Market Segmentation Analysis Applied To The Online World

From: Bryce Isham <bisham_at_claritas.com>
Date: Thu 2 Dec 1999 14:14:36 -0500

I have recently had a couple of off-list email
discussions with list members about how the
"traditional" method of market segmentation can be
applied to online marketing and advertising. I would
like to outline the concept of market segmentation,
give a few examples of applications in the online
world, and then ask for everyone's thoughts on this
issue.

Market segmentation analysis involves classifying
customers into different groups (often called
clusters). Each cluster has distinctly different
demographic and lifestyle characteristics. Cluster
codes can be assigned to any customer file with
addresses or at least zip codes.

The result is that marketers can determine who their
customers are, what they are like, which customer
groups are their best customers, what media mix and
message to use to reach more people like their best
customers, and where the people similar to these
customers are located. In short -- actionable
information for targeted marketing.

In the online world, I see market segmentation analysis
being applied in various ways. Examples are below.

Example 1:

A company with an online presence (web site) wants to
increase site visitor retention by placing content on
its web site that visitors are interested in. These
visitors can be prospects or customers. The company
has a file of site visitors. These could be site
visitors who were first required to type in some
contact information in order to use a free demo or
download feature. By conducting market segmentation
analysis on these visitors, the company can determine
the primary interests of these visitors, and add
appropriate content to its web site.

Also note that a company can do market segmentation
analysis on its off-line customer base to determine
what content to place on its web site. Of course, the
company would have to make the assumption that its
off-line customers are more or less representative of
its web site visitors.

Example 2:

A company wants to attract more advertising to its web
site. The company has a file of site visitors. Again,
these could be site visitors who were first required to
type in some contact information in order to use a free
demo. By conducting market segmentation analysis on
these visitors, the company can determine the primary
interests of its web site audience. This information
will allow the company to convince potential
advertisers to buy ads, based on the fact that the
company web site has an audience interested in a, b,
and c.

Example 3:

With market segmentation analysis and some programming,
web servers can dish out ads based on the market
segment the particular customer belongs to.

Example 4:

Companies who wish to place ads on other Internet sites
can do market segmentation analysis on their own
off-line or on-line customer base to find out what
interests them. This information can help the company
select web sites on which to place its banner ads.

Example 5:

Internet-based companies (no storefronts except in
cyberspace) can do market segmentation analysis to
determine in what traditional media (newspapers, radio,
etc.) and where (physical location) to place
advertising.

My questions:

   What other applications for market segmentation in
   the online world have I missed?

   Are many Internet-based companies and companies with
   an online presence using market segmentation analysis?

   If you know of any companies that are using market
   segmentation analysis, do you know what the results
   have been?

   When companies do what is called "personalization",
   is this type of market segmentation analysis being
   used?

Thanks in advance to everyone!

Sincerely,
Bryce Isham, bisham_at_claritas.com
Product Manager, E-Commerce Group
Claritas Inc.
www.claritas.com
connect.claritas.com




Received on Thu Dec 02 1999 - 13:14:36 CST