Building Market Segmentation Models

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Building Market Segmentation Models

  1. 1. Building Market Segmentation Models Jeremy Everham and Curtis Bixel
  2. 2. Denver Is a Leading Newspaper Market Total Paid Circulation Source: ABC Audit 3/31/02 ABC FAS-FAX 9/30/02 #7 in the nation (Mon-Sat) #6 in the nation Sunday
  3. 3. Source: DNA analysis of ABC FAS-FAX September 30, 2002 Denver Ranks 1st in Household Penetration POST/NEWS Metro/NDM Household Penetration DAILY SUNDAY 51.7% 64.7% This is the #1 newspaper market in America. The Denver Newspaper Agency provides higher household penetration (paid circulation divided by occupied households) than any other newspaper in the nation - daily AND Sunday.
  4. 4. ACTIVE SUBS PAST SUBS NEVER SUBS New Segmentation Ideas <ul><li>New methodologies based on segmentation </li></ul><ul><li>Infinite possibilities in “niche” marketing </li></ul><ul><li>Traditional mass marketing to retain penetration coupled with segmentation to increase smaller markets </li></ul>
  5. 5. Segmentation Opportunities <ul><li>Past Subscribers: </li></ul><ul><ul><li>Non-pays: </li></ul></ul><ul><ul><ul><li>Segment between never-pays, and once-paid but no renewal. </li></ul></ul></ul><ul><ul><ul><li>Strategy will be to require payment in advance or limit their grace period, offer them lowest price with incentives to pay up front via credit card, and tie a promotion such as King Soopers discounts to 2 yr. credit card offer. </li></ul></ul></ul><ul><ul><li>Do not calls: </li></ul></ul><ul><ul><ul><li>Segment by interest to determine the largest interest/lifestyle groups. </li></ul></ul></ul><ul><ul><ul><li>Our strategy is to identify direct mail offers specifically tied to their interests. </li></ul></ul></ul>
  6. 6. Segmentation Opportunities <ul><li>Past Subscribers: </li></ul><ul><ul><li>Reason for Stopping: </li></ul></ul><ul><ul><ul><li>Run counts by stop code on those who gave a reason for stopping </li></ul></ul></ul><ul><ul><ul><li>Look at the major segments to determine if we need a strategy for them. </li></ul></ul></ul><ul><ul><li>7 Day Sub cancellations: </li></ul></ul><ul><ul><ul><li>Profiles by price, length of subscription, cancellation code, and anything else that will help us determine why 10%-12% of this important segment cancel </li></ul></ul></ul><ul><ul><ul><li>See if there are segments we could treat differently to improve retention </li></ul></ul></ul>
  7. 7. Segmentation Opportunities <ul><li>Active Subscribers: </li></ul><ul><ul><li>Sunday Only/Weekender Packages: </li></ul></ul><ul><ul><ul><li>Profile using demos and lifestyle clusters to determine what this group looks like. </li></ul></ul></ul><ul><ul><ul><li>Identify spending thresholds for high, medium and low level renewal rates. </li></ul></ul></ul><ul><ul><li>Heavily Discounted Rebilling: </li></ul></ul><ul><ul><ul><li>Profile using demos and lifestyle clusters to determine what this group looks like. </li></ul></ul></ul><ul><ul><ul><li>Identify spending thresholds for high, medium and low level renewal rates.. </li></ul></ul></ul>
  8. 8. Segmentation Opportunities <ul><li>Active Subscribers: </li></ul><ul><ul><li>Profile of EZ Pays: </li></ul></ul><ul><ul><ul><li>Profile using demos and lifestyle clusters to determine what this group looks like. </li></ul></ul></ul><ul><ul><ul><li>We will then identify existing subscribers with the same characteristics for heightening marketing efforts to this group. </li></ul></ul></ul><ul><ul><li>Duplication with other publications: </li></ul></ul><ul><ul><ul><li>Look at subscriber activity with other publications such as NY Times to identify multiple subscriber households. </li></ul></ul></ul><ul><ul><ul><li>We will profile these to help us identify targets for marketing these other, non-DNA publications. </li></ul></ul></ul>
