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as defined by Professor Malcolm McDonald and Ian Dunbar in Market Segmentation . which is incorporated in a series of workshops.Market Mapping & Market Segmentation Market Mapping and Market Segmentation A market map defines the distribution and value chain between supplier and final market segment. and is used to map and segment your market. The Marketing Process Company has developed processes and software to help define both these inter-linked pre-requisites to successful strategic marketing planning. can be distilled into a 10 step process.385ktns 4 % 3 Direct Who Buys Corp Groups Private etc Who Buys What Large Corp Groups Private C G P what where when how A1 to A17 what where when how G1 to G13 what where when how P1 to P4 Direct (20. consultancy.30% Micro. Market segmentation identifies those groups of customers whose similar requirements can be satisfied by a distinct marketing mix. quality. shown graphically above. The software tools.250 ktns Distrib's (5) 1. Reach. accounting for the various buying mechanisms and influencers found in a market. can be used in support of the 10 stage market mapping and segmentation process shown below. Copyright © 2003 The Marketing Process Company Date: 27/06/03 Ref: Mkt Map & Seg v 2003. package. When and How Total European Market $2B PMS share . Market Mapping $1. Seg 1 Seg 2 Seg 3 Seg 4 Seg 5 Seg 6 Seg 7 Segmentation Stage 1 Doc in the Box Finance Dependent Leading Mgt CFO/IT Groups Mainstream Public Extensive service Intensive Surg Micro. intensity.500ktns 45% 405ktns 6% & Clubs (30) 7 5 k t n s 22% 65ktns8 % 300ktns Distrib's 30% Consults 1.000) Agents/ Retail $600M 15% Agent/ retail 290ktns % Consults 3 (150) Speclst Public'n What is Bought What products. MMap and Market Segment Master.400M 40% 370ktns 21% 850ktns 27% Nat 1.1 .how to do it. services Where.Segments Segmentation Stage 2 Size Differ.970ktns 35% Overseas Importers Independ Distrib's (245) 525ktns 25% Co-Ops Manufs 2.935ktns 33% 400ktns Manuf's 38% 5 0 k t n s 35%Consults 215ktns 49% 5 0 k t n s 40%Independ 200ktns 0 % 4 355ktns 5 % 1 2.Segments Market CPIs Innovative/new Life Cycle Cost Financing IT networking Sophistication Maximum output Brand-quality Brand-service Application range Price C1 to C17 score score score score score G1 to G13 P1 to P4 Why OK and compatible with the company! Total 100 100 100 The Market Mapping and Segmentation process. how to profit from it.
e. where influence / advice / decisions occur (not necessarily a transaction) about which products to choose]. 2.e. 6.Market Mapping & Market Segmentation 10 Step Market Mapping and Market Segmentation Process 1. Define market (need). Top-line’ picture developed so far may be hiding important differences between customers. Set parameters for analysis (i. 7. of businesses / customers which exist at each junction. as highlighted by the current customers. 4.e. Draw a map of the market your business is segmenting – FUTURE: • Record key drivers (such as e – business) that will have an impact on channel mix. that part of the market in which your organisation can realistically compete. • Adjust total market volumes and your organisation’s share. Estimate RAM (Realistically Available Market) i. • Draw a total market map – not just the part you currently deal with. For example. all the currently understood different types of companies / customers that occur there. which flows through different channels. the final user. • The definition should focus around the needs of the final customer (i. • Include stages where influence is brought to bear on the purchase decision [i.1 . Expand detail (preliminary segments). • List the ‘needs’ being met by the current products. transaction stages). • Need to capture which channels will increase at the expense of others. Draw a map of the market your business is segmenting – CURRENT: • Identify junctions (i. 3.e. • Identify new / emerging junctions. • No. avoid the word ‘’distributor’ if there are in fact different kinds of distributors who behave in different ways and who supply different customers. specify what is to be included / excluded). Initial quantification: • Total market volumes (units) / value (revenue) and your organisation’s share. • Specify key assumptions.). This will ensure you understand your market dynamics properly. • Sketch out the various sub-junctions separately. Note at each junction on your market map (if applicable). Copyright © 2003 The Marketing Process Company Date: 27/06/03 Ref: Mkt Map & Seg v 2003. 5. Guesstimates. which flows through different channels.e.
dominant profiling characteristics)? What. Identify the junctions where market segmentation should occur (Market Leverage Points) on the Market Map • determine which junctions ‘own’ or ‘influence’ the purchase decision (i. Who buys (i. those junctions where a decision is made about which of the competing products/services should be purchased) • segment junction furthest away from the supplier (manufacturer) where decisions are made • progressively backtrack along map away from final user towards the supplier If junction ‘owns’ or ‘influences’ the purchase decision.1 . when and how do they buy? Why do they buy (underlying needs from which CSFs derived)? 9. Copyright © 2003 The Marketing Process Company Date: 27/06/03 Ref: Mkt Map & Seg v 2003. behaviours and current channel preference. 8.e. NOTE: Market mapping routine may be challenging the traditional lists of company / customer types at the various junctions around whom you currently conduct your marketing effort.e.e. Redraw the market map incorporating the breakdown of junction types. Use process to segment your market into groups of customers who share the same needs. Definitive picture can be entered once you have decided at which junction(s) on the map you should be developing segments. • • Highlight companies / customers who make decisions about which product to buy (i.Market Mapping & Market Segmentation • Construct an outline (as opposed to the definitive picture). where. ask: • • • 10. split junction into leverage / nonleverage ‘members’).
