Segmentation and customer insight in contemporary services marketing practice: why grouping customers is no longer enough

Abstract

The bulk of market segmentation literature has concerned the generation of segments, with far less attention on what segmentation is used for-particularly surprising given the common speculations that the role of segmentation is changing due to CRM practices and the wider range of forms of customer insight which they enable. We explore market segmentation in the services and product-service systems context through twenty-five interviews in five UK-based companies, highlighting practical considerations in implementing market segmentation programs (see Young, Ott and Feigin, 1978, for a similar early approach). Within this case set, market segmentation, using a variety of segmentation bases, is still regarded as essential for customer selection, proposition development and mass communication. Addressable and interactive communications with individual customers, though, are increasingly based on individualised customer analytics and propensity modeling, which aid the determination of the likelihood of uptake of specific propositions. Events and triggers informing companies of how to deal with customers individually are also considered to be particularly effective rather than simple allocation of the customer to a particular characteristic segment. Implications for theory and practice in market segmentation are outlined and further research is called for to explore this important area further.

Emerging segmentation practices in the age of the social customer

“…), some in proprietary format. This is not a new problem in segmentation (Bailey, Baines, Wilson, & Clark, 2009), but adds another layer of complexity. A related challenge is the fact that customers may adopt different identities in various channels, which limits the ability of achieving the desired single view of the customer.…”

Non-Technical Skills for IT Professionals in the landscape of Social Media

“…(Sakib, 2014) Categorization Collaboration Credibility Social Networking Tagging (Churches, 2009;Gray, Hathi, 2009;Litt, 2013;Yakushigawa, Yanagimoto, & Yoshioka, 2013;Xu, 2013 Customer relationship management involves two components involves collecting and analyzing customer information to build long term relationships with customers that are mutually satisfying. (Bailey, Baines, Wilson & Clark, 2009;Castronovo & Huang, 2012 (Acker et al, 2011;Lager, 2006;Bolding et al, 2005;Hasanzadeh & Mahaleh, 2013;Woodcock et al, 2011).…”

Services Segmentation and Emergent Customer Behavior: A Case Study

“…Lee, 2006;Dibb & Simkin, 2009). Services segmentation research has also emphasized switching behavior as a consequence of service encounters, inconvenience and competitive forces (Bailey, Baines, Wilson, & Clark, 2009). In a service economy, customer relationships are recognized as the key to profit generation, and customer lifetime value (CLV) is a metric to select customers for relationship attention.…”

“…However, knowledge acquisition emerging through ongoing interactions not only identifies opportunities for co-creation of new value, extending current services, and supporting customer decision-making, but also the ability to exploit those opportunities (Yli-Renko, Autio, & Sapienza, 2001;Brangule-Vlagsma, Pieters, & Wedel, 2002). Segmentation information informs the strategic allocation of resources and can provide guidance for customer acquisition (Bailey et al, 2009).…”

“…Although CRM places segmentation in the realm of segments of one, many benefits residing in these systems are yet to be realized (Bailey et al, 2009). In one customized application, Kalyanam and McIntyre (2002), proposed segmentation by personalization where individual customers self-select, and the system customizes interactions based on the user's exhibited behavior, customizes based on preferences of users with similar interests, and=or the system evokes a rules-based approach recommending items that match with those selected by the customer.…”