Oxford College of Marketing

The Oxford College of Marketing is delighted to announce the Strategic Marketer of the Month is Hussam Asmar, a Marketing Manager at LaFarge, based in Jordan.

The Oxford College of Marketing is delighted to announce the Strategic Marketer of the Month is Hussam Asmar, a Marketing Manager at LaFarge, based in Jordan.

Hussam achieved this by playing the online Market2win Game and guiding his virtual company to a superb market victory beating four other companies to the top position. In doing so, he demonstrated the right stuff for senior leadership including superior customer insight, situation awareness, strategic leadership and masterful execution.

Hussam was very glad he signed up to one of our January games, “Playing the game was a good experience for me and would be the same for any strategic marketer or market strategy student. Comparing it to other simulation games I did during my studies and training, I believe the Market2win game is much more strategic and more customer oriented than similar games which are more sales oriented in nature. This game makes the player feel the importance of both long-term and short-term decisions and focuses more on value propositions to customers.”

Do you want to develop your strategic leadership skills by playing against other real people from around the world - and collect valuable CPD time along the way? For more information about upcoming games go to http://www.market2win.com/play.php

For further information or to discuss any Chartered Institute of Marketing courses ( Distance learning, part time evening or intensive weekends ) please contact Oxford College of Marketing Jane Young, on +44-(0)1865-515255, janey@oxfordcollegeofmarketing.ac.uk. The college is a CIM top performing college with excellent exam results.

Needs-based Market Segmentation – the unchanging bedrock of successful strategy

By Emeritus Professor Malcolm McDonald

There is a widely held belief that new media and changing patterns of behaviours have made traditional market segmentation irrelevant.  They haven’t, nor will they in future.  These are feeble excuses from lazy and incompetent marketing departments, who fail to use the tried and tested process of needs-based market segmentation to understand these new consumer behaviour patterns.  Given the current fearsome economic circumstances, this is one of the biggest challenges and opportunities we face if we are to survive in a fast-changing world.

A Harvard Business Review article by Christensen in December 2005 reported that the reason for a 90 per cent failure rate of 30,000 new products was poor market segmentation.  In February 2006, also in an HBR article, Yankelovich reported on the widespread failure of market segmentation initiatives.

The reasons aren’t hard to pinpoint.  A whole edition of the Journal of Marketing Management in 2009 was devoted to market segmentation, discussing issues such as what segmentation bases to use, such as size of purchase, customer characteristics, product attributes, benefits sought, service quality, psychographics and, more recently, with the advent of relationship marketing, one-to-one.  Such debates always have been largely irrelevant and ‘production-orientated’.  For example, it is clearly nonsense to segment on the basis of socio-economics demographics, geodemographics and the like.  Other than at a very high level of aggregation, not all As behave the same, Nor do all 18-24 year old women, nor does everyone in a specific geographical area.

The justification for saying this is that anyone who says “We segment markets by …..” is totally missing the point.  First any market has to be correctly defined in terms of needs, the very opposite of “we’re in the pensions market”, as a pension is only one of many ways of satisfying the needs for retirement income.  Remember what happened to IBM then they defined their market as mainframes and Gestetner who defined their market as duplicators.  The history of commerce is replete with failed companies who defined their market in terms of what they sold rather than the needs to be satisfied.

Secondly, any market consists of 100 per cent of what is bought, where it is bought, how it is bought, who buys it, how it is used and why it is bought and used in these ways.

Needs-based market segmentation, as spelled out in detail in Market Segmentation: how to do it; how to profit from it”, is a simple step-by-step process, which space doesn’t allow to be spelled out here.  Suffice to say that the correct methodology for segmenting markets has always been to understand the many different actual purchase combinations that take place in a market, as shown in Figure. 1.  The resulting micro segments are all actual purchase behaviours and there are usually as many as 40 of these in any market, but since most companies can only deal effectively with up to 10, a simple clustering routine is used to bring together those micro segments that share approximately the same needs – ie. Segments,

 

Figure 1 – Micro Segments

A simplified example of the end result of this process is shown in table 1 for the toothpaste market.  Figure 2 shows the end result of the process for purchasers of IT and IS products.  Particularly in relation to Figure 2, it can easily be appreciated how products, services and communication channels and messages must vary in accordance with the needs and profile of each segment.  Competitors without such a segmented approach are of necessity ‘marmalading’ their offer over the average IT buyer and just cannot understand why this major global supplier is so successful and why they don’t have to compete on price.

