The Power Of Segmentation

Michael Lieberman
Multivariate Solutions

Not every dollar spent in an advertising and sales effort is created equal. Some of those dollars generate far more revenue than others in the advertising and sales budget. It seems that if one only knew beforehand which dollars to spend, and where they should be directed, success would be far more certain.

Our client wanted to find, define and then speak to a particular group of consumers who are willing to pay more for a commodity that is highly price-elastic gasoline. Our approach to market segmentation and customer targeting is importance based, using a common segmentation technique called Q-factor. This uses the output of fairly straightforward factor analysis to group respondents into four distinct segments; two of these were combined to form a group of people roughly 25% of the population who were willing to pay more for gasoline.