Market Mapping Market mapping is used to develop a clear understanding of how a market actually works. the process ensures a rigorous and very targeted brief can be produced. These different requirements can then be used to develop the alternative strategies that need to be implemented. Once this is clear. 3. 2. which clearly identifies the different requirements that customers look to be satisfied. The Workshop series is structured in three phases. the process makes it very clear where the information holes are and the importance of that information. agency. loyalty programmes. along with the revenue associated with their decisions. This is achieved by answering the following questions: • Who buys? Here the output of the market map is captured. fare type. Market Definition A market is defined in terms of a need that can be satisfied by the products or services customers view as alternatives. as follows: 1. However most organisations do have sufficient internal knowledge to produce something that is ‘roughly right’ and a reasonable starting point.1 . A key stage in market mapping is to identify who makes the decision between alternative offers.Market Mapping & Market Segmentation Market Mapping and Segmentation Workshops The objective of the workshop series is to produce a structure for the defined market. small independents. If research is required. additional services (chauffeur drive. Market Segmentation Having identified the key junctions on the market map. individuals and so on. Where this is not the case. for example). as it is on these individuals/departments that the segmentation review will focus. looking at both the routes or channels to market and the role of influencers. airport. these are analysed to arrive at a segmentation structure. Copyright © 2003 The Marketing Process Company Date: 27/06/03 Ref: Mkt Map & Seg v 2003. In an airline example this could involve class of travel. to better access the segments and tune the product offers to suit the customer requirements. the boundaries for the segmentation project can be set. by identifying and defining the different types of decision makers such as large corporates. • What is bought. schedule. It should be noted that most organisations do not have access to the information to produce a definitive segmentation structure that is 100% accurate. direct and so on. where? when? how? The objective of this step is to clearly identify the Key Discriminating Features (KDFs) used by the decision-makers to choose between one offer and another.
some segments will be influenced by service and convenience. It should also be noted that CPIs may relate to how the micro-segment wishes to be served.1 . others by price and so on.Market Mapping & Market Segmentation • Who buys what? The different types of decision makers identified earlier in the process are then broken down into a series of micro-segments. (within which customers have the same or similar requirements). The final part of this phase involves mapping product groups onto the identified segments to produce an Ansoff Matrix. in which case they would be reached by the channel serving those needs. to reflect the different ‘purchase bundles’ they put together. for other micro-segments the Internet may represent the best way to serve the customer. Ansoff Matrix PRODUCT OR SERVICE Existing Existing New MARKET Market Penetration Product Development New Market Extension Diversification Copyright © 2003 The Marketing Process Company Date: 27/06/03 Ref: Mkt Map & Seg v 2003. For example. which defines the product-markets. For example some large customers may wish to be served by a single point of contact for all their needs. This information is converted into Critical Purchase Influences (CPIs). understanding the real needs customers are trying to satisfy by the purchase bundle they put together is a crucial step. • Why do they buy? As segmentation is about splitting customers or potential customers within a market into different groups or segments.
00% 2.00% 10.00% 3.80% 10.50% 100. consistent approach.00% 15.00% 1. shows the source of supply.50% Copyright © 2003 The Marketing Process Company Date: 27/06/03 Ref: Mkt Map & Seg v 2003.00% 30.00% 80.00% 1.00% 10.00% International Banks 0.00% Direct Sales (Banks) 35.1 .00% 1.00% 2.00% 1. A re-colouring tool facilitates viewing of : • routes through a channel • the influencers of a particular channel and who the channel consequently influences • routes into and out of a channel by unique colouring by channel.00% 1.50% 0.20% 0. (produced using Mmap).00% 2.00% Internet 1. MMap enables The Marketing Process Company to produce a series of market maps to allow easy comparisons between markets Maps constructed by MMap will be structurally and numerically consistent MMap is versatile enough to allow comparisons of volumes and values and their percentages and market shares Market maps may be easily exported to a word processing or presentation package The structure of the map is continuously checked whilst drawing to ensure consistency Each map is produced in full colour.00% Local Offices 0. These are some of its features: • • • • • • • MMap introduces a uniform language for market maps By adopting a single.00% 90.00% 1.00% Local Banks 75. 80.00% 16.00% 3.00% 7.00% Other Financial Inst 4.50% 0.50% 0. An example Market Map for a fictitious financial service market.50% 0.00% 2.00% 3.Market Mapping & Market Segmentation MMap .70% 1.00% 32.00% Direct Marketing 0.00% 0. market channels and (un-named) product/market segments.00% 3.30% 0.00% 80.50% 1.The Market Mapping Tool Market Mapping Tool is used in-house by The Marketing Process Company and allows the production of market maps quickly and simply.00% 90.00% Suppliers Retail Banks 10.50% 0.50% 0.00% Direct Mail 1.50% 2.
which either directly map onto needs. MSM and Market Segment Master are registered trademarks of Prof Malcolm McDonald and Ian Dunbar. and generating and sizing segments. and segments are often hard to identify in a way that will give maximum leverage in the marketing plan. below is shown a Spread-Cluster Map. the product offer maps onto how the customers run their business. The tool automatically segments on the basis of similar attributes. In these cases. as we ll as generating segment descriptions. we have developed a set of tools (MSM – Market Segment Master) and processes for analysing existing and potential customer data. Copyright © 2003 The Marketing Process Company Date: 27/06/03 Ref: Mkt Map & Seg v 2003. the diameter represents the number of customers in a cluster and the distance between the discs represents the relative difference between clusters. One of the great advantages of the tool is that. To help solve this problem. A number of novel outputs are produced in order to show the size and relationship between the clusters found. or can be used to define needs.1 . it lists potential customers who belong to each segment. As an example.the Market Segmentation Tool Often companies sell products and services into horizontal segments.Market Mapping & Market Segmentation Market Segment Master® . The colour of the discs represent the strength of a chosen feature (red graded to green which represents high strength).
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