Acquisitive Growth – Workshop 3 (Segment Focus)
The Appleton Greene Corporate Training Program (CTP) for Acquisitive Growth is provided by Mr. Chicles Certified Learning Provider (CLP). Program Specifications: Monthly cost USD$2,500.00; Monthly Workshops 6 hours; Monthly Support 4 hours; Program Duration 24 months; Program orders subject to ongoing availability.
If you would like to view the Client Information Hub (CIH) for this program, please Click Here
Learning Provider Profile
Mr Chicles is an approved Certified Learning Provider (CLP) at Appleton Greene who is a business leader and strategist with broad experience in the global multi-industrial, aerospace and defense sectors. He is a seasoned operational leader of global industrial businesses, leading transformational strategies in highly competitive markets.
As a senior, C-suite strategist for multiple major industrial corporations he has led multiple mergers, acquisitions, divestitures and restructurings, as well as corporate break-ups and spin-offs. He has a distinguished track record of successful transformations of complex organizations in dynamic and uncertain market conditions while engendering the trust and buy-in of employees, customers, vendors, owners, corporate leadership and boards of directors.
A highly engaged leader at the personal and team level he has demonstrated the ability to engender effective senior teams and boards. He’s also an active mentor, teacher and community leader.
Mr Chicles is an active board member with AES Seals, global leader in sustainable reliability engineering, and Micro Technologies Inc, an electronics and advanced manufacturing company. He is a principal partner with ProOrbis Enterprises®, a management science consultancy with premier clients such as the US Navy and PwC, as well as the principal of Xiphos Associates™, a management and M&A advisory. Recently, he served as Board Director and Chairman of Global Business Development with Hydro Inc. the largest independent pump and flow systems engineering services provider in the world.
He was President of ITT’s Industrial Process / Goulds Pumps business segment a global manufacturer of industrial pumps, valves, monitoring and control systems, and aftermarket services for numerous industries with $1.2 billion in revenue, 3,500 employees and 34 facilities in 17 countries. Preceding this role he served as Executive Vice President of ITT Corporation overseeing the creation of a newly conceived ITT Inc. following the break-up of the former ITT Corporation to establish its strategy and corporate functions such as HR, communications, IT and M&A, building the capabilities, policies and organizations for each.
He joined ITT Corporation’s executive committee as its strategy chief in 2006 and instituted disciplined strategic planning processes and developed robust acquisition pipelines to respond to rapidly changing markets. Created successful spin-offs of 2 new public corporations Exelis Inc. and Xylem Inc. ITT Corporation was named one of “America’s Most Respected Corporations” by Forbes for exemplary management and performance during his tenure there.
Before joining ITT, Mr Chicles served as Vice President of Corporate Business Development and head of mergers and acquisitions for American Standard / Trane Companies, where he initiated and closed numerous transactions and equity restructurings globally.
Additionally, he created and led the corporate real estate function which entailed more than 275 real estate transactions around the world.
He began his career at Owens Corning rising through the ranks in various operational roles to Vice President of Corporate Development.
Recently, he taught advanced enterprise strategy at Stevens Institute of Technology as an adjunct professor and still supports start-ups through the Stevens Venture Center. He continues to be active as the Founding Board Member with several successful start-up technology businesses and non-profit organizations. A community leader, Mr Chicles has held the role of President of the Greek Orthodox Cathedral in Tenafly, N.J., He also led trips abroad to Cambodia and Costa Rica to build sustainable clean-water solutions and affordable housing.
His formal education includes earning a Masters of Business Administration from The Wharton School at the University of Pennsylvania, and a Bachelors in Finance from Miami University.
Every company aspires to grow. But, in a market where competition is fierce, inorganic business growth requires insight and innovation. Segmenting the market and customers is among the most effective techniques to promote acquisitive growth. Yet as numerous businesses have shown, artful segmentation can result in a significant competitive advantage. The purpose of segmentation is to inform your marketing approach. Using this method, it is feasible to recognize and categorize groups of potential clients based on their shared preferences, needs, and interests. This method effectively identifies the demographics most likely to value a specific good or service you provide. Furthermore, it may assist you in positioning that service so that it outperforms that of your rivals.
