tourism and hospitality researchers to create knowledge and by data analysts in tourism industry to generate market insights. The stability of market segmentation solutions across repeated calculations is a key quality indicator of a segmentation solution. Yet, stability is typically ignored, risking that the segmentation solution arrived at is random. This study aims to offer an overview of market segmentation analysis and propose a new procedure to increase the stability of market segmentation solutions derived from binary data.
The authors propose a new method – based on two independently proposed algorithms – to increase the stability of market segmentation solutions. They demonstrate the superior performance of the new method using empirical data.
The proposed approach uses k-means as base algorithm and combines the variable selection method proposed by Brusco (2004) with the global stability analysis introduced by Dolnicar and Leisch (2010). This new approach increases the stability of segmentation solutions by simultaneously selecting variables and numbers of segments.
The new approach can be adopted immediately by academic researchers and industry data analysts alike to improve the quality of market segmentation solutions derived from empirical tourist data. Higher quality market segmentation solutions translate into competitive advantage and increased business or destination performance.
The proposed approach is newly developed in this study. It helps industry data analysts and academic researchers to reduce the risk of deriving random segmentation solutions by analyzing the data in a systematic way, then selecting the most stable solution using the segmentation variables contributing to this most stable solution only.
Customer service represents a significantopportunity for segmenting markets. This articlereviews the importance of customer service andthe conceptual issues associated…
Customer service represents a significant opportunity for segmenting markets. This article reviews the importance of customer service and the conceptual issues associated with segmenting industrial markets on the basis of customer service. A methodology is presented which can be used by managers to classify a market into segments with different customer service needs. Empirical results from a high‐technology industry are also presented. The article emphasises the need to recognise the differing customer service requirements of segments of customers when establishing priorities for customer service expenditures.
This paper’s main objective is to expand the demand-driven strategic field by developing a model where endogenization of consumers’ preferences for clean(er) products…
This paper’s main objective is to expand the demand-driven strategic field by developing a model where endogenization of consumers’ preferences for clean(er) products becomes the driver of the firm green corporate social responsible (GCSR) profit maximization behavior.
The model proposes that in undifferentiated markets, firms using a conventional technology manage production-related negative externalities via information asymmetries. In turn, when consumer socially responsible individuals (CnSR) discover the nature of the information asymmetries, they then reveal their preferences. The building block of the model is that CnSR derive value both from intrinsic as well as extrinsic product features, and derive negative satisfaction from the production negative externalities. In turn, CnSR preferences offer a higher willingness to pay for a combined intrinsic (private good and direct utility) and extrinsic (public good and feel good–do good utility) product.
The model demonstrates that the firm’s GCSR behavior is a technological-driven process directly affecting the extrinsic component of the product through the development of a safe technology, and exclusively targeting CnSR type of consumers. The corollary of the model is that for the firm pursuing a GCSR behavior, the development of a competitive advantage with higher firm performance leads to profit maximization when exclusively serving the GCSR segment of the market. Thus, GCSR is the result of unusual innovation efforts.
This paper presents a model that expands the field of strategic management through the demand-driven incorporation and respective modeling. To the best of the author’s knowledge, this is the first model to explicitly develop this relationship in this format.