Bridging the gap: A quant geek makes the case for (better) qualitative

David Bakken
KJT Group, USA

INTRODUCTION

Several years ago, a major American telecoms firm decided to segment the consumer market for long distance services by “rate period.” The firm had established three different rate periods for long distance minutes of use: weekdays during business hours, weekday evenings, and late night and weekends. As one might expect, the weekday per minute rates were highest, followed by weekday evenings (5:00 pm to 11:00 pm). The late night and weekend period was deeply discounted. The segmentation was based on consumers’ usage in each of the three rate periods.

The firm undertook market research to better understand the motivations of consumers in the different segments, starting with a series of focus groups. Over the course of several group discussions, an interesting pattern emerged. Consumers who made most of their calls in the weekday evening period were trying to save money but they were also taking advantage of their own availability and the availability of the person they were calling. The same was true of those who made most of their calls in the late night and weekend rate period except that they were motivated even more by cost savings and were willing to endure some inconvenience. The consumers who made many personal long distance calls during the most expensive weekday period had very different motivations. These consumers were seeking the immediate emotional gratification that came from sharing something with friends and family members. At the same time, they experienced some measure of guilt over this indulgence.