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Segmentation
1.
2. Which of these 2 Agents is more
likely to succeed and Why?
Look! We sell
insurance. Whatever
your insurance
needs, we have the
policy for you!
I’m an insurance agent
known to be a specialist
with teachers. I know
30 principals and have
insured over 200
teachers in this city. I've
developed a special
insurance program
specially for teachers
3. The Market Scenario
1
• Purpose of businesses is to fulfill customer needs
profitabily
2
• Customer expectations are increasing &
becoming unique
3
• It is becoming difficult to understand complex
customer needs
4
• Businesses are becoming more and more
specialized to fulfill these unique needs
9. Demographic Segmentation
Segmenting the market on basis of physically
recognizable or evident factors.
Age
Young Adults (20 – 34), Middle Aged (35 –
54), Senior Citizens (55 and above), etc
Gender
Ethnicity
Hindu-Marathi, Hindu-Rajput, Muslim, Christian, etc
Family Life Cycle
Young single, Young Couple, Full Nest, Middle age
with Grown Up Kids, Old With Children to
Support, Old Without any Support, etc
10. Demographic Segmentation
Income
Low Income (0-2 Lakh), Mass Market (2-6 Lakh),
Affluent (6-24 Lakh), HNI (>24 Lakh)
Occupation
Professional, Manager, Clerical, Skilled & Unskilled
Labor, Businessman, Homemaker, Retired
Education
Primary or less, Secondary, Intermediate, Graduate,
Post Graduate
11. Psychographic
Lifestyle
People of similar age and socio-economic status
Posses varied interest, performing different
activities, lead different life styles
Examples are Socialites, DINKs, Fitness
Freak, Fiscal fledging
Personality
“Birds of the Same Feather Flock Together”
Examples are Conservative, Extrovert, Risk
Seeker, Thrifty
Values
The internal belief system that helps people in
taking decisions.
Examples are Altruists, Fun
12. Behavioral
Benefit
Buyers can be segmented on benefit that they seek
Examples are Protection, Investment, Savings, Pension
Loyalty
Segmentation on basis of buyers’ loyalty towards brands
Examples are Hard Core Loyals, Split Loyals, Switchers
Usage Rate
Segmenting on usage helps determine the LTV of
customer
Examples are need, frequency and volume
Buyer Readiness
Where is the customer in buying process
Examples are unaware, consideration, seeking, buying
13. Identify your Target Segment
List your current customer
profiles and other groups in
your market
For different segments Estimate
the
Size
Growth Prospects
Profitability
Competition
Your chosen segment should
be
14. Position Yourself As a NICHE
Agent
Study the Demographics of your chosen segments
Know everything about them such as their
lifestyles, personality, attitude, behaviors, etc.
Identify their unique problems, needs & desires.
Promote a “Service Guarantee” specific to your niche
Sweeten the POT by offering non insurance services
unique to your niche.
15. In groups identify a unique segment
List their needs and behavior characteristics
List things your group will do as a NICHE Agent
Editor's Notes
Explain: Most successful businesses are created by individual who are great marketers. All marketers do 2 things – Invent new products or services and tell stories about them. Either you will stories that will spread or you will become irrelevant. Lets learn how these great stories can be created.
Explain the questionShow First Agent and explain her offer as a generic sales pitch offering all kinds of products for everyone.Show Second Agent and explain her offer specifically to a teacher.Take answers from the participants and make a list of their reasons on board.Discuss their answers while explain how second agent is more likely to close the deal with this teacher.Understand special needs of teachers.Give references of other teachers who this person is likely to knowGet into targeted databases with references from Principals & TeachersOrganize special events like teacher meets to nurture relationships with customersProvide unsaid benefits like job references.
Point 1 Explain that “Fulfilling Customer Needs” and “Profit” are mutually inclusive and recursive.Point 2 Explain that with increasing competition customer expectations are also increasing. When going to a restaurant earlier people expected good food only. Then they started demanding good service too. Later people asked for hygiene & cleanliness. Now people feel that these things are basic and necessary. But the restaurant must offer a good atmosphere and ambience also.Point 3 Explain that customer expectations at this level are very complex and difficult to understand. For example, it is very difficult to explain what customers expect in terms of ambience of a restaurant. Youngsters would expect the place to be loud for partys, couples would expect soft music with dim lighting, families would expect the place to brightly lit, etc.Point 4 Different brands and companies are coming to the market to fulfill these specialized needs.Ambience – Special atmosphere or mood created by the environment of a place.