01. Industrial Segmentation: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
02. Market-Size Based Segmentation: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
03. Product-Based Segmentation: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
04. Value-Based Segmentation: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
05. Channel-Based Segmentation: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
06. Supply Chain Segmentation: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
07. Behavioral Segmentation: departmental SWOT analysis; strategy research & development. 1 Month
08. Geographic Segmentation: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
09. Demographic Segmentation: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
10. Generational Segmentation: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
11. Challenges & Pitfalls: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
12. Emerging Segments: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
01. Industrial Segmentation: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
02. Market-Size Based Segmentation: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
03. Product-Based Segmentation: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
04. Value-Based Segmentation: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
05. Channel-Based Segmentation: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
06. Supply Chain Segmentation: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
07. Behavioral Segmentation: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
08. Geographic Segmentation: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
09. Demographic Segmentation: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
10. Generational Segmentation: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
11. Challenges & Pitfalls: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
12. Emerging Segments: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
01. Create a task on your calendar, to be completed within the next month, to analyze Industrial Segmentation.
02. Create a task on your calendar, to be completed within the next month, to analyze Market-Size Based Segmentation.
03. Create a task on your calendar, to be completed within the next month, to analyze Product-Based Segmentation.
04. Create a task on your calendar, to be completed within the next month, to analyze Value-Based Segmentation.
05. Create a task on your calendar, to be completed within the next month, to analyze Channel-Based Segmentation.
06. Create a task on your calendar, to be completed within the next month, to analyze Supply Chain Segmentation.
07. Create a task on your calendar, to be completed within the next month, to analyze Behavioral Segmentation.
08. Create a task on your calendar, to be completed within the next month, to analyze Geographic Segmentation.
09. Create a task on your calendar, to be completed within the next month, to analyze Demographic Segmentation.
10. Create a task on your calendar, to be completed within the next month, to analyze Generational Segmentation.
11. Create a task on your calendar, to be completed within the next month, to analyze Challenges & Pitfalls.
12. Create a task on your calendar, to be completed within the next month, to analyze Emerging Segments.
What functions come to mind when you think about the crucial elements that determine acquisition success? Perhaps sales, operations, human resources, and finance. Marketing, though?
Yet, according to Mckinsey, marketing plays a crucial role in deal success and shouldn’t be neglected based on their experience and discussions with top M&A executives. Instead, marketing should take the initiative to establish the new organization’s brand strategy and create innovative, compelling value propositions. The value proposition’s narrative should then be delivered by marketers to drive above-market growth.
It is essential to understand the key difficulties that CEOs and chief marketing officers should address to have an impact because the integration of marketing’s role is so broad—ranging from strategy to tactical brand execution. Executives underlined the significance of getting six things right—the “six Ss”—in a 2020 Mckinsey research study.
The six Ss are:
• Story. Define the new organization’s value proposition
• Segments. Refresh your view of the market
• Service. Delight your most valuable customers
• Share. Deliver consistent value over time
• Science. Take an objective, fact-based approach to setting brand strategy
• Scope. Tackle less, not more, on and after Day 1.
Applying these six Ss can boost the success of marketing integration, measured by revenue synergies captured, as much as 1.5 to 2.0 times (exhibit).
Reexamining customer segmentation is made possible by integration. Marketing have to take the initiative in the discussion and suggest ways in which the whole range of goods, services, and solutions will better satisfy the needs of the united consumer base. Marketing should assess how its organizational structure and operating model should change to support the updated market view.
Think about one mobile telecom merger’s approach to segmentation. One company (early adopter) introduced a needs-based approach to segmentation, whereas the other introduced a functional approach (low cost, no frills). The market was changing quickly as consumers desired lifestyle solutions rather than just straightforward, practical voice-to-voice or text-to-text communication. The techniques catered to various market segments.
The CMO carefully reviewed the customer segmentation. The analysis examined the benefits and drawbacks of the traditional segmentation methods, speculated on how customers will use technology in the future, and assessed how challenging it would be to implement a novel segmentation method through the channels that are already in use.
Over a period of months, the new organization introduced a revised segmentation that was more technology-focused than communication-focused. This segmentation laid the groundwork for the organization to view new competitors (such as Google, smartphone manufacturers, and other tech companies), define value propositions, and pursue partnerships and M&A opportunities. Market-leading retention and revenue growth per customer were made possible by segmentation and its assistance in implementing value propositions.
