Value Segmentation & Targeting
Beauty lies in the eyes of the beholder “.
Similarly, perceived Value can vary very significantly between customers….
Prices applied to different versions of a song performed by Nine Inch Nails illustrate it well, with different customer required to pay from zero to 300$ for different versions of the same song.
But Value perceived & willingness to pay can also vary very significantly based on usage or circumstances
For the same can of coke, depending on consumption opportunity, the same consumer may be ready to pay up to ten times the base price...
In a world where most manufactures struggle to achieve 10 to 20% margins, on their products, it would thus seem that segmentation offers incredible potential for improved value capture and bottom line impact.—
so, why is it that the vast majority of offers are still undifferentiated? Why do so few manufacturer take advantage of this great opportunity?
We believe that there are 4 key reasons:
1–Measurement: The first, and most frequent reason is that whilst most easily see the issues and extra costs associated with different offers, few can measure its potential impact on ‘Value perceived’ and revenues
-2: Fencing: whilst customers may be ready to pay more for your offer, they will only do so if they cannot get it at a significantly lower price. The Value capture can only take place if the customers willing to pat more are effectively prevented from just buying the cheaper version. (one cannot buy a supermarket coke in a bar… one does not get the extras with the base version of the CD...)
- 3– Targeting: Finally, particularly n B2B markets, effective segmentation strategies can only work if you can target & communicate with the various ‘customer segments’ to present the offer that corresponds to their need (.. And transform it into better value capture..)
PriValEdge works with its clients to ensure that the three key components of effective Segmentation strategies are inb place so that the company can reap the benefits of its strategies in terms of improved competitive advantage & bottom line impact.