Explain that the solution to this unique marketing environment is in STP (Segment, Target, Positioning) approach. Segment the market – All types of people buy toothpastes for different reasons. Youngsters, Professionals, Mothers, Elder People.Target – Brands may target toothpastes for fresh breath, other to make teeth look whiter and still others to protect teeth from germs or to keep them strong.Position - Different brands have chosen to target these unique segments differently. Like Close Up promises fresh breath, Colgate Whitening promises whiter teeth, Pepsodent protects the teeth from germs and Babool makes them strong.
Explain segmentation
Explain why segmentation is important.Different Needs – Different types of customers have got different needs from their insurance agents. For example, financial planning,help in tax planning, stock market tips, educational seminars, etc.Attractive – For some agents it is a better approach to work on volumes with faster sales cycles and for others spending more time with a few high net worth customers.Mass Marketing – Mediums of mass advertisement are cluttered with too many advertisements and are also very expensive.
We can do segmentation by dividing the market on basis of four different aspects. Mention all four aspects.
Geographic Segmentation Explain that it is not a good profit to target all areas for an insurance agent. He can manage and use his time optimally if he concentrates his marketing effort in a defined geographical area to save time and cost of commuting.Geographical segmentation can be done by Distance, like earmarking a 5 Km area around the place of work or place of residence. Regionally, segmentation can be done by identifying some specific colonies, localities, villages where potential customers might be living in large numbers. An agent may also choose 2-3 areas having high population Density. Sometimes choosing Terrain could help in segmenting. For example people living near the river, or people living in hills or people living along the forest, etc.
Explain the meaning of demographic segmentation and explain different factors of segmentation.People of different age group have different needs and expectations from insurance. Probably a young adult could plan for retirement whereas middle aged could be looking for protection from uncertainty.Male buying behavior and Female buying behavior will be entirely different in insurance buying.Different ethnic groups might show some specific behavior, like Muslims.Similarly, buying needs of customers will vary with life stage. Young Single - Could only look for tax savingYoung Couple – Could be looking for annuityFull Nest – Couple with 1 or 2 kids could be looking for protection from unforeseenMiddle Age with Grown Up Kids – Could be looking for retirement
Explain each segment with suitable examples
Note:The examples of psychographics given here are very few and only illustrative.Explain people have different lifestyles depending on their tastes Socialites – People who like to meet people and make friends, attend social gatherings and functions.DINKs – Double Income No Kids – Working couples having no kids have got a lot of disposable income.Fitness Freak – People who like to go to gymnasiums, yoga, aerobics, etc.Fiscal Fledging – Young people who do not have big earnings.Explain that people mix well with people of similar personality. Different people have values which guide their process of decision making.Altruists – These people have the attitude their action should lead to welfare of the society.Fun Seekers – These people are looking for fun through their actions.Strivers – These people put more emphasis on material and professional goals.Devout – These people are religious and that drives their actions.
Behavior segmentation is slightly more explicit than psychographic, since it is based on visible action of people.Benefit Sought – Buyers could be looking for different types of benefits from their investment in insurance. Protection, Investment, Savings, Pension, Tax Saving, etc. If you understand your segment well, you will be able to specialize in products which will cater to the benefit they mostly seek.Loyalty is based on the general loyalty of the buyer towards brands.Hard Core Loyal – These people have very strong brand loyalty and will not switch over other brands.Split Loyals – These people have loyalty towards 2-3 brands and will divide their basked amongst them. The competition here is over the basket share.Switchers – These people have no brand loyalty and will switch purely for functional benefitsUsage Rate helps in identifying the periodic buyers from one time investors.Buyer readiness is the stage in buying process at which the person is right now.Unaware – He does not know about insurance and need to buyConsidering – He feels he should buy, but has put no specific effortSeeking – He is researching and comparing different insurance productsBuying – He has all necessary information and is just negotiating the best deal
The agent should list the key customer segments that he can identify in his market. He must pay special attention to his existing customers and try to figure out commonalities amongst them.For different segment he should see the Size – How many potential customers are likely to be in that segment.Growth Prospects – Even if the segment is not very big at present, is it likely to grow in near future as your business matures. (Usually such segments will be untapped and hence have a good potential)Profitability – Do the customers in chosen segment have decision making authority, do they make regular investments and sizeable investment.Competition – How much competition is likely to be their in the segment. More competition in the segment makes marketing expensive and hence reduces the profit margins.Finally choose a segment that you are going to target. Your chosen segment should beSubstantial – Big EnoughDifferentiable – To enable you to offer some unique service so you can attract the customers.
Niche Agent – An agent who consolidates his entire marketing effort in a particular market segment.
Divide the class in groups of 4-5 people each and ask them to do this exercise as a homework. The participants will be required to make a presentation in the morning on the next day (5 Minutes per group)