If you would like to view the original Mckinsey article, please click here: www.mckinsey.com
Market segmentation can be a straightforward and inexpensive process. Or, given the vast amount of data companies now have, it can become complicated and expensive. Thanks to technology, we can create “markets of one.” But making the leap to one-to-one marketing may not be right for every company or brand — now or ever. So if your focus is on acquisitive growth, you may want to rethink your market segmentation strategy first.
Why segment your market?
Every product, as savvy marketers are aware, requires a target market. They are aware that no good or service can satisfy everyone’s needs. The market is segmented into segments based on shared demands and features. Members of the group are likely to have comparable purchasing habits as a result of these characteristics.
Market segmentation is a tried-and-true method for acquiring growth in both the consumer and business-to-business sectors. Every step of the product commercialization process can be facilitated with a solid segmentation model. When done properly, segmentation also boosts a business’s profitability by:
• Develop products and services that meet the needs of various segments
• Focus marketing resources on segments with the most potential
• Craft marketing messages that resonate with target audiences
• Set prices that optimize the balance between profitability and demand.
Businesses that correctly segment their markets and comprehend their clients benefit greatly. That also involves higher profits. According to a Bain & Company survey, organizations with segmentation strategies that enabled them to customize their products to the right client categories experienced up to 10% more earnings over a five-year period than those with less successful segmentation. Even while just 25% of executives polled thought their organizations were efficiently using customer segmentation, 81 percent of executives stated it was essential for boosting revenues.
Understanding Market Segmentation
Companies can generally use three criteria to identify different market segments:
1. Homogeneity, or common needs within a segment
2. Distinction, or being unique from other groups
3. Reaction, or a similar response to the market
For instance, a company that sells athletic footwear might have market segments for long-distance runners and basketball players. Basketball players and marathon runners react to commercials very differently as separate groups. The company that makes sports footwear is better able to promote its branding by having a thorough understanding of these various market niches.
Market segmentation is a development of market research that aims to pinpoint specific customer groups in order to develop products and branding that appeal to the group. By identifying which items have the best odds of capturing a share of a target market and figuring out the best approach to get those products to market, market segmentation aims to reduce risk. This enables the business to improve overall efficiency by concentrating scarce resources on initiatives that yield the highest rate of return on investment (ROI).
Keeping a face on big data
People have been transformed into units that can be targeted, acquired, tracked, and held with every click, like, follow, search, and sale. Information may become devoid of the actual people who give it meaning in this age of big data. That makes it simple to overlook the actual persons who are the source of the information. even forgetting that your objective as a marketer is to connect with actual people.
The marketing axiom is “know your consumer,” nevertheless. Good market segmentation aids in your comprehension of your target audience. This includes the likes and dislikes of your clients, which is a crucial step in quantifying their interaction with your brand and business.
Which Industries Use Market Segmentation?
The most obvious businesses to use market segmentation include media, retail, e-commerce, consumer goods, and retail. But, all industries gain from the customer insights that this study offers. For instance, Grand View Research, a U.S. market research firm, offers both syndicated and customized market segmentation reports on each of the following industries: pharmaceuticals and biotechnology, financial services, telecommunications, computer software and hardware, materials and chemicals, manufacturing and construction, shipping and transportation, energy and resources, and agriculture.
Market segmentation research is carried out on behalf of government agencies, academic institutions, law firms, advertising and marketing companies, as well as industry participants. Bloomberg, for instance, published the findings of a segmentation study on the customer experience (CX) management market, which is predicted to reach $38.98 billion by 2030 and register a compound annual growth rate (CAGR) of 18.1% between 2022 and 2030 across the mobile touchpoint, cloud-based, end-use, and BFSI (banking, financial services, and insurance) segments.
American Express: Finding the Sweet Spot of Market Segmentation
Prior to acting on findings from customer segmentation research, you must first identify a crucial portion of your current customer base: brand-loyal existing consumers who “truly, really like you.” Of course, that group isn’t your aim; you already have them. Instead, an overlapping subset inside the new client groups that your study produced is found using the traits of your most contented current customers.
