To boardrooms and sustainability: the changing nature of segmentation

Market segmentation is the process by which customers in markets with some heterogeneity are grouped into smaller homogeneous segments of more ‘similar’ customers. A market segment is a group of individuals, groups or organisations sharing similar characteristics and buying behaviour that cause them to have relatively similar needs and purchasing behaviour. Segmentation is not a new concept: for six decades marketers have, in various guises, sought to break-down a market into sub-groups of users, each sharing common needs, buying behavior and marketing requirements. However, this approach to target market strategy development has been rejuvenated in the past few years. Various reasons account for this upsurge in the usage of segmentation, examination of which forms the focus of this white paper. Ready access to data enables faster creation of a segmentation and the testing of propositions to take to market. ‘Big data’ has made the re-thinking of target market segments and value propositions inevitable, desirable, faster and more flexible. The resulting information has presented companies with more topical and consumer-generated insights than ever before. However, many marketers, analytics directors and leadership teams feel over-whelmed by the sheer quantity and immediacy of such data. Analytical prowess in consultants and inside client organisations has benefited from a stepchange, using new heuristics and faster computing power, more topical data and stronger market insights. The approach to segmentation today is much smarter and has stretched well away from the days of limited data explored only with cluster analysis. The coverage and wealth of the solutions are unimaginable when compared to the practices of a few years ago. Then, typically between only six to ten segments were forced into segmentation solutions, so that an organisation could cater for these macro segments operationally as well as understand them intellectually. Now there is the advent of what is commonly recognised as micro segmentation, where the complexity of business operations and customer management requires highly granular thinking. In support of this development, traditional agency/consultancy roles have transitioned into in-house business teams led by data, campaign and business change planners. The challenge has shifted from developing a granular segmentation solution that describes all customers and prospects, into one of enabling an organisation to react to the granularity of the solution, deploying its resources to permit controlled and consistent one-to-one interaction within segments. So whilst the cost of delivering and maintaining the solution has reduced with technology advances, a new set of systems, costs and skills in channel and execution management is required to deliver on this promise. These new capabilities range from rich feature creative and content management solutions, tailored copy design and deployment tools, through to instant messaging middleware solutions that initiate multi-streams of activity in a variety of analytical engines and operational systems. Companies have recruited analytics and insight teams, often headed by senior personnel, such as an Insight Manager or Analytics Director. Indeed, the situations-vacant adverts for such personnel out-weigh posts for brand and marketing managers. Far more companies possess the in-house expertise necessary to help with segmentation analysis. Some organisations are also seeking to monetise one of the most regularly under-used latent business assets… data. Developing the capability and culture to bring data together from all corners of a business, the open market, commercial sources and business partners, is a step-change, often requiring a Chief Data Officer. This emerging role has also driven the professionalism of data exploration, using more varied and sophisticated statistical techniques. CEOs, CFOs and COOs increasingly are the sponsor of segmentation projects as well as the users of the resulting outputs, rather than CMOs. CEOs because recession has forced re-engineering of value propositions and the need to look after core customers; CFOs because segmentation leads to better and more prudent allocation of resources – especially NPD and marketing – around the most important sub-sets of a market; COOs because they need to better look after key customers and improve their satisfaction in service delivery. More and more it is recognised that with a new segmentation comes organisational realignment and change, so most business functions now have an interest in a segmentation project, not only the marketers. Largely as a result of the digital era and the growth of analytics, directors and company leadership teams are becoming used to receiving more extensive market intelligence and quickly updated customer insight, so leading to faster responses to market changes, customer issues, competitor moves and their own performance. This refreshing of insight and a leadership team’s reaction to this intelligence often result in there being more frequent modification of a target market strategy and segmentation decisions. So many projects set up to consider multi-channel strategy and offerings; digital marketing; customer relationship management; brand strategies; new product and service development; the re-thinking of value propositions, and so forth, now routinely commence with a segmentation piece in order to frame the ongoing work. Most organisations have deployed CRM systems and harnessed associated customer data. CRM first requires clarity in segment priorities. The insights from a CRM system help inform the segmentation agenda and steer how they engage with their important customers or prospects. The growth of CRM and its ensuing data have assisted the ongoing deployment of segmentation. One of the biggest changes for segmentation is the extent to which it is now deployed by practitioners in the public and not-for-profit sectors, who are harnessing what is termed social marketing, in order to develop and to execute more shrewdly their targeting, campaigns and messaging. For Marketing per se, the interest in the marketing toolkit from non-profit organisations, has been big news in recent years. At the very heart of the concept of social marketing is the market segmentation process. The extreme rise in the threat to security from global unrest, terrorism and crime has focused the minds of governments, security chiefs and their advisors. As a result, significant resources, intellectual capability, computing and data management have been brought to bear on the problem. The core of this work is the importance of identifying and profiling threats and so mitigating risk. In practice, much of this security and surveillance work harnesses the tools developed for market segmentation and the profiling of different consumer behaviours. This white paper presents the findings from interviews with leading exponents of segmentation and also the insights from a recent study of marketing practitioners relating to their current imperatives and foci. More extensive views of some of these ‘leading lights’ have been sought and are included here in order to showcase the latest developments and to help explain both the ongoing surge of segmentation and the issues under-pinning its practice. The principal trends and developments are thereby presented and discussed in this paper

