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Published: January 1, 1997

 
 

Segments in Time

Vendors who understand and categorize customers by stages of evolution can reap huge rewards. That includes wooing customers away from established competitors, thus improving sales growth rates.

By rigorously isolating industry trends, observing how customers have reacted to these trends, recognizing what stage a customer is in and predicting potential next steps, vendors may understand customers' future decisions earlier than the customers themselves -- and far sooner than the competition.

Reprint No. 97105

FOOTNOTES

(1) Robert S. Duboff, "Marketing to Maximize Profitability," Journal of Business Strategy, November/December 1992, pp. 10-13. Observes that in today's environment, it is difficult to keep customers loyal.

(2) The means of connecting data bases that allows flexible downloading and uploading of information is called TCP/IP, or transmission control protocol/Internet protocol. The method permits large files to occupy wide network bandwidths, thus speeding the transmission of the files. See Richard H. Baker, "Networking the Enterprise" (McGraw-Hill, 1994), for a review of data networking choices.

(3) The goal of allowing everyone access to the same information presents the problem of keeping the same file up to date with multiple, inconsistent changes. The ideal is a "synchronized" data base joined by a flexible data network. To accomplish this goal, companies like Morgan Stanley are creating flexible relational data bases, using Sybase or Oracle, and improving workers' access to these data repositories.

(4) Benson P. Shapiro, "How to Segment Industrial Markets," Harvard Business Review, May/June 1984. The most difficult, but necessary, part of industrial marketing is assessing the purchasing approaches and the traits and characteristics of companies. This requires creativity.

(5) Speech by Edward Teller, Stanford University, April 1979.

(6) Shapiro, supra. Lists a number of ad hoc segmentation criteria.

(7) See, e.g., Lawrence Lepisto, "A Life Span Perspective of Consumer Behavior," in Advances in Consumer Research, ed. E. Hirschman and M. Holbrook, XII (1985), p. 47ff.

(8) Barbara G. Cohen, "A New Approach to Strategic Forecasting," Journal of Business Strategy, September/October 1988, pp. 38-42. Forecasting is often haphazard

(9) Shapiro, supra. Make decision of usefulness of approach and data availability separately.

(10) Philip Kotler and Paul J. Stonich, "Turbo Marketing Through Time Compression," Journal of Business Strategy, September/October 1991, pp. 24-29. Early is better.

(11) Best Buy's current poor margin performance is a result of some bad geographic expansion choices, in the opinion of analysts. This does not detract from the usable lesson of the company's early segmentation choice and resulting growth.

(12) The tactics were employed by MCI and other marketers in a range of ethnic and niche markets. See Robert G. Docters, Raul Katz and Carolina Junquiera, "Strangers in Their Own Land," Telephony, July 31, 1995, pp. 18-19. See also, "Special Report: Marketing to Hispanics," Advertising Age, Feb. 27, 1986, pp. 11-51.

(13) See Jim Holden, "Power Base Selling" (John Wiley & Sons, 1990). This book describes the importance of identifying and influencing purchasing decision-makers.

(14) See Gary E. Willard and Arun M. Savara, "Patterns of Entry: Pathways to New Markets," California Management Review, Winter 1988; John L. Ward and Stanley F. Stasch, "How Small-Share Firms Can Uncover Winning Strategies," Journal of Business Strategy, September/October 1988, pp. 26-31.


Authors
Robert G. Docters, Robert G. Docters is a principal with Booz-Allen & Hamilton. His consulting focuses on business and marketing strategy and cost reduction for providers of telecommunications services, computers and information services. Prior to joining Booz-Allen, Mr. Docters was market manager-financial services markets at the Bell Atlantic Corporation. He holds an M.B.A. in finance from Columbia University, a J.D. from the School of Law, College of William and Mary, and an A.B. in economics and literature from Stanford University. He is based in New York.
John N. Grim Jr., John N. Grim Jr. is a principal at Booz-Allen and is based in New York. He specializes in helping clients in the telecommunications and computer industry improve their competitive and strategic positioning. Mr. Grim holds an M.S.E.E. and B.S.M.E. from the Thayer Graduate School of Engineering, Dartmouth College. Mr. Grim completed his undergraduate work at Dartmouth.
John P. McGady,

John P. McGady is a senior associate with Booz-Allen's telecommunications, command, control and communications client service team. Prior to joining Booz-Allen, he worked for AT&T Bell Laboratories, where he participated in the development of advanced network management systems. He holds B.S. and M.S. degrees in electrical engineering from Drexel University.

 
 
 
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