Your sweet spot will be that overlap, which a Bain study dubbed “the design target”: the “bull’s-eye” of potential clients who were not only identified by the new research but who are also extremely similar to your happiest existing clients. Spending on marketing that is targeted to that precise segment—which can be a very small slice—will likely be very profitable and highly effective.
In the 1990s, American Express (AmEx) fended off fierce competition by expanding its product offering based on the proper kind of segmentation study. They focused on their sweet spot, a lucrative group of high spenders who were potential consumers and shared many traits with their best existing clients. The updated study was also used by AmEx to find additional things to offer to its present satisfied consumers.
As an illustration, AmEx developed credit cards that were integrated with rewards programs, enabling business executives to accrue frequent flier miles and hotel points. Although though this market was fairly small, it ended up being very profitable in the long run, in part because marketing expenses were so low. Offering enhancements to their current client base and then relying on word-of-mouth advertising to bring in new customers was all AmEx needed to do to tap into the lucrative executive market.
Choosing segment variables is a key strategic decision
There isn’t one optimal technique to segmenting a given market. Yet, the objective is to establish distinct, pertinent, recognizable, and quantitative categories.
If you have trouble deciding on a solid segmentation strategy, you’re not alone. Should you choose a variety of demographic factors? What about variations brought on by geographical factors? Can or should psychographic factors be layered on top? In practice, it is frequently necessary to combine traits to produce useful segments.
The kind of product or service chosen often dictates the choice of variables. However, the ultimate choice is still one of strategy. While various businesses will employ various segmentation strategies, the following fundamental characteristics ought to be present:
• What — including what they’ve done, what they do, what they think and what they are likely to do
For the majority of goods and services, market segments are created using geographic, demographic, behavioral, and psychographic characteristics. Here is a quick summary of these popular segmentation techniques.
One of the most popular and straightforward methods of market segmentation is demographic segmentation. That is a great place to start for any marketing campaign. Demographic segmentation makes use of qualities that are easily recognizable, objective, and quantifiable. Age/generation, gender, family size, marital status, ethnicity and nationality, education level, occupation, and religion are a few examples of these traits. We can learn who is buying our goods and services from their demographics. But, they are unable to articulate why customers favor one good or service over another.
Example: A new video game console’s market segmentation technique might show that young men with disposable income make up the majority of its consumers.
The needs, interests, and preferences of people are influenced by where they reside. Additionally, it directs how customers use the goods and services offered by your business. For some firms, geography is one of the simplest and most straightforward segmentation techniques. Country, region, state, county, community, neighborhood, zip code, population density (urban, suburban, or rural), and climate are examples of geographic factors. When a product has a broad appeal and buyers are concentrated in a specific area, geographic segmentation should be taken into account.
Example: A clothing company that stocks more rain gear in its locations in the Pacific Northwest than in the Southwest.
The psychology of customer behavior is taken into account during psychographic segmentation. Members of a market sector often have similar views, passions, pastimes, values, or lifestyles. These characteristics are difficult to quantify, unlike demographic or geographic considerations. Nonetheless, they can offer profound, nuanced insights that support spatial and/or demographic data. Investigating psychographics can help us understand why people choose our goods and services.
According to Alexandra Samuel’s article in the Harvard Business Review, the internet has increased the significance, clarity, and relevance of psychographic distinctions. Now more than ever, gaining psychographic insights is simple. Additionally, they can be done in ways that were virtually impossible before social media. Psychographics can serve as the cornerstone of a strong product development and marketing strategy when combined with modern research, analytics, and ad targeting.
Example:A fitness apparel business, for instance, might focus on those who enjoy participating in or watching a range of sports.
Consumers are categorized by their behavior when using a product or service. In this instance, your market segments are acquainted with and have used your items before. Benefit preferences, amount or frequency of use, brand loyalty, and prospect or customer status are typical characteristics.
Example: Millennial consumers are more inclined to purchase national brands of beer than older generations.
A combination of approaches may be most useful
It is possible to create a quantitative and qualitative picture of your target market by combining demographic and psychographic factors. Additionally, when you combine demographic, psychographic, and behavioral factors, you get a potent marketing trifecta that can influence the creation of products, services, channel strategies, pricing philosophies, and brand message for your business.
How many market segments are enough?
