BUS 3500 February 10

I love the topic of market segmentation and especially geodemographic segmentation. I was happy to read the entry about the Claritas PRIZM system because I was exposed to this when I worked at a marketing firm in Denver. I didn't really understand the unique functions of geodemographic segmentation over the other methods of market segmentation at the time, but now after this week's exposure I can see more of a realistic context for what we did back in Denver. We used the Cluster Coding system to conduct target marketing for companies like Vail Associates, Steamboat, the Colorado Tourism Board, and Comcast Cable. We also cluster coded their existing customers so they would know what groups responded best to what product groupings they offered, and then launch marketing to attract more members of those groups. One example was Vail - they assumed that their customers (and therefore future targets) were highly affluent cluster groups - but when analysis came in, they really had a much larger set of mid-level groups - families with kids for the ski packages, fixed income seniors for the golf packages. They dropped their focus on high end offerings and beefed up their offerings to these other groups, customizing each offer and package to fit that particular target. We ended up with eight specific smaller campaigns, rather than just one really glitzy one meant to reach everyone. Then we used database marketing to reach out to the customers with offers that fit their specific wants and needs. It made for smaller more affordable mailings, took the shotgun approach down to a rifle approach. They were also able to drive yield by reaching out to a specific group with a special offering on days (or hours) that were under utilized, or if a unique opportunity came up, such as a last minute booking of a pro skier to do a technique clinic, or room availability at the Inn, etc. Word could get out fast and in a more affordable, personal message format too. Geodemographic segmentation really opened their eyes and also opened the door for expansion into areas they had not previously considered. Then database marketing kicked in to put this new insight to work in making targeted offerings that had a high propensity of being accepted. In "lean" this is referred to as a "pull system." I worked in lean at Shingo Prize for 2 1/2 years. It's providing something in answer to a need by the customer. My old boss in Denver would have said it's Marketing 101: "find out what the customer wants and give it to him." But you first have to find out who the customer is... and these lessons in segmentation and next week's market research topics are a valuable starting point.