My first ever White Paper is here titled Rapid Market Segmentation: Collaborate and Conquer
Download it from the link for a rapid reading. There are some related articles on Diamond's Analytics blog as well
Let me know what you think.
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3 comments:
Thanks for mentioning my post on "desktop analytics" .. I do indeed hope to develop such a tool.
I found your paper on "Rapid Market Segmentation" interestsing - I agree that there is a need for speed (I have done segmentation studies in 6 weeks!), but sometimes the pressure to get quick results should be resisted.
Prioritization of segments is also important, and I think that the idea that you do a proper financial analysis of each segment is very sound. But in reality we must recognize that prioritization is only a simplification .. a simple "in and out" of the target set .. whereas it can sometimes be more sensible to allocate marketing budgets across all segments, but in a "proportionate to potential" manner, like in portfolio optimization. I call this "stratified marketing" .. see, eg,
http://dsanalytics.com/dsblog/stratified-marketing_83
However I am not sure that I am comfortable with the idea of starting one's work with an off the shelf segmentation (although I understand that you augment this). Too often these standard approaches are bland and insufficiently creative.. clients often do need a fresh look at the market. But there is a role for "standard approaches" sometimes - see for example http://dsanalytics.com/dsblog/revisiting-brand-loyalty-based-segmentation_75
To my mind the potentially most exciting approach to market segmentation is to segment on decision rules as revealed by choice modelling. It is not an easy thing to do, but some Bayesian approaches look promising .. see for example "Bayesian Statistics And Marketing" by Peter Rossi et al
John! Thanks for dropping by. Was a little off blogging recently!
1. Would love to see your desktop analytics tool.. It is a very interesting concept. I remember seeing some widget
2. Rapid Segmentation - I think our approach is strongly geared towards quick implementation. And the second most important aspect of our proposed approach is the ease of implementation. Instead of looking at the whole consumer population universe, for instance, the client can focus on a subset of the universe which is readily identifiable through the off-the-shelf schemes, thereby reducing overall costs. We try to incorporate the whiff of creativity to these standard schema for greater returns from marketing strategy.
Having said that, I do agree with the PoV on focusing on all segments at times, and hence a prioritized allocation of marketing dollars. But I think you would also agree with every consultant's focus being the bang for the buck. We try and identify areas with maximum ROI, and an off-the-shelf segmentation is a good tool for that!
Regarding choice modeling, I, myself, am a big supporter of that. And yes, there is no substitute for statistical rigour. At the same time, contextual swift action can lead to great results! :-)
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