Market Segmentation

Market Segmentation Description This process is about grouping organizations utilizing criteria that could help your approach to them in terms of products to offer and also how to approach (key selling points). “Market segmentation is a strategy that involves dividing a larger market into subsets of consumers who have common needs and applications for the goods and services offered in the market” (Malcolm Tatum). General overview of the process How to do it? Important considerations First of all, for this process is very important to make a consideration before talking about how to deliver the process itself. Let’s make a reflection: which are the sectors that AIESEC can work with? To be clear with our example, you can see that we have as Global Partners: Banks, Auditing Companies, Education Institutes, Mining and Logistics. Could you get the idea that we can work with very diverse types of sectors? Now, analyze it locally. Do you have or had internship with huge companies in your city? Also with medium and even small companies? Sharing a concrete example: I saw traineeships being raised in companies of more than 1000 employees, in companies with 100 and I saw an internship being raised in a company with 7 employees. And the last generic criteria that is generally applied for segmentation is localization. We not even need to say that this criterion is also not applicable for AIESEC. For sure, there are some other ways to create segments that would make easier your approach toward companies. The problem is that, this approach 1) could generate a lot of efforts, with no clear results expected, 2) you could be excluding more companies than facilitating your process 3) it generally depends on historical data and other data that generally AIESEC don’t have access internally. Considering all of these facts, the purpose of this document is to create a simplified model for market segmentation. General analysis of your market This phase comprehends 2 main steps: 1) to identify the main trends on your market. To do that, what basically is advised is to check which are the sectors in your scope of operation that are growing and which are the ones that are not. It means to check the general overview of the industries in your country, region or city. 2) To identify your historical database of sales: which are the companies that historically have you been able to sell for. It may mean a simple analysis about industries which you sold products in the past or something deeper considering also which were the key elements that made this company to buy from AIESEC. Outcome expected: a group of industries or sectors that apparently should be the focus for AIESEC to approach; Crosschecking demand and offer From the list of sectors that you have got, some of the sectors that are growing, maybe you can’t offer products that are fit with their demands. For example, if you have a sector of pharmacy that is huge and growing in your country, but you have law restrictions about professionals with this kind of background, that’s a sector that – at least with this approach – wouldn’t be interested on products of AIESEC. Then, you start to check which are the sectors that make sense for you to approach. For this analysis is essential that you have in mind all the benefits that you can offer as AIESEC. You don’t need to think specifically about products but mainly about benefits that AIESEC can offer for an organization. For example: International Talent (the product could be traineeship). It helps you to do not get stuck when you’re going to use this analysis for product development. Just giving a concrete example, you could take Traineeship as the only way for the company to access International Talents, but while you’re developing products you could start thinking about “returnees” as a product that also could fit this demand from the company. Validating After you did the analysis and decided which are the sectors or types of companies that you are going to approach, the best thing to do would be to try to validate this analysis. Sometimes our view inside AIESEC doesn’t group all the huge scope that the market offers us. Also, one problem that can happen is the fact that mainly you’re relying on secondary source of information, that in practical terms can give you wrong clues about the real situation of your market. For this validation exercise there are 3 main ways that you could use: 1) BoA, 2) Market Specialists (even through current partners) and the easiest 3) Professors. The idea is that you could be able to see if the sectors or type of companies that you’re planning to approach are the ones that the market also feels like being the ones that AIESEC should be working with. For this validation, the interlocutor will need to have more information about AIESEC work, otherwise, won’t be understandable the fit between Demand and Offers from AIESEC point of view. If the person that you have available doesn’t have clearly this knowledge about AIESEC, take some time briefing the person about the whole process. It should not take much time. Measurement of Effectiveness Percentage of segments identified that were ratified by the specialists; Contract signed with companies in the segments identified; Percentage of contracts signed with companies on these segments, in comparison to the total of contracts. ER + Finance – IGN Regional Initiative External Relations Supporting Material