WHITE PAPER ON MOTIVATIONAL SEGMENTATION

Written by Steve Gang, based on Gang & Gang marketing consulting for a large (but anonymous) pharmaceutical company (data are disguised)

The Problem: In most businesses, the most important analytical process in marketing is segmentation. By segmenting the market, businesses hope to understand customers and be able to target clearly and precisely. However, segmentation is falling far short of these objectives in most businesses.

Why is segmentation falling short? Not (typically) for lack of interest, or insufficient talent, or tentative spending on external consultants or extensive research. In most organizations, market segmentation fails because it is limited to the "art of the possible." Shortfalls in market segmentation schemes usually result from two factors, which are endemic in most organizations we know about and deal with.

The first factor is how weak most research techniques are at uncovering the strongest and most important attitudes /opinions in the marketplace. Batteries of attitudinal statements, with scales for "Agree" and "Disagree," have severe limits, because of the instrument-hypotheses bias, lack of normalization, the uni-dimensional scaling, and participant boredom and fatigue. (These problems are the subject for another White Paper!) As a result, most attitudinal research provides at best a very hazy picture, and at worst an inaccurate picture of why people buy or don't buy. Most executives, even most marketing executives, recognize these limitations from their common sense, and they discount the research findings accordingly.

The second factor is the practical limitations of most external databases and lists for marketing. These are built from primitive demographic information (zip codes, age, gender, residence value) and designed to promote contact with the entire market. These practical limitations play right into marketing's typical concerns with including as many customers and prospects as possible - preferably the entire market. So, although the purpose of market segmentation is focus, the result of most segmentation processes is vague categories translated into simple demographic markers for marcom purposes.

The Ideal: Without question, the ideal market segmentation groups people in a way that explains their purchasing behaviors and predicts their responses to specific initiatives. To do this, the ideal scheme creates segments based on key behavioral motivations. As a client implored recently: "We've got to segment by similar motivations, so that we can essentially walk away from some segments on which we could otherwise waste a lot of effort and money."

How Gang & Gang uses Resonance® Survey Results in Segmentation: Our Resonance surveys measure emotional responses to the entire experience of being a customer or prospect for a particular brand, product or service. Since we use a standardized scale of emotions in addition to spontaneous emotion words, these results can easily be separated in high vs. low motivation, based on the "passion" of the standard emotion category. We also separate positive and negative emotions, allowing distinct or combined measures of motivation (positive) and inhibition (negative).

Resonance results can give a simple view of categories of respondents (customers and/or prospects or defectors) based on the motivating and inhibiting power of their feelings and thoughts, which is not obtainable with standard research methods: Figure 1

A somewhat more complex categorization, which will often be much more predictive and valid, comes from combining the measures of motivating and inhibiting emotions: Figure 2

In our recent survey of primary-care physicians (PCP's), for example, emotional segmentation would indicate that most physicians fall into "target" (37%) and "indifferent" (50%) segments about prescribing Drug A, based on motivating emotions. Relatively few MDs fall into "conflicted" (4%) or "hard sells" (9%) motivational segments: Figure 3

In comparison, OB/GYN's on the same subject of "prescribing Drug A" reveal very similar emotional segments, except that OB/GYNs are somewhat more polarized between "key targets" and "hard sells."

Applications of Motivational Segments: Superior segmentation will lead to superior implementations, in many areas. Here are some of the implications:

Market mapping, sizing, valuation: The primary implications of successful segmentation are these gauges of the size and shape of the overall market. Clients can define the opportunities among customers (end-users as well as physicians) and size them based on motivational segmentation.

Segment economics: The real measure of market opportunities is the economic potential within each segment. This will include upside (opportunities to gain share and increase profits) as well as downside (threats of defection and loss of profitable customers). More advanced economic valuation will incorporate models of the cost and timing of changing key behaviors, to arrive at full-fledged valuation models that can support precise ROI calculations for different initiatives aimed at different segments.

Segment Strategies: First, we can set priorities and targets much more effectively among motivational segments than among traditional demographic (or simplistic behavioral) segments. This will usually include de-emphasizing some types of customers and prospects, even disregarding some, in order to focus limited resources on those with real economic potential for clients. Then, to realize the potential (and avoid the possible downsides) in the important segments, we must capitalize on competitors' weaknesses and blind spots. Resonance data for the "ideal" and "competitor" topics pinpoint these strategic levers.

Training: Salespeople can be taught how to recognize different motivational segments and how to utilize this information for significantly more effective sales efforts. Such training is part of the growing specialty of "emotional competence," about which we can furnish a lot more information and contacts.

Performance Measurement: Most of the existing performance metrics (market share, share of customer, average revenue, customer satisfaction) will become more meaningful and more actionable if developed and reported by motivational segments. Gaining share among pre-disposed customers & prospects will carry less weight, for example, than share gains among strongly-inhibited customers & prospects.

Innovations: Responses to each respondent's "ideal" version of the product or service is a very fertile source of ideas for new products or services. Then it is possible to get detailed ranking, evaluating, and prioritizing of the laundry list of possible innovations or product extensions, based on Resonance® testing among target segments.

Marketing Communications: Developing, testing, and measuring impact of segment-specific messages.

This White Paper only scratches the surface. Contact us to find out how we've turned these insights into action for dozens of clients, and how Motivational Segmentation could turn your problems or opportunities into triumphs.