Segmentation and customer insight in contemporary services marketing practice: why grouping customers is no longer enough (original) (raw)
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Services Segmentation and Emergent Customer Behavior: A Case Study
Services Marketing Quarterly, 2012
Traditional approaches to segmentation have been questioned in terms of their economic efficiency, and found to be ineffective in online environments. The research objective was to identify how market segmentation can be reconceptualized to support decision-making in dynamically changing environments, and where engagement with customers occurs both online and off-line. A value-in-use segmentation methodology was developed through a workshop to address segmentation challenges identified through the case study, and tested against forces anticipated to drive future environments. Its feasibility for implementation was interrogated against records of off-line engagement and data streaming into the case organization's warehouse as customers engaged online.
A Balanced View for Customer Segmentation in CRM
Many researchers place great emphasis on the customer segmentation step of the CRM implementation process because it is a starting point for creating differentiated offerings and target marketing to satisfy customers. As the process of segmenting customers is to make an important service encounter with a company and its customers, both the companies' and customers' expected value should be considered equally. However, most of the current studies have focused only on the companies' view in terms of profitability. This paper proposes a balanced view for segmenting customers. Focusing on communications and banking industries that have massive demographic and transactional data, this study states that the intangible customers' expected value, including customer satisfaction or loyalty, can be indicated as a monetary measure and used as an input of customer segmentation. Through the proposed segmentation approach, a company can more multilaterally define its loyal customers and build mutually beneficial relationships with customers. The resulting more exact definition of customer loyalty will effectively retain customers.
The contribution of CRMs to the ability of market segmentation
The subject of study is to show CRM (Customer Relationship Management) Systems as technological resources, that properly implemented, can empower the companies' management skills embodied in an efficient market segmentation strategy. This analysis is based on the case study of VIPs Group, thanks to structured interviews with the head of the Customer's Area. We explain the organization's practices as well as the adoption of their CRM system, from early steps to their implementation and use. Through the use of this technology, companies identify both threats and achieved strengths, materialized in dynamic capabilities. The smart use of these systems allows combining different resources in order to provide new capabilities used to increase the target audience, clients who demands company’s products or services, and focusing on their needs.
Reexamining Market Segmentation: Bifurcated Perspectives and Practices
Marketing Management: A Cultural Perspective, 2020
Overview Market segmentation is foundational to marketing: as scholars and managers contend, its concept "is built into the fabric of marketing" (Gibson 2001, 21). Segmentation is the process through which a company's actual and prospect customers are split into subgroups (i.e. segments), each of them showing similar consumption behaviors that differ across subgroups (Peter and Donnelly 2008). Differentiation (i.e. the process leading to variations of a company's offer) and targeting (i.e. the decision of which segments to serve by means of differentiated offers; Pride and Ferrell 2004) are meaningful only when customers have heterogeneous preferences, that is, only when a market is segmentable. Subdividing and profiling market segments help identify the customers to serve, the most effective way to satisfy their specific needs/desires, the competitors to face, the resources requested to compete in each segment, and the main stakeholders to involve in order to reinforce a company's market legitimacy (Cucurean-Zapan 2014; Lambin 1998). In simpler terms, market segmentation helps perform a company's market-orientation. While segmentation is still central to today's marketing, the profound transformations as much as the rising opportunities of contemporary markets and societies ask for a profound revision of segmentation theory and practice (Arnould and Cayla 2015; Gibson 2001; Kannisto 2016). Answering to this call, the chapter's aims are twofold. First, we approach segmentation historically, in order to unveil which were, and somehow still are, its often-implicit grounding premises. We show that most of these premises sway when confronted to extant cultural, economic, and technological environments, and invite for revision. The first part of the chapter (§ 18.2) thus provides readers with a longitudinal understanding of market segmentation and with evidences motivating the requested revision. Second, by focusing on contemporary trajectories of revision, we approach segmentation epistemologically, that is, we contrast two opposite perspectives on the needed revisions of market segmentation (§ 18.1). On the one hand, the marketing science perspective combines big data-driven consumer knowledge (cf. chapter 26 by Zwick and Dholakia) and the power of new technologies (especially, of artificial intelligence) to reinvigorate and transform segmentation (Mandelli 2018). Within this perspective, segmentation-as-science goes micro-basically, at a one-to-one level-and (hyper)targeting (Hoffmann, Inderst, and Ottaviani 2013) results into personalization, interpretable as the radicalization of mass-customization (Flavin and Heller 2019). On the other hand, hailing from the cultural marketing perspective (Peñaloza, Toulouse, and Visconti 2012), segmentation evolves into a set of decisions that marketers co-construct with customers. In line with this dialogical posture, targeting then requires conversational abilities (Jarratt and Fayed 2012) not only to reach, but also to engage target customers.
Journal of Marketing Management, 1987
Market segmentation is a crucial marketing strategy. Its aim is lo identify and delineate market segments or "sets of buyers" which would then become targets for the company's marketing plans. The advantage to marketing management is that iAw technique divides total demand into relatively homogeneous segments which are identified by some common characteristics. These characteristics are relevant in explaining and in predicting the response of consumers, in a given segment, to marketing stimuli.
Journal of Market-focused Management, 1999
An important concern for service businesses is how to develop an appropriate segmentation and relationship marketing strategy that is tied to the value contribution of the customer base. This article presents a case study of the relationship marketing strategy for a division of a leading, worldwide financial services provider. The case firm segments customers into three tiers, using a framework similar to the one established by Berry and Parasuraman. Potential revenue from the customer is the primary segmentation variable used to assign customers to one of the three tiers, while the customer service response is tailored for each tier based upon customer information capabilities and needs. Although information is normally thought of as a supplemental service, rather than a core service, this case study shows how information is central to providing effective customer service and is a key to relationship marketing. The study also demonstrates how social and structural bonds can be used...
2006
In the advent of Customer Relationship Management, a more accurate profile of the consumer is needed. The objective of this paper is to show the usefulness of knowing consumer's complete utility function through his/her marginal utilities. This approach allows one to form groups of individuals with similar preferences (as traditional segmentation methods do) and to treat them individually (which represents an advance). The empirical application is carried out, on a sample of 2,127 individuals, in the context of tourism, where the customer relationship management philosophy is gaining more and more relevance.