‘How should we in Sales segment our market?’

Q: OUR COMPANY is in both vertical and horizontal construction.  We’re in Sales. We sell and presell condo units, and houses and lots. Our Marketing people recently briefed us about our ad agency’s market research on our market’s “psychographic segmentation.”

We wanted to ask some practical questions but decided against asking.  Our CEO and other top management were present during the briefing. It was our CEO who opened the briefing and it was clear to all of us in Sales that he and the other top executives were sold on this segmentation research and wanted us in Sales to adopt it for our sales campaign.

So we thought we’d request for your help and ask you our questions instead.    “What can we in Sales do with such customer segments like  ‘the energetic, daring segment’ who want ‘innovative, ground breaking brands’?”  “Or what about ‘the playful, indulgent segment’ who are for a brand that ‘does not take itself too seriously’?”   “How does a broker or an agent of ours pre-qualify or qualify a prospect into one of their five or six such psychographic segments?”  “In preparing the appropriate sales script, how do we fit, say, our condos  into the condo need and motivation of an energetic or a playful condo prospect?”

A: You will find the answers to your questions in the Senior MRx-er’s best-selling book, Market Segmenting, Self-Segmenting and Desegmenting.  So that it will not sound like we’re trying to sell you the book, we’ll summarize its answers below but tailor fitted to your real property projects and business.

The latest powerful market segmenting mantra talks about purpose-driven segmenting.  It’s like what the often-cited Ecclesiastes 3:1 advises:  “To everything there is a season, and a time to every purpose under heaven.”  Replace “time” with “segmentation,” and you have this latest powerful segmenting mantra: “To everything there is a season, and a SEGMENTATION to every purpose under heaven.”

For the purpose of gaining “high identification” with the target audience in your communication and advertising, psychographic segmentation suits the purpose better than any other segmentation.  But for the purpose of selling or preselling a condo or house and lot to a customer prospect, another segmentation technique will do a better job.

In the old, old days and in most or almost all local companies where Sales was also in charge of Marketing, Sales developed and executed the “best” market segmentation technique.  It was “best” in the sense that it delivered the target revenue and profit.  This was territorial or geographical segmentation.  It was a segmentation strategy that was the basis for structuring and organizing Sales.

To a large extent, the revenue and profit effectiveness of this segmentation process can be traced to the way it honored the late Harvard Business School professor, Alfred Chandler’s classic rule: “Structure follows strategy.”  It shouldn’t be the other way around as is the usual case.  Most companies try fitting their strategy to their current organizational structure.  That’s easier and more convenient to do.

Sales’ market segmenting is not only classically true but also contemporary, at least among most of those with whom we’ve worked and helped.  It’s contemporary because it goes up to a “second level” segmenting as Rx’s in our 2012 book, Market Segmenting, Self-Segmenting and Desegmenting.  The need to go to a second level segmenting derives from two marketing challenges.

The first of these says that geographical segmenting defines for you the “boundaries” of the market and selling arena where your marketing game will be played.  What you have to do within that arena to attain target revenue or effect target market behavior is unspecified.  Suppose, for example, that you’re after the Quezon City territory market segment and the current priority problem is pricing.  Let’s say that you found that the greater percent of Quezon City customers are after lower pricing including condo and house and lot pricing.  This means that you should go and do a second level segmenting of the Quezon City customers according to price sensitivity, say, who and where are the economy price customer segment, the premium price segment and even the super-premium price customers.

The foregoing segmentation is what our book termed as “self-segmenting.”  It is a customer segmenting behavior.  It was not you as Sales or Marketing as marketers who segmented the customers.  It is the customer herself who decided to count herself as belonging to an economy price segment or a premium segment or a super-premium segment.  For this reason, we also called this segmenting as “behavioral segmentation.”

If names and addresses of prospects can be generated in each of these three price customer segments, that’s the most Sales purpose-serving segmentation process for you in Sales.  This is Marketing’s job as marketing services department accepting the responsibility of marketing services in the service of Sales.  Now, if Marketing also wants to help and support your sales campaign with advertising, its psychographic segmentation of those price segments will support this advertising-serving purpose.

So, our Marketing Rx is simple.  Subtly and politically correct, get your Marketing and top management people knowledgeable about the latest in market segmentation, in “purpose-driven” segmenting.  Get help from your HRD and OD colleagues on how to go about this necessary and critical task.

Keep your questions coming.  Send them to us at [email protected] or [email protected]. God bless!