Unpicking antecedents of CRM adoption: a two-stage model

Most CRM work focuses on consumer applications. This paper addresses the operational adoption issues facing the organisation deploying CRM practices. There are a plethora of challenges facing organisations when adopting CRM. Previous research is limited to either examining the CRM adoption process at an individual/employees level or an organisational level. Hence, in this paper the myriad of organisational, marketing and technical antecedents that seem to impinge upon employee perceptions and organisational implementation of CRM are structured in a two-stage model. Using a stratified sample of ten organisations across four sectors, seven hypotheses are tested on data collected from 301 practitioners. A two-stage model is analysed using structural equation modelling. Findings reveal that CRM implementation relates to employee perceptions of CRM. This paper deepens our understanding of organisational practices to adopt CRM, so as an organisation properly profits from the expected benefits of CRM

Implementation rules to bridge the theory/practice divide in market segmentation

Despite an extensive market segmentation literature, applied academic studies which bridge segmentation theory and practice remain a priority for researchers. The need for studies which examine the segmentation implementation barriers faced by organisations is particularly acute. We explore segmentation implementation through the eyes of a European utilities business, by following its progress through a major segmentation project. The study reveals the character and impact of implementation barriers occurring at different stages in the segmentation process. By classifying the barriers, we develop implementation "rules" for practitioners which are designed to minimise their occurrence and impact. We further contribute to the literature by developing a deeper understanding of the mechanisms through which these implementation rules can be applied

Understanding customer relationship management (CRM) adoption in an Arab Middle Eastern context

While the development of customer relationship management (CRM) started in the developed west, it has rapidly spread to developing countries. However, the way organisations adopt CRM in developing countries, and more specifically in the Arab world, might be different and the context certainly differs. There is a shortage of rigorous studies that examine the drivers of CRM adoption in this context. In this study, we examine the antecedents of CRM adoption in the Jordanian service sector. The conceptual framework of this research is tested using a cross-sectional survey of more than 322 practitioners. Using structural equation modelling analysis, results specify six underlying factors that explain CRM adoption: segmentation analysis, clear direction and objectives, performance measurement, rewarding usage, managing project changes, and knowledge management. Each area has implications for improving practices and maximising the benefits of adopting the process or management practice of CRM. This paper identifies key practices to provide useful guidelines for organisations in the Arab world making plans to adopt CRM, with broader implications for the adoption of many systems and projects there and for CRM deployment in developed regions