Table 1 – Segments in the market for toothpaste

		Segment name
		Worrier	Sociable	Sensory	Independent
Profile	Demographic	C1 C2 25-40 Large families	B C1 C2 Teens Young smokers	C1 C2 D Children	A B 35-40 Male
	Psychographic	conservative: hypochondriacs	high sociability: active	high self-involvement: hedonists	high autonomy: value orientated
What is bought, where, when and how	Product examples   Product features       Outlet   Purchase frequency	Signal Mentadent P   large canisters   health properties   supermarket   weekly	Macleans Ultra brite   large tubes   whitening properties   supermarket   monthly	Colgate Aquafresh   medium tubes flavouring     supermarket   monthly	Own label     small tubes         independent   quarterly
Why it is bought	Benefits sought	stop decay	attract attention	taste	functionality
Price paid		medium	high	medium	low
Percentage of market		50%	30%	15%	5%
Potential for growth		low	high	medium	nil

 

Note: ‘C1’, ‘C2’ and so on appearing in the demographic profiles of each segment represent socio-economic groups which were in use in the UK until 2001, now replaced by eight analytic classes numbered from 1 through to 8. ‘Signal’ and ‘Mentadent P’ are trade marks of Lever Fabergé; ‘Macleans’ and ‘Aquafresh’ are trade marks of GlaxoSmithKline; ‘Ultra

Figure 2 – Understand the different category buyers

A propos the issue of whether new channels, new media (such as i-tunes, You Tube, etc.) and subsequent changing behaviours has made traditional segmentation irrelevant, the resounding answer is ‘NO’.

In Figures 3 and 4, the buying process (listed in the left hand column and the actual behaviours of just two of ten segments of a global travel company in respect of their use of media such as the internet, interactive TV etc. for each stage are shown.

Even a cursory glance at this would show that, unless these different actual behaviours by segment were known by this travel company, the offers made to their customers and their communication strategies would be hopelessly misplaced. 

 

Figure 3 – The Sunworshippers

Figure 4 – John and Mary Lively

The Times letter shown in Figure 5 is a hilarious explanation of what goes wrong when needs-based segmentation isn’t carried out and is a classic example of why most communications, especially direct mail, miss the mark completely.

 

Figure 5 – Relevant

Finally, the link between shareholder value creation and excellent marketing has been firmly established during 50 years of research.  Table 2, taken from Brian Smith’s 2003 Cranfield PhD, shows this link.  It also shows on the right what gurus like Philip Kotler and others consider to be worldclass marketing.

The order is important and justifies my belief that without proper market segmentation, all strategies fail in the long run.

 

 

2011 will officially mark the next marketing decade, yet , we’ve reached a round year, urging us to question what  the upcoming marketing challenges and more importantly, what the next decades’ marketing imperatives will be .  The past ten  years have been refocusing   marketing around the imperatives of accountability and  creating shareholder value. Doyle was always reminding us about the growth imperative.  Internet and technology have dramatically changed  the way information and products are consumed and distributed. Social networks have doubled the challenge of targeting efficiently in an increasingly atomized world and a continuously fragmentizing traditional media.  Marketing practice is constantly challenged and marketers obliged to stay alert to the never ending shifts and changes.  What will be the next decades  marketing imperatives?  Some  thoughts to share, very personal and  obviously not exhaustive. 

 

The Nuanced Analysis Imperative

 

In my opinion, an even more nuanced approach will be prerequisite for 2010 as market trends  are contradictory and various market segments are behaving so differently from  place to place. Markets are no longer as predictable, nor are the statistics and data, even if they abound. For example, declining spending levels in mature economies are the main recession effect. Yet,  growing consumption and increasing spending power are tracked in India, where FMCG sales  among this audience were  set to grow by 23%, durables up by 15%  and telecoms by 13%.  Anti consumerism and self indulgence splash  with the same intensity, at the same time but in various corners of the world. While Germans declare war to consumerism by opening  up  shops with  free  staff and  volunteering vendors, self indulgence acs as an enabler for  increasing  spend on personal care products in India, an almost inappropriate driver in the past.  

 

A nuanced , sensible analysis in  marketing data would be essential.

 

The Relevant  Data Imperative  

 

Starting with 2010, every marketer will be confronted with ten  times more data and ten  times less relevant information. Open source data , the use of social media for marketing reasons, the technology now offering a larger scope for gathering and  storing behavioral data set new challenges for marketers to set , design and develop reliable marketing information architecture, select meaningful and accurate date, choose and discern  among  information producers and disseminators.

 

Governmental statistics and prognosis are trusted as a reliable source of information. Yet, more than 4 million Romanians working abroad still appear in the Romanian statistics. A good reason  to start redesigning the growth strategy of many retail businesses.  So for example the Romanian police quote declining crime levels as a metric of performance. However this may in part be due to the fact that some of the criminal fraternity may well be living and operating in other European countries but officially they are still included in Romanian records.

