276 The Marketing Book
Only 16 per cent (of the 51 blue chip companies
interviewed) understand what the main drivers
of loyalty are... 30 per cent never look at this
and only half carry out some research to
identify loyalty.Indeed, a study amongst pharmaceutical com-
panies found that, when asked what the key
challenges are for the introduction of CRM,
only 6.5 per cent of the issues mentioned
related to improving customer satisfaction
(Clegg, 2001). So one wonders what happened
to the likes of benefit segmentation, for exam-
ple. Actual behavioural response does not
necessarily equate with an understanding of
consumers. If responders become the central
focus (because they are cheaper to retain than
new consumers are to acquire), then aren’t we
storing up trouble for the future in attending
less to why the others are non-responders?
Also, it is clear that the new data-driven
segmentation is not always managed by mar-
keters who possess the right skills to cope with
the approach or even to talk the same language
as those who can. In recent research conducted
for the Chartered Institute of Marketing (CIM,
2001a), this was identified as a major skills
gap:
Marketers should develop IT/new technology
skills (maybe via ‘junior mentors’ – younger
people who are ‘IT savvy’ and who can educate
their senior colleagues). We cannot influence
the development and usage of IT within com-
panies unless we know something about it.
Senior manager, financial services
multinational (CIM, 2001a)Indeed, Carson (1999) interviewed a group of
leading US marketing practitioners and con-
cluded that analytical skills and statistics top-
ped the list of ‘areas in which their education
was lacking’. Businesses are demanding more
accountability than ever before, making it
essential for marketers to ‘know how to do the
numbers and prove their financial contribution
to the bottom line’. Already we are seeing non-
marketers taking over some of this ground and
losing, for example, control of websites as
reported by the CIM in their Marketing Trends
Survey (CIM, 2001b).
All in all, then, there are some concerns
over the practicalities of CRM as a route for
segmentation. It is certainly surely true that the
data-driven approach will continue, but will
this lead to true organization–customer rela-
tionships? Even by 2001, there were signs that
the bubble might have burst: ‘corporate dis-
illusionment and downright hostility to the
whole CRM bandwagon is reaching fever pitch’
(Mitchell, 2001b). Perhaps those involved with
segmenting and targeting should be more
honest – they want to track customer spending
in order to target people with what they hope
will be offers that are more likely to produce a
purchase response. The problem with the ‘R’
word is that it has too many associations with
the human analogy, but organization–customer
interaction is not the same.
On this note, the discussion now turns to
some of the issues involved with the process of
selecting those segments to target.Targeting
From a marketing strategy point of view,
selection of the appropriate target market is
paramount to developing successful marketing
programmes. Market targeting requires the
evaluation and selection of one or more market
segments to enter.
With regard to the question of each seg-
ment’s structural attractiveness, the marketing
manager’s primary concern is, as has been
discussed, accountability and profitability. It
may be the case that a segment is both large
and growing but that, because of the intensity
of competition, the scope for profit is low.
Several models for measuring segment attrac-
tiveness exist, including Porter’s five-force
model. This model suggests that segment prof-
itability is affected by five principal factors: