Friday, February 15, 2008

Segment Market by Clock

An interesting idea for Market Segmenting:
A new way to target your messaging: by the clock.
By John Rosen and AnnaMaria Turano

"The model that matters most today is not measured by income statistics, educational attainment or political affiliation. It is measured by the clock.

For despite thousands of technological developments, from UPC codes, to telemarketing and direct mail, to 500-channel cable TV, to broadband Internet access, every one of which was supposed to "change everything about the way business is done," the most important constant in marketing hasn't changed since the discovery of fire allowed humans to stay awake past sunset. The number of hours that a human being could theoretically spend in the path of commerce hasn't changed significantly since then, and the hours that they do spend there, shopping and buying, has increased only marginally since the introduction of television. What has changed, of course, is the number of messages competing for those hours . . . and the way in which those hours are now controlled. Consumers don't spend any more time standing in line to examine your product than their grandparents did, but they have a lot more lines to choose from. So if one line isn't moving at the speed they like, they move to another one.

Marketers who want to succeed today have to give their customers more than the traditional four Ps (Price, Product, Promotion and Place); they have to reduce the length of the queue waiting to enter the consciousness of a potential customer. If they want to convince Mr. Green to make a reservation in their hotel, they need to start pitching weeks, months—sometimes years—before he is decision-ready. If they want to rent Ms. Blue a car, they can't waste a second of her time. If they want to succeed in any marketing effort, they have to cut in line at the same place, and at the same moment, that their customers do. They have to make sure that they can deliver what their customers want before those customers glance at their metaphorical watches, and decide either not to buy, or—even worse—leave for another, competing, line. They have to time their selling messages to be no longer than the amount of time that buyers have allocated for hearing them.

Stopping that consumer at precisely the right time requires a set of disciplines that we call stopwatch marketing."

"Clustering customers into groups with distinct patterns of behavior is nothing new; familiar behavioral clusters include Basic shoppers (seekers after essentials and convenience, in that order), Apathetic shoppers (those who lack interest in virtually every aspect of shopping), Destination shoppers (for whom the mall, or supermarket, or mass merchant is reason enough for shopping, even absent convenience or brand-name merchandise not associated with the merchant), and Enthusiast shoppers (the mirror image of Destination shoppers, consumers who will spend days shopping for the same handbag at a dozen stores).However, “Typing consumers is not the same as Typing consumption”Here’s a model that measures consumption—not consumers—along two axes: the disposition to spend time shopping for a particular product or service; and the net margin of that product or service. (Since marketing resources, over time, must be a fraction of any business' gross margin, they will determine the quantity and quality of the touchpoints and catchpoints—the resources available for marketing the product or service.) This model segments shopping style into understandable groupings, so that marketers can align their marketing strategies to those segments, or their marketing styles.
In this model, transactions tend to fall somewhere within one of the four quadrants that comprise the matrix: In one, we match low-margin products or services with consumers who have a low willingness to spend time shopping; others match low-margin with high willingness; high-margin/low willingness; and high-margin/high willingness. Of course, since we're marketers who understand the importance of packaging, we actually give the quadrants slightly less imposing names:
• Few touchpoints + lower margin/Fast stopwatch = Reluctant shopping
• Many touchpoints + higher margin/Fast stopwatch = Impatient shopping
• Few touchpoints + lower margin/Slow stopwatch = Recreational shopping
• Many touchpoints + higher margin/Slow stopwatch = Painstaking shopping

To read the matrix, think about, for example, air-conditioning in the reluctant quadrant. Purchase of a new air conditioner, especially a central-air unit, is nearly always done by a reluctant consumer. The consumer is not an expert, is usually in a hurry (she has a quickly ticking stopwatch) and the reason for the purchase is likely an unplanned event (it's August and the darn thing just broke!). Moreover, there are few touchpoints: Almost certainly, there are more conveniently located, well-lighted and comfortable Starbucks than central-air-conditioning showrooms in her neighborhood.

Understanding the real estate your customers occupy on this map—their shopping style—is the single most important thing you need to know in order to succeed in selling your product or service to them. The relevant customers for some products occupy only a small section of a single quadrant of the matrix; others cover large sections of the map, with customers appearing in more than one quadrant, such as the Green and Blue families. In general, most businesses will find the behavior of their most important customers congregating around a single shopping quadrant . . . though, of course, we never forget that even the most reluctant shopping experience is a joy to some small fraction of shoppers. This highlights an important consideration for marketers in understanding and using this matrix construct—a consumer's or customer's placement in a quadrant is situational (it's August and it broke!), behavioral (I'm not the type to comparison shop) and emotional (I'm just getting too old to be uncomfortable in my own house)."

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