  9. 9. Telemarketing Workstation
  10. 10. <ul><li>Why Telemarketing Workstation? </li></ul><ul><ul><li>Multiple Publications </li></ul></ul><ul><ul><ul><li>The Denver Post, Rocky Mountain News, New York Times, etc. </li></ul></ul></ul><ul><ul><li>Integration of Outside Data </li></ul></ul><ul><ul><ul><li>Demographics, Clusters, Private Party Classified Ads </li></ul></ul></ul><ul><ul><li>Segmentation and Response Tracking </li></ul></ul><ul><ul><ul><li>Segment best acquisition leads </li></ul></ul></ul><ul><ul><ul><li>Track Household Response </li></ul></ul></ul>Telemarketing Workstation
  11. 11. <ul><li>Weekly Calling Plan </li></ul><ul><ul><li>13 week NDM call cycle </li></ul></ul><ul><ul><ul><li>Approximately 180,000 potential /wk </li></ul></ul></ul><ul><ul><li>10 week ONDM call cycle </li></ul></ul><ul><ul><ul><li>Approximately 15,000 potential /wk </li></ul></ul></ul>Telemarketing Workstation
  12. 12. <ul><li>Monthly Calling Plan </li></ul><ul><ul><li>Extended vacations > 30 days old </li></ul></ul><ul><ul><li>Suspended accounts </li></ul></ul><ul><ul><ul><li>With previous payment </li></ul></ul></ul><ul><ul><ul><li>Without previous payment - prepay only </li></ul></ul></ul><ul><ul><li>Positive balance > $1.00 </li></ul></ul><ul><ul><ul><li>Refund, restart, or donate to NIE </li></ul></ul></ul>Telemarketing Workstation
  13. 13. <ul><li>Future plans </li></ul><ul><ul><li>Use Demographic data for targeted acquisition </li></ul></ul><ul><ul><li>Use Classified data for targeted acquisition </li></ul></ul><ul><ul><ul><li>Free ad w/subscription </li></ul></ul></ul><ul><ul><li>Use Retention response data for Targeted Renewal Campaigns </li></ul></ul>Telemarketing Workstation
  14. 14. Niche Campaigns: EZ Pay Example
  15. 15. Credit Card Subscriptions <ul><li>A Market Facts survey conducted for the NAA and Visa USA, concluded: </li></ul><ul><ul><li>Over one-third of newspaper subscribers want the option of paying with their credit cards </li></ul></ul><ul><ul><li>Those most interested in a payment card are younger, educated, higher-income males </li></ul></ul><ul><li>A study in Presstime magazine showed a 50% higher retention rate for readers who pay with a credit card than for those who don’t. </li></ul><ul><li>Madison Newspapers report the retention rate on automatic credit card accounts is 94% after six months and 87% after one year. </li></ul>
  16. 16. EZ Pay Analysis <ul><li>Database Strategy: </li></ul><ul><ul><li>Develop a user profile utilizing demographics and lifestyle clusters </li></ul></ul><ul><ul><li>Identify existing subscribers with the same characteristics for conversion to EZ Pay or for new household acquisition </li></ul></ul><ul><li>Database Tactic : </li></ul><ul><ul><li>Identify and analyze EZ Pay subscribers in the database </li></ul></ul><ul><ul><li>Report on their demographics and PERSONICX codes. </li></ul></ul><ul><li>Database Findings: </li></ul><ul><ul><li>EZ Pay customers when ranked by index are predominantly young </li></ul></ul><ul><ul><ul><li>New household acquisition opportunity - this cluster much different than the current core subscriber base - acquisition opportunity </li></ul></ul></ul><ul><ul><li>EZ Pay customers when ranked by quantity are mostly middle-aged and affluent </li></ul></ul><ul><ul><ul><li>Very similar to the existing core customer base - conversion segment </li></ul></ul></ul>
  17. 17. Target 1: Acquisition
