Market Segmentation Research: Identifying Target Markets for Improving MROI
Market segmentation research is a market research technique that focuses on analyzing different market segments and customer groups. The end objective of conducting this research is not just to help brands sell their products and services but to improve their R&D efforts and maximize MROI. Market segmentation research also enables businesses to prioritize market segments and develop different strategies for targeting customers within each market segment.
It can be broadly classified into four methodologies:
- Quantitative survey-based research
- Qualitative research
- Research carried out on secondary market information
- Research carried out on existing databases
Market segmentation research helps define profitable market segments and helps generate hypotheses about strategies to target these segments.
Market segmentation research is usually conducted as an early step in business strategy development to help identify profitable target markets based on an analysis of multiple factors like demography, geographic patterns, shopper behavior, and lifestyle. Additionally, this research methodology helps analyze the brand image and offers a holistic view of factors impacting brand affinity.
About the Client
Based in Sweden’s manufacturing powerhouse, the automotive fuel additives manufacturer is well-known for manufacturing a wide range of high-quality products for the automotive industry. The client has a growing distributor and supplier base that is spread globally.
The fuel additives manufacturer was considering relabeling a trademark product from one of its top-selling fuel additives categories. This decision was taken after a distributor refused to sell a derivative product because they felt the product did not fit well with their existing product categories and customers’ needs.
A must-read success story for strategists looking to understand the importance of market segmentation research in the automotive industry. Request a free proposal to get started.
Since their target markets were fast-growing, the client didn’t want to risk missing significant revenue-driving opportunities. With several new market entrants establishing a solid market presence, each day of delay directly translated into a missed sales opportunity for the client. As such, the client needed to make a quick move and a crucial decision around reformulating and relabeling its product or develop a new product to meet the specific needs of its target markets.
Amid the ongoing automotive market turmoil, the client needed to choose a solution that could result in the largest net sales increase while also enhancing brand reach. What’s even more crucial is that the client had to ensure the adopted approach does not negatively impact the brand. Since the client did not want to make a move that would alienate its existing customers, they approached Infiniti Research looking to leverage our market segmentation research and target market analysis expertise.
The client wanted to conduct market segmentation research to improve their competitiveness and profitability in two fundamental ways, as described below.
- By focusing product development, marketing, and service resources on high potential target markets
- By developing products and marketing messages that address the specific needs of customers
Effective market segmentation requires an in-depth understanding of target markets and expertise to identify the right segments.
Research Objectives – Market Segmentation Research
The main objective of this study was to analyze market segments and the underlying needs of consumers using market segmentation research. Besides, the client wanted to gauge consumer demand and purchase consideration for the new product alternatives.
The primary objectives of market segmentation research include:
- Analysis of feasible combinations of interest in product features and combinations of service needs
- Identify and assess the needs of target markets and develop strategies to target customers
- Study the applications of the product concepts by all likely buyers and the volume of additives used in the formulation
- Determine the demand for the new product formulation
- Understand brand affinity and factors impacting purchase intent of its customer base
The automotive landscape is complex, with several new players looking to establish themselves through market expansion. Hence, businesses must sustain a competitive edge by targeting market segments with high-profit potential. Request a free brochure to learn how market segmentation research can help you achieve this.
An in-depth market segmentation research was conducted to help the client analyze the automotive market scenario. A needs-based assessment that was carried out in phase two of this market segmentation research engagement enabled the client to understand customer needs and behavior based on various factors like shopping patterns, demographics, and geographic impact.
Moreover, the detailed market segmentation research insights helped reveal the underlying divisions in the market and characteristics of the target market segments that aided the creation of effective and profitable marketing strategies.
Based on the market segmentation research findings, it was clear that the demand for the product was high across segments. The insights also helped divide the market into segments based on the likelihood of purchase and brand loyalty.
The benefits achieved by our client include:
- Identification of market segments with high affinity for their products
- Prioritization of market segments based on profit potential
- Development of custom marketing messages
Hence, it is evident that market segmentation research helped the client build a robust insights-backed foundation for decision-making. It also helped analyze market characteristics and devise strategies to approach the market in ways that will be particularly effective in driving MROI.