What happened to strategic segmentation? — Angus Jenkinson, Journal of Direct, Data and Digital Marketing Practice Vol. 11 No. 2

Segmentation that combines insight with descriptive, predictive and operational capability represents the most complete and powerful capability for marketers, when achievable, and therefore a gold standard. However, the author notes a trend towards simpler, limited modes. These tend to isolate capabilities, such as descriptive market segmentation, or predictive analytics for targeting tactical campaigns, or real-time ‘ black-box ’ behavioural algorithms, such as collaborative filtering and next best action. The author suggests this is brought about by failures in technique, process or imagination, giving typical causes, and posits a simple ‘test of effectiveness’ self-audit for organisation decision-making. (16 pages)

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1.  At 14:52:51 on 06 November 2009, Alex Warlow, Noridol Ltd wrote:

An interesting paper. However the question posed (page 134) "Which would you rather run: a customer black box or a customer base you understand" - presumably the authors feel that the latter is better. The newer type business practicing automated marketing techniques really do not know (or care) why the computer system is segmenting customers in the way it does. The marketing costs are substantially reduced and the computer spots ALL segmental relationships - however obscure.

2.  At 12:42:02 on 09 November 2009, Robin Fairlie, Robin Fairlie Associates wrote:

Alex, you have unearthed a critical question. Can I suggest there is no universal answer. One can think of the problem as a 2-dimensional graph, on which the x-axis represents simplicity/complexity, and the y-axis degree of understanding Different persons, and different applications, will plot different positions on the graph, swopping degrees of understanding for levels of sophistication. E.g some will use CHAID segmentation methods, others will use a neural net. Horses for courses?

3.  At 10:28:30 on 12 November 2009, Angus Jenkinson, Stepping Stones wrote:

Thank you for your comments. I understand the points made by both Robin and Alex. However, the computer can only come up with suggested communicatons and offers if these already exist. Where are these to come from if you lack insights? Do we then hand over to the computer the process of R&D, deisgn, creative? Maybe one day, who knows. Not today, I think

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