A Revolution in Decision Making: Segmentation Plus Merchandising Optimization

Say your final farewell to the mass market. It's taken at least three decades of work and experimentation but, thanks to technology, truly customer-focused, targeted merchandising and marketing is now finally possible.

Data analytics now gives retailers the ability to define their customer segments based on shopper needs, behaviors and traits, and specify marketing approaches that meet the demands of each segment.

But with opportunity comes greater complication. Retailers are feeling the pressure to produce multiple versions of their promotions — whether targeting multiple customer segments or geographies, satisfying local regulations or addressing specific price sensitivities.

As a customer-centric tactic, shopper segmentation has become increasingly popular to the extent that many retailers use up to 20 different segmentation schemes to handle a variety of activities.

Short of one to one marketing initiatives, segmentation has proven to be an effective way to manage diverse shopper needs and efficiently translate those needs into merchandising activities. Both retailers and manufacturer respondents to RetailWire's 2010 Shopper Insights study assigned some of the highest values to two shopper segmentation schemes: "item purchased-based" (otherwise known as behavioral segmentation) and "lifestage-based". That's not too surprising as those two segmentation types combined can be extremely powerful in the pursuit of putting the right shoppers together with the particular offers that will drive incremental sales and continued loyalty.

As discussed in a recent Shopper-Centric Retailing eBook produced by IBM DemandTec, combining merchandising optimization technology with shopper segmentation now gives retailers the power to identify and incorporate a host of segment behavioral differences into their merchandising and marketing decisions.

To operationalize their shopper segment strategies, retailers need:

• Merchandising technology for assortment, pricing, and promotion;
• Access to the combination of optimization and segmentation at the point of decision;
• Active collaboration with CP partners.

FOR MUCH MORE ON THIS AND OTHER SHOPPER-CENTRIC STRATEGIES, DOWNLOAD THESE TWO RESOURCES...

Submit this form for an instant download of the IBM DemandTec eBook, Shopper-Centric Retailing - Shopper Insights at the Point of Decision. Also available is the RetailWire's study, Shopper Insights - Actionable or Academic?