B2B Market Segmentation Case Study
Bureau de change. Exchanging one currency for another. As commodity markets go, this is as pure as they come. After all, the ‘product’ itself, money, is literally identical between suppliers. Unsurprising then that ‘zero commission, great rates’ is the deafening cry from the numerous competing providers seeking to attract custom from travellers.
The challenge of somehow transcending this purely price-driven marketing strategy was one which Moneycorp, an operator of bureau de change, had been considering for some time.
Can we meaningfully differentiate in a largely commoditised environment?
Or are we better to lead a ‘race to the bottom’ and compete on price as is the traditional approach?
Answers to these questions were required urgently. Moneycorp had ambitious plans to grow its business and competitive pressures were increasing with alternative channels such as online bureaux and ATMs steadily gaining presence.
Moneycorp needed an edge; a new angle. At this point, they turned to Circle Research to help explore what really drives customer choice. The result is a fundamentally different way of viewing the market and a series of bold, precisely targeted marketing communications.
Exploring Buying Behaviour
Circle does things differently. It challenges conventional wisdom, questions common perceptions. And its work in the bureau de change market is a startling case in point. The market is predominantly price driven, right? Well, no actually.
Circle began with the premise that there’s not one ‘type’ of customer but several. It’s a segmented marketplace. The behaviours, needs and motivations of one group will differ from another. So yes, price will probably be the key behavioural driver for one segment. But for others, different things will matter. ‘Rational’ things like convenience and also ‘emotional’ things like brand associations.
To explore this hypothesis Circle conducted several focus groups, interviewed 800 business and leisure travellers, and applied a variety of statistical analyses. But this was far more than just a numbers game. To get to the heart of what really matters, the line of questioning adopted sought to delve deep into the thought processes taking place when a buyer chooses to buy currency via one method and not another.
The result? The kind of gold-dust market insights upon which whole marketing and, indeed, customer-facing strategies can confidently be built.
The research confirmed that price is, indeed, a key factor in buying behaviour. However, it does not matter equally to everyone. Rather, buyers fall into distinct groups which share common motivations, behaviours and preferences. To some of these segments, price is not the primary consideration – in other words, there is an opportunity for a supplier to break the pattern and differentiate on other dimensions.
And the other side of the coin is that suppliers themselves are segmented. They’re stereotyped by buyers – that an airport bureau de change is typically perceived as expensive is one example of this. This of course has implications for the credibility of any proposition a bureau de change might wish to adopt. Whilst the proposition itself may be attractive, if the bureau’s stereotype is at odds with the message then it is likely to be met with cynicism.
From Research to Action
For some research agencies, the project might have ended there. Circle’s approach, however, is about much more than data dumping.
Rupert Bedell, head of marketing with Moneycorp, puts it best: “Between the focus groups and the quantitative research Circle didn’t simply provide us with the data and the numbers; they offered genuine strategic thought behind the data in terms of how we could take those results and act on them.”
To this end, Circle applied its creativity to bring the segments to life and make them ‘tangible’ so that they could more easily be put at the heart of decision making. Each segment was given a memorable name. A pen portrait of the typical member of each segment was created. And a video was made which starred members of each segment overlaid with key facts about them.
To help identify the most commercially attractive segments, each was sized and profiled using firmographics and demographics.
And in an inspired move, statistics were used to isolate a small number of ‘magic questions’, the answers to which could place any individual into the right segment. This can be used to profile databases, channel leads or tailor conversations.
Three examples amongst many, but you get the idea. This is an approach where impeccable research rigour is combined with application and action. It’s not just about theory; it’s about practice.
The implications for Moneycorp’s marketing strategy have been profound. Adds Rupert: “We were keen to categorise and segment our pool of prospects and we have been successfully able to do that with Circle’s research findings. That helps us enormously in our marketing approach – we know, for instance, the prospects whom there is very little point in trying to appeal to, and we know where we have a chance.”
Think about this for a moment in marketing terms. No more wasted money on a one-size-fits-all, scatter gun approach to marketing and PR. Instead, a targeted strategy, with resources and activities focused on those buyers most likely to be receptive to your proposition. And best of all, because your marketing strategy has the credibility of being underpinned by intelligent, robust research findings, it gets buy-in from the FD.
Such was the case at Moneycorp which has gone on to develop what is a genuinely ground-breaking marketing campaign throughout the terminals of its airport partners. The power of the campaign, says Rupert, rests on, “the understanding of customer thought processes when they are heading through the airport.” This insight, suggests Rupert, means Moneycorp now knows which buttons to press with its marketing, “putting together executions to prompt buyers to act now.” Most tellingly of all, he adds: “These are emotional messages. I have never seen any competitor do this before.”
There is, unquestionably, an interesting lesson in all of this. Your business operates in a crowded industry and is struggling to cut through the noise with its marketing campaigns. Its messages sound trite and hackneyed – basically, the same as those of its competitors. However, to deviate from them represents a huge risk. It’s a classic, and common, Catch 22.
Rupert and Moneycorp found the answer to this conundrum with great research. In essence, research which dug that little deeper into buyer attitudes to enable Moneycorp to see exactly what they were dealing with. “It was tough to convince everybody this [marketing strategy] was the right route to go down,” says Rupert. “But we had the weight of research behind it – without that I don’t think we would have been able to defend such an approach.”
Read more about our approach to business-to-business (B2B) market segmentation.