 

 

The Accurate  Diagnosis Imperative

 

Into  an informal yet very   meaningful and idea rich conversation, Professor Denis Wilcox was describing public relations as “a sensible tracking of issues”. We were debating the contemporary PR challenges of correctly assessing communication problems and opportunities and PR accountability.  The professor was talking of strategic PR that indeed works as a management function focusing on diagnosis as main role.  Marketing would be much more a sensible and continuous tracking of business issues as well.  What does actually happens? To what extent does it impact on us?? What would be the consequences?

 

The Smart Growth Imperative

 

The first two imperatives  seem quite redundant. As also mentioned at the beginning my favourite marketing imperatives as stated by Doyle in 2004 is the growth imperative. Yet , the growth imperative is the cause of most of the business failures in the Romanian market where I work . Lots of  companies have imagined that is enough to produce or trade some products, perform an aggressive growth strategy and the success would follow. That proved very sadly wrong. 

 

Accelerated growth, lack of relevant data regarding the market potential and genuine market potential, the skin-deep analysis of the macroeconomic data has led many Romanian companies into an over  enthusiastic  regard towards the potential growth which after 2005 ended close to  bankruptcy.

 

Intelligent  growth based on sound analysis would be essential for survival. Growth is an imperative but  without smart marketing it can be a deadly trap.

 

The Quantifiable Social Media Imperative

 

Social media has finally won the battle and  over 80% of the major US companies are already using it and are including social media actions within their marketing mix. The focus will move towards  accountability as well.  The next decade might actually account for a genuine victory and the use of social media, which is seen as fashionable at the moment, but is still limited in the ability to deliver results.

 

The Strategic and Accountable CSR Imperative

 

CSR , far from a passing fad, has become the new evangelist and a must have in each organization.  Yet, for many companies struggling to survive recession it  is and will be considered a fad. Companies must now  be accountable to their employees, shareholders and stakeholders and  thus do something for society as well. CSR will  be  for those who can afford it. Those who can , might actually  find out they will be able to do more. Coca Cola has made  significant accountable  savings by adopting a responsible and sustainable procurement policy.

 

In the next decade CSR  will be accountable and strategic or not exist at all. CSR has become in short time so fashionable that everyone thinks they can wear it like a hat. The next years will show that CSR will be a too large a hat. Tricky, thorny or simply full of opportunities, CSR  will be a must-deal-with issue for every company, never mind the size.

 

The next marketing decade will certainly bring us many unanticipated surprises and iy is impossible to predict shifts and trends . The rate and pace of change in  the last ten years can only allow us to anticipate the rhythm. The only certain thing for marketers is that it will be definitely ten times more complicated.

 

 

 

Oana Sav

Marketing Consultant

 

More Marketing Solutions

 

oana@marketingsolutions.ro
www.marketingsolutions.ro

Thanks for offering to put my job share on your blog. Marketing & Development Officer 18.5 hours per week job share at Cornerstone Arts Centre in Didcot. The link for applications is www.southoxon.gov.uk and the details and application form are under Careers and then Council Vacancies, the closing date is Tuesday the 9th (sorry I didn’t get this to you sooner we have meen manic this week!). Who knows there may be some speedy keen person out there just waiting for a job share!

MAKING SENSE OF DIGITAL MEDIA

The explosion digital media in our business lives cannot be ignored! Neither can the ongoing impact it has on Marketing Strategy.

While many marketers have embraced all that is digital, there are others for whom the world of Digital Media remains a mystery.

Oxford College of Marketing has launched 2 new exciting qualifications from CAM / CIM that aim to unravel the mysteries of the Digital World. The Diploma in Digital Marketing and Diploma in Managing Digital Media cover topics such as Search Engine Optimisation (SEO), Pay per Click (PPC), Online advertising, Social Media as well as the relevant legislation, regulation and codes of practice that govern Digital Marketing.

Aimed at marketers who want to update their digital knowledge or increase their levels of expertise, Oxford College of Marketing offer flexible study options for the Diplomas by Online Distance Learning or by attending Intensive Weekends at one of 5 study centre’s in Liverpool, Birmingham, London, Reading and Gatwick.

The Diploma in Digital Marketing comprises 3 units that can be studied separately as stand-alone awards or by completing all 3 assignments to gain the full Diploma.

The Diploma in Managing Digital Media comprises 5 units that are assessed by 3 work based assignments and 2 exams.

Oxford College of Marketing will also be delivering the Digital Diplomas by way of a short-course. Perfect for those who feel that their exam days are over but still want to update their knowledge.

To find out more contact Oxford College of Marketing on 01865 515255 or email janey@oxfordcollegeofmarketing.ac.uk or check out the website www.oxfordcollegeofmarketing.com