25 Mar 2010

The Promise of and Current Need for Segmentation Studies

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Over the past couple of months, the team here at DRI has been busy conducting more consumer segmentation studies for clients. This is a welcome development, as I believe it is a sign that businesses have started to recover from the recession and that it’s a perfect time for companies to get the in-depth understanding of their customers that segmentation studies offer.

I believe that increased demand for segmentation projects is a sign of economic recovery because it shows that these companies are looking forward. Developing a thorough and current understanding of their customers through a segmentation study will help them become optimally positioned to take advantage of the emerging recovery. This forward-thinking is something that tends to get pushed aside during an economic downturn as research budgets get cut and priorities shift more towards short-term projects to help a company get through the tough economy.

I also mentioned that this is the perfect time to conduct a segmentation study. According to the National Bureau of Economic Research, the Great Recession began in December 2007. Since this time, consumers spending and communication habits have radically changed. Changes in consumer spending habits — spending less, paying down debt, and saving more — are well documented. Meanwhile, social networking and changes in wireless connectivity have revolutionized the way consumers communicate. According to Neilson NetRatings, the number of Facebook visitors increased from about 20,000,000 in December 2007 to more than 100,000,000 in December 2009. At the same time, Twitter grew from practically nothing in December 2007 to seeing approximately 20,000,000 visitors in December 2009. What’s more, less than 1.5 million iPhones had been sold through the end of Q4 2007 compared with 8.737 million in Q1 2010 alone.

Given these changes, it’s imperative that companies understand how different groups of their customers have changed during this time. The analysis and profiling offered by a segmentation project is a great way to do this and help identify marketing messages and communication channels that will resonate with different customers’ needs in this changed world.

Chris Kelley
Research Director