Advanved Research Solutions For Strategic Decision-Making

THE MARKETING ANALYSTS is concerned with helping clients identify, select and implement successful marketing strategies.   Our intent is to provide our clients with advanced research solutions to improve the quality of strategic decision-making.

Clearly, the right strategic decision-making produces the positive outcomes that every organization seeks.  However, wrong decisions may produce disastrous results.  As example, here are some startling statistics from well-known American retailers:

•             1990 – 2004         Circuit City grew from $2 billion to $9.75 billion.  Five years later, the company filed for bankruptcy.

•             1930’s   Sears Roebuck and Montgomery Ward were about equal in sales and profits.  Twenty years later, Sears was about three times larger than Montgomery Ward.  In 2001, Montgomery Ward closed all of its remaining stores.

•             1991       Walmart surpassed Sears and Kmart to become the largest US retailer.  Today Walmart is the largest retail company in the world and is becoming one of the largest grocers in the US.

While these examples are dramatic, every organization is affected by strategic decisions. Thus every company must plan and act strategically.  You can uncover the information you need through numerous ways—from online research to focus groups to predictive models.  With effective market research, we can help you determine the need for your service or a product’s likelihood to sell, target-market demographics, and determine desirable store locations. To help you meet your target market’s needs, we offer a leading collection of tools, resources and professionals.

THE MARKETING ANALYSTS can help you.

Conjoint Analysis • Marketing Mix Models • Brand Maps • Market Segmentation • Product Line Management • Sales Forecasts • Advertisement Optimization • Data Mining • Market Basket Analysis • Customer Retention/Predictive Customer Churn

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Email: info@themarketinganalysts.com

Perceptual Map Created With Discriminate Analysis

Perceptual maps are used to visualize the differences and similarities in perceptions and choices between products, brands or customers.

For example, a manufacturer of salon brand hair care items wants to see whether a lifestyle variables such as being a NASCAR racing fan, education level, ethnicity and demographic variables such as personal income, sex and a number of other factors are useful in distinguishing purchasers of their products from purchasers of other salon hair care brands.   Based on this classification, customer profiles will be developed in order to plan targeted advertising campaigns.

Discriminate analysis, a multivariate technique used for market segmentation and predicting group membership is often used for this type of problem because of its ability to classify individuals or experimental units into two or more uniquely defined populations.  The discriminant score is the basis for predicting to which group (a purchaser of the manufacturer’s brand or a competitive brand) the particular individual belongs. The discriminant weights of each predictive variable (age, sex, income, etc) indicate the relative importance of each variable.  For instance, if age has a low discriminant weight then it is less important than the other variables.

With this information, a classification matrix can be developed that indicates the accuracy of our model that will be used to construct our map.  For instance, if our discriminant model correctly classified 94.5-percent of users of our brand, then only 5.5-percent were incorrectly classified.  Conversely, if the model correctly classifies 92-percent of the competitive brand users, then only 8-percent were incorrectly classified.  We consider this a strong model because the number of correct classifications is much higher than what might be expected by chance.

Other Applications of Discrimant Analysis

While our example illustrated how discriminant analysis helped classify users and nonusers of salon brand hair care products based on independent variables, other uses of discriminant analysis include the following:

Product research – Distinguish between heavy, medium, and light users of a product in terms of their consumption habits and lifestyles

Perception/Image research – Distinguish between customers who exhibit favorable perceptions of a store or company and those who do not

Advertising research – Identify how market segments differ in media consumption habits

Direct marketing – Identify the characteristics of consumers who will respond to a direct marketing campaign and those who will not

Conclusion

While discriminant analysis is often used in marketing research for marketing segmentation and predicting group membership, there are more powerful and accurate techniques available.  We invite you to learn more about our solutions by contacting us today.

US TOLL FREE: 866-371-4863
INTL: 239-243-0767
FAX: 480-393-5183
Email: info@themarketinganalysts.com

You can probably think of a number of customer loyalty factors that can predict customer churn and customer loyalty.  Some factors that are often mentioned include transience, youthfulness and price sensitiveness.   As you might imagine, the return on your marketing investment will be much greater if you start with potentially loyal customers as opposed to potentially disloyal customers.

How Do I Profile Potentially Loyal Customers?

The best place to start is by building a database that contains both loyal and defecting customers.  A careful analysis of the loyal customers and disloyal customers can reveal some valuable insights.  While this is a good first step, THE MARKETING ANALYSTS recommend further analysis using predictive analytics for customer segmentation.  Once behavior based segments are identified, profitable strategies can then be developed to maximize your Marketing ROI.  For additional information about our customer retention and marketing segmentation programs, please visit our website at http://www.themarketinganalysts.com/en/pages/customer-retention-defection-churn/ and contact us today.