How many market segments are adequate is a question without a right or wrong response. Qualtrics, an experience management and technology business, advises aiming for four divisions or less. Gartner, a research and advisory firm, urges clients to utilize as many as necessary. Gartner is quick to point out that the real question is how many segments can be utilized.
To be useful, market segments must meet several criteria:
Measurable segmentation factors are ones that can be quantified and have a direct bearing on purchasing a good or service as well as key performance metrics.
Can the requirements, wants, desires, or preferences of each sector be quickly identified? Each client or prospective client must belong to just one sector. Moreover, it ought to be feasible to develop a unique character for each detected segment.
Reachable or accessible
Being able to contact your customers and comprehending them are two separate things. You should be able to determine the most effective method of contacting members and effectively contacting them using the traits and behaviors of your segments.
Actionable denotes that each segment is distinct, individual, and reacts to a marketing offer in a certain way.
Substantial and relevant
The size or wealth of a market sector must be sufficient to support targeting it based on factors like stability, growth, or durability. An selected sector need to have a keen interest in the goods and services you offer. Members ought to be prospective customers.
Segmentation versus targeting
The first step of a two-step process is segmentation. You can choose the organizations you want to target once you are aware of their existence. Even though you may have defined a market sector, you are not required to allocate resources to it.
Your team’s ability to comprehend who your customers are and why they choose your company’s goods and services is aided by market segmentation. By using segmentation, your business can find unmet requirements and develop products and services to fill them. Your communication staff may create messages that appeal to current customers and draw in new ones with the help of segmentation.
Benefits of Market Segmentation
Implementing marketing segmentation requires time and money. Successful marketing segmentation strategies, however, can improve a company’s long-term profitability and health. Some benefits of market segmentation include;
• Increased resource efficiency. Marketing segmentation allows management to focus on certain demographics or clients. Marketing segmentation enables a targeted, precise approach that frequently costs less than a broad reach approach, as opposed to attempting to offer products to the entire market.
• Stronger brand image. Management must think about how it wants to be perceived by a particular group of people due to marketing segmentation. Management must decide what message to craft after identifying the market segment. The fact that this message is intended for a specific audience suggests that a company’s branding and marketing are more likely to be very deliberate. This can also have the unintended consequence of improving customer interactions with the business.
• Greater potential for brand loyalty. Marketing segmentation gives customers more chances to establish enduring relationships with a business. Customers may respond favorably to more direct, personable marketing strategies that encourage a sense of inclusion, community, and belonging. Market segmentation also increases your chance of finding the right customer who fits your product line and demographic.
• Stronger market differentiation. A corporation may pinpoint the precise message it wants to send to the market and to competitors thanks to market segmentation. By clearly stating how a business differs from its rivals, this can also aid in product differentiation. Instead of a wide approach to marketing, management builds a specific image that is more likely to be memorable and specific.
• Better targeted digital advertising. A company can implement more effective targeted advertising strategies thanks to marketing segmentation. This includes social media marketing strategies that target people of a certain age, area, or behavior.
Limitations of Market Segmentation
Without any potential drawbacks, the aforementioned advantages cannot be realized. Here are several drawbacks to take into account before putting market segmentation tactics into practice.
• Higher upfront marketing expenses. The long-term objective of marketing segmentation is efficiency. To achieve this efficiency, though, businesses frequently have to invest money up front in order to gather information about their target markets and client base.
• Increased product line complexity. By marketing segmentation, a huge market is divided into smaller, more manageable chunks. The drawback of this is that it runs the danger of resulting in an unnecessarily complex, fractionalized product line that places an undue emphasis on serving particular market niches. A company’s marketing mix may grow overly complex and inconsistently communicate its entire brand rather than having a consistent product line.
• Greater risk of misassumptions. The foundation of market segmentation is the idea that people with similar demographics would have comparable requirements. This may not always be the case. By grouping a population together with the notion that they have common qualities, a corporation may risk misidentifying the needs, values, or motives within individuals of a specific community.
• Higher reliance on reliable data. Market segmentation is only as reliable as the supporting evidence for the assertions it makes. This necessitates paying attention to the sources from which data is gathered. This entails being aware of evolving patterns and instances in which market segmentation may have changed from earlier surveys.
Examples of Market Segmentation
The products, marketing, and advertising tha