Example Cases

Learn valuable lessons from these organisations:

Marketing Focus Strategy relates to perceptions concerning competitors

US Amtrak provided passenger rail services on both long and short distance corridors with three primary market segments i.e. business, leisure, and student travellers. The company faced competition from automobile and air transport with varying degrees of intensity for each corridor. In a survey of travelling customers Amtrak investigated the key elements affecting each market segment (or niche) in a desire to provide superior value to each segment of customers. It was concluded that effective niche marketing required:

It was found that rider attitudes and intentions concerning Amtrak increased as competitive alternatives were weakened. (Drea & Hanna, 2000)

Customer Segmentation in Service Organisations

To enhance profitability, Federal Express, a US company which provides transportation, e-commerce and supply chain solutions, revolutionised its marketing philosophy. The company categorised its customers according to behaviour, desires, and responsiveness to marketing, and identified three segments which they entitled: the good; the bad; and the ugly. The company's marketing effort was differentiated to put its major efforts into servicing the good, to move the bad to good, and to discourage the ugly. (Zeithaml et al, 2001)

First Commerce Corporation / Bank of Granite

Customer Segmentation in Financial Institutions

First Commerce Corporation (now merged with Granite Bank), a US bank holding company, used customer segmentation to more effectively address customers that differed in contributions to current and/or future profitability. Using demographics, the company divided its clients into mutually exclusive groups of individuals and then identified the reasons for swings in profitability including account balances, product mix, and transaction behaviour. Following analysis the company was able to define three unique customer segments which they called the smart money segment, the small business segment ,and the convenience segment. The company then tailored its marketing to each differentiated segment which made its programmes far more effective. (Zeithaml et al, 2001)

Intrawest Corporation

Niche Markets - Cleansed Data Required

Canadian company Intrawest Corporation operated golf and ski resorts and desired to transition itself from a product-focused organisation to being more customer focused. Through this it hoped to take advantage of cross-marketing opportunities; however the organisation had as many as 7 profiles of each customer spread across its databases. This information was derived from various customer touch points e.g. from lodging, ski passes /cards, food and beverage, retail etc. Much of the data contained errors making the quality of the data doubtful. Cleansing the millions of records that Intrawest held was an arduous task hence the organisation chose to use commercial software to carry out the necessary data cleansing. This action enabled Intrawest to better segment its customers helping the organisation to identify potential customer niches that it could efficiently use as markets across its resorts. (Hilson, 2003)

ABC Health Plan

Customer Segmentation in a Health Plan Provider

ABC Health Plan, USA, a nationwide US managed care plan focused primarily on behavioural health, and set out to position itself as the leading organisation in terms of plan benefits orientation. The plan, with over 9-million members in several states, had historically focussed on traditional behavioural health benefits. ABC wished to identify the lifestyle-oriented services that members desired and to create a new plan to better serve these members and also pitch a unique proposition to prospective employer-clients. The implementation process began with a pilot study of ABC members with the aim of gaining an understanding of their characteristics. Then:

As a result:

• The plan grew closer to anticipating the needs of a population for lifestyle-oriented and concierge-type services;

• The allocation by lifestyle categories helped to link clusters to a wide variety of consumer databases unrelated to health services. For example; the propensity of employees in the respective clusters to use counselling services, over-the-counter drugs, alternative therapies, and fitness programs etc;

• The organisation was better placed to make a pitch for contracts with employers to provide a much more targeted constellation of services which increased employee satisfaction levels. (Anonymous, 2001)