After reading the article on the “Fortune
at the Base of Pyramid”, I found myself discussing it with my wife over dinner.
She owns a chain of beauty salons in and around Metro Manila and I was telling
her about the possibility of expanding her business to the BoP. She told me
that the business is already targeting that segment of the market through their
small salons located in smaller cities and towns (and not inside big shopping
malls). We talked about creating another brand name that would specifically
cater to Tier 4 because, like anybody else, all people especially women need
pampering and beauty services from time to time. But then we asked each other: Who
are the Tier 4 consumers? How do we determine who among them would actually
need salon services? Who among them can afford the services that the salon is
offering? How much are they willing to pay for a haircut or hair re-bonding for
example? Little did I realize that we were already talking about market
segmentation and targeting- at least in the manner we understood it.
Yankelovich and Meer said that “good segmentations identify the groups most
worth pursuing- the underserved, the dissatisfied and those likely to make
first-time purchase, for example”. I excitedly brought this idea to her
over the phone and I told her that to expand her business targeting the BoP
market, her company must be able to do a good segmentation. However, we
realized that her business has been thriving without the slightest idea of
psychographic segmentation
as described by the authors. The company lacks profiling of its
market according to relevant consumer attributes (personality
traits, values, attitudes, interests, lifestyles etc.) and does not have even
the simplest information in terms of customer gender, location, job/ source of
income and others. I told her that segmentation will allow the company to deliver
better services because they would be able to know what the consumers really
want. For example: Who
among the target segment has never had a salon experience? Who among them have
experienced unpleasant services in beauty salons? What kind of services do they
need relative to their jobs, or status? How important is ‘makeover” to them?
How often do they need it? By answering these questions,
they would be able to expand their market to that ‘underserved- dissatisfied
segment” of the market.
We ended our conversation with a
resolve to better understand her business stakeholders- first through market
segmentation. She agreed that segmentation efforts must be aligned with the
company’s overall strategy or else it will all amount to nothing. I
was relieved. It’s not often that I get to persuade her to my side.