Tie the knot: building stronger consumers’ attachment toward a brand

Extant research has promoted the importance and seeking to establish a deeper understanding of brand loyalty. However, it still remains elusive and uncertain. A study with more than 1,500 CEOs worldwide believes that creating a bond with consumers and continuing to learn how to strengthen the bond are essential for realizing strategies and delivering on shareholder expectations. Not surprisingly, firms and researchers are seeking ways to build a stronger connection with consumers, because such attachment acts as a key requisite in a firm’s success. Consequently, understanding how marketers can intensify the attachment is important. This article offers a framework for building stronger consumers’ attachment and testing it based on a survey of 432 participants. Four factors are deemed to be important: ideal self-congruence, sensory experience, responsiveness, and CSR beliefs. Attachment influences loyalty and resilience to negative information. Additionally, attachment fully mediates ideal self-congruence and responsiveness to loyalty, as well as ideal self-congruence and sensory experience to resilience to negative information

Self-congruence, brand attachment and compulsive buying

Compulsive buying refers to a phenomenon that promotes excessive consumerism which may hurt the brands' reputation in the long run. This study examines the influence of actual and ideal self-congruence on brand attachment and two dimensions of compulsive buying behavior (i.e. impulsive and obsessive-compulsive buying). Based on a survey of 427 respondents, it is evident that self-congruence directly affects brand attachment, where actual self-congruence is a stronger predictor of brand attachment. Both actual and ideal self-congruence do not directly affect obsessive-compulsive buying. This indicates that brand attachment fully mediates the relationships. However, actual self-congruence directly affects impulsive buying but ideal self-congruence does not. This indicates that brand attachment partially mediates the relationship between actual self-congruence and impulsive buying and fully mediates the relationship between ideal self-congruence and impulsive buying. Interestingly, the direct effect of actual self-congruence on impulsive buying is negative. Academic and managerial implications of these findings are discussed

Positive and negative behaviours resulting from brand attachment:The moderating effects of attachment styles

Purpose The purpose of this study is to investigate the relationships between brand attachment and consumers’ positive and negative behaviours. Furthermore, this study examines the moderating effects of attachment styles on these relationships. Design/methodology/approach The study is based on a survey of 432 respondents, and the data are analysed using the structural equation modelling approach. Findings This study empirically supports that brand attachment and attachment styles (i.e. anxiety attachment and avoidance attachment) are distinct. Brand attachment influences consumers’ not only positive behaviour (i.e. brand loyalty) but also negative behaviours, such as trash-talking, schadenfreude and anti-brand actions. The findings of the study suggest that only avoidance attachment style moderates the relationships between brand attachment and these consumer behaviours. The link between brand attachment and brand loyalty is attenuated for high-attachment-avoidance consumers. In contrast, the links between brand attachment and trash-talking, schadenfreude and anti-brand actions are strengthened. Practical implications This study assists marketing managers in understanding that a strong brand attachment may result in negative behaviours that can harm a company’s brand image. Thus, building a strong relationship with consumers will not always be beneficial. Companies should be aware of the consequences of building relationships with consumers who have a high level of attachment anxiety and/or avoidance. Originality/value This paper highlights that brand attachment not only influences brand loyalty behaviour but also three negative behaviours: trash-talking, schadenfreude and anti-brand actions. Moreover, the links between brand attachment and negative behaviours are strengthened when consumers have a high level of attachment avoidance. </jats:sec

The Customer Relationship Management Paradox: Five Steps to Create a Fairer Organization

Purpose: Favoritism of customers reveals great benefits, as focusing on the most profitable customers ensures better use of marketing resources. Scholars suggest, however, that such favoritism imposes a danger to customer management, potentially creating perceptions of discrimination. We explore the fairness of differential customer management practices and propose a framework contributing to fairer marketing practices with implications for social businesses. Approach: We critically review the literatures on perceptions of fairness and evaluate the customer relationship management (CRM) paradox. Findings: Within our framework, we identify four stages towards fairer customer management practices: (1) generating awareness and diagnosing problems, (2) managing targeted and non-targeted customers, (3) creating emphasis on positive inferences and goodwill, and (4) promoting morality in marketing. Implications: This framework assists firms in incorporating fairness issues in their marketing schemes, improving the well being of both customers and society alike. With increased fairness, all stakeholders will benefit, and it encourages more 'compassionate management.' Contribution: This paper critically reviews related literatures to suggest best practices for overcoming these dangers in a framework involving four phases, and presents an action program comprised of five steps for practitioners to practice fairer customer management