  18. 18. Selected Targets for Acquisition <ul><li>Urban Scramble : Young professionals and students, urban, well educated, just beginning to make money. </li></ul><ul><ul><li>Interests: civic and human rights </li></ul></ul><ul><ul><li>Opinions: spend money without thinking, worry about themselves, health is important </li></ul></ul><ul><ul><li>Read: New York Magazine, The Economist </li></ul></ul><ul><ul><li>Finance: Pay bills by phone </li></ul></ul><ul><ul><li>16,128 non-subs </li></ul></ul><ul><li>Career Building : Under 30, single, well-compensated, mobile, active. </li></ul><ul><ul><li>Interests: Mountain Biking, environmental organizations, college football </li></ul></ul><ul><ul><li>Opinions: Like magazines, trust what I read in newspapers, take risks </li></ul></ul><ul><ul><li>Read: Sports magazines, INC, webcrawler.com </li></ul></ul><ul><ul><li>Finance: Buying homes and condos, mutual funds, paying off education loans </li></ul></ul><ul><ul><li>12,825 non-subs </li></ul></ul>
  19. 19. Target 2: Retention
  20. 20. Selected Targets for Retention <ul><li>Skyboxes and Suburbans: </li></ul><ul><ul><li>One of the best educated and wealthiest clusters, often with teens at home, living in the lap of suburban luxury. </li></ul></ul><ul><ul><li>6,836 non-EZPay subscibers up for renewal </li></ul></ul><ul><li>Apple Pie Families : </li></ul><ul><ul><li>Well educated, married, dual income, upper middle class homeowners with mini-vans, age 46 to 55. </li></ul></ul><ul><ul><li>5,508 non-EZPay subscribers up for renewal </li></ul></ul><ul><li>Established Elite: </li></ul><ul><ul><li>No kids, enormous disposable income, rank first for education, home values, and home equity. </li></ul></ul><ul><ul><li>4,733 non-EZPay subscribers up for renewal </li></ul></ul>
  21. 21. Selected Targets for Retention <ul><li>Career Centered Singles: </li></ul><ul><ul><li>Affluent, well educated suburbanites, dedicated to their careers and long-term homeowners in their community. </li></ul></ul><ul><ul><li>3,730 non-EZPay subscribers up for renewal </li></ul></ul><ul><li>Leveraged Lifestyle: </li></ul><ul><ul><li>Established couples with teenage kids, mortgages, car loans, and the high incomes to support them, age 36-55. </li></ul></ul><ul><ul><li>3,029 non-EZPay subscribers up for renewal </li></ul></ul>
  22. 22. Marketing Strategy Discussion <ul><li>New Household Acquisition </li></ul><ul><ul><li>Target non-subscribers for acquisition via EZ Pay in the best clusters when ranked by index - young up-and-comers. (Target 1) </li></ul></ul><ul><ul><li>Direct mail test of 25,000 households </li></ul></ul><ul><ul><li>Marketing leverage points </li></ul></ul><ul><ul><ul><li>Offer: price by the month/low price point/Starbucks gift card offer tied to payment by credit card </li></ul></ul></ul><ul><ul><ul><li>Branding: low price point/minimal cost </li></ul></ul></ul>
  23. 23. Marketing Strategy Discussion <ul><li>Conversion of Existing Subscribers </li></ul><ul><ul><li>Target current subscribers approaching renewal via EZ Pay in the best clusters when ranked by quantity; upscale, well-educated, established clusters. (Target 2) </li></ul></ul><ul><ul><li>Develop communication for branding EZ Pay customer benefits - letter sent prior to renewal offer, communicating benefits </li></ul></ul><ul><ul><li>Direct mail test of 25,000 households of best prospects </li></ul></ul><ul><ul><li>Marketing leverage points: </li></ul></ul><ul><ul><ul><li>Offer: UA Mileage plus miles tied to payment by credit card </li></ul></ul></ul><ul><ul><ul><li>Branding: Heightened level of customer service (ease and convenience) </li></ul></ul></ul>

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