Customer Profiling, Target Marketing & Predictive Segmentation

Modeling Customer Behavior for Segmentation and Target Marketing

Before you design your next marketing campaign, you should consider the ideal customer that you want to target.  To maximize effectiveness and ROI, your marketing collateral should target the right audience, with the right offer and be delivered through the right medium.   However, knowing the best offer, storyline, theme, length and medium to use requires in-depth knowledge about your target.  Gaining this level of knowledge often requires marketing research and the aid of predictive marketing analytics.

Where do I start?

Without much effort, many companies can identify a number of good marketing segmentation variables.  For example, direct mail marketers might identify demographic and psychographic factors.   Marketers that are more sophisticated might apply a crude RFM model.  RFM models have been around for years.  In short, RFM is based on the premise that the people who bought from you recently are more likely to respond to new offers than people who made a purchase in the distant past.  Large financial institutions will likely take the RFM approach a step further by combining data purchased from external suppliers.  Next, genetic algorithms are trained to classify customers into groups based on their propensity to use a particular product or respond to specific types of offers.

Unsure Where You Should Start? . . . Spend A Day With Your Customers

If you are unsure where to start, then you need to connect with your customers.  You need to be in front of your ideal customers as much as possible to understand them.  While you can easily conduct a survey, it is often better to start by “spending a day” with your customers.  Try to figure out what your customers do in the morning, noon and at night.  Can learn more about them by follow them online through social media circles?

Surveying Your Customers

If you decide to conduct a survey, you might consider collecting the following types of data.

• Demographic Factors: Age/lifecycle, income, disabilities, mobility (in terms of travel time to work or number of vehicles available), educational attainment, home ownership, employment status, and even location
• Socioeconomic: Disposable Income, Memberships to clubs, Vacations, Entertainment patterns, Assets owned, Investments
• Customer Behavior and usage patterns
• Risk profiles
• Profitability of customer
• Customer tenure

However, collecting this data through surveys will be challenging.  As an alternative, you might consider purchasing equivalent data from information suppliers or coming up with creative ways of capturing this information on your own.

Once you have completed your research, you should know enough about your customers to start developing customer profiles.  When you can start answering the following questions, you are close to developing a segmentation strategy and a predictive model for target marketing.

• Who is your “perfect customer”?
• Why does a customer buy (or not buy) your product?
• Do customers buy from you (or your competitor) for any particular reason?
• Do customers tend to buy specific products at particular times?
• How much consideration do your customers give when making these types of purchases?
• What benefits do they see in your company (or your products)?

By now, most economists agree that we have entered “The BIG L”, a long, slide down that is accompanied by a long period of flat or low economic activity.  Some economists even believe that we could be headed into a depression by 2011. Unfortunately, the end most likely won’t be good since we are still trying to find our way out by printing money, issuing Treasury Bills, and bailing out inefficient businesses.

As a result, Marketing Departments are continuing to cutback.  However, companies need to focus on making smarter investments in customer retention.  Customer retention strategies must address consumer trends toward less expensive product and service alternatives.  Corporate budget decisions must focus on reaching those customers who are most likely to leave.  When customers alter their purchase behavior, they may be lost forever.

Marketing Strategies

Marketers can initiate a number of strategies to counter customer defection.  Some strategies include adding new product lines and incentive programs.  Highly targeted direct marketing campaigns that utilize customer profiling analytics can also help retailers.  Maintaining a communication strategy with churning customers is also important since low priced retailers will try to retain their new customers once the economy recovers.

Your Retention Solution

THE MARKETING ANALYSTS provides a complete solution to your customer retention needs.  With our advanced technologies, we conduct sophisticated customer profiling and identify cross-selling and up-selling opportunities.  Our services recommend the best strategies to retain customers and provide maximum ROI.  Whether you need a single service or an integrated approach, we have the flexible solutions that can improve customer satisfaction, retention, loyalty and value.

Market Segmentation & Target Marketing

With over 6.7 billion people in the world, it’s nearly impossible to satisfy everyone with a single marketing mix strategy. With the exception of unbranded, plain labeled package goods that are aimed at the mass market, a marketing strategy that attempts to satisfy everyone is destined to fail.

Many years ago soap manufactures determined the need for special marketing strategies to target individual markets. For example, Dove targets soft skin and Irish Spring promotes extra sex appeal. Therefore, capturing large portions of the market often require that firms use market segmentation strategies and develop custom marketing mix strategies to target market each segment.

What is Market Segmentation?

Market segmentation is the process of dividing the total market into several homogeneous groups. By adjusting a marketing mix strategy for a specific market segment, companies can focus on satisfying the needs of specific portions of the target market.

THE MARKETING ANALYSTS use advanced multivariate statistical analysis to segment markets. Often, our segmentation techniques will combine demographic, psychographic, geographic and perceived product benefit data to identify homogeneous customer groups. By doing so, we provide marketers with better information to target, attract and capitalize on similarities within a segment.