Market
Segmentation
Phase 1: Market Strategy
as Related to Minorities and Financial Services.
Phase 2: Recommendations
for the Establishment of a Money Transfer
Business Unit.
A Global
Financial Institution
Background
Our client, a major global financial institution, had yet to significantly penetrate the growing US minority marketplace, (which, for them, consists of Hispanics, Asians, and African-Americans) with their products and services. Because these groups have tremendous spending potential, which will continue to expand in the years to come, Wability was contracted to undertake a major initiative in order to help our client begin to penetrate lucrative these marketplaces.
Wability began this project by conducting some primary
demographic research, examining growth trends and overall
market potential. Based on this research, we recommended that
our client begin its penetration efforts with the Hispanic
marketplace. Wability made this recommendation based
on the fact that Hispanics are the fasting growing ethnic
group in the United States, and therefore represent a good
starting point, (see chart below).
| U.S. POPULATION TODAY | U.S. POPULATION 2050 PROJECTIONS |
| 73.6% White | 52.8% White |
| 12% Black | 24.5% Latino |
| 10.2% Latino | 13.6% Black |
| 3.3% Asian | 8.2% Asian |
| .7% American Indian | .9% American Indian |
| Total Population: 262.8 million | Total Population: 393.9 million |
Business Challenges
Phase I
Our Client, a Major Financial Institution, with business in
both North America and South America wanted to research the
feasibility of targeting the minority marketplace in the U.S.
by offering an array of traditional and tailored financial
services. The client needed direction and insight to determine
which financial products would most appeal to these segments
and how to draw on the bank's existing core competencies and
resources to develop this business.
Phase II
Our market research lead us to believe that there was an enormous
opportunity in offering a money wiring service to Hispanics
in the U.S. The target market was large and showed strong
signs of continued growth. In order to successfully penetrate
this market, our client needed to understand the decision
drivers among Hispanics for choosing a money transfer company
to send money internationally.
Approach/Strategy
After selecting the Hispanic marketplace as a starting point, a market orientation study was conducted in which market intelligence data related to Hispanics and financial services was collected and analyzed.
Secondary research was performed in order to discover how our client was currently marketing to their existing/potential customer base, as well as to provide insight on the effectiveness of the present marketing strategies for both our client and their competitors. The secondary research consisted of:
- Analysis of Competition
- Market Definition
- General Information about our client's industry
- USA Hispanic Demographics
- Latin America Demographics
(See appendix ii for questionnaire used as part of the secondary research-gathering phase).
Qualitative Research was conducted. This research included:
- Focus groups
- One-on-one interviews
- Executive interviews
- A strategic analysis, followed by recommendations and cultural implications
Quantitative research was conducted. This included:
- Attitude/Awareness and Usage
- Products Testing
- Concept Testing
- Profile of Radio, Television, Newspaper and Magazine Audiences
Various products and service scenarios were hypothesized and tested. These scenarios detailed all of the activities that would be required in order to build our selected market segments and launch the most appropriate products to the defined target market.
Solutions
Phase
I
Wability began by conducting market orientation study
during which we collected market intelligence data related
to the minority market in the US which we analyzed and presented
to the client. We recommended the Hispanic market as a starting
point because of its current growth and existing and future
buying potential. A market segmentation initiative was conducted
in order to build the required segments, and map the selected
financial products into those segments.
Wability worked through a series of scenarios, detailing all the activities that would be necessary to launch each segment. These exercises allowed us to validate and define specific attributes and scenarios as well as analyze each potential opportunity.
Based on substantial research, attributes were evaluated and selected. A successful monitoring trail was conducted in order to test the results of these scenarios, and better position the selected products and services. During the trial, a segmentation migration was performed in order to test the validity of the selected segments. Over the test period, segments were continuously evaluated and adjusted. Finally, we worked closely with our client's financial analysts to construct the appropriate business models.
Phase
II
The
second portion of the project consisted of a market assessment
phase, during which Hispanics of Mexican origin were analyzed
in terms of their usage of various financial products and
services. This was done through the use of existing secondary
data as well as the utility of primary qualitative and quantitative
research. The competition and distribution channels both in
the U.S. and in Mexico were also analyzed to identify the
opportunities for creating a first rate service. This information
was used to build a compelling business case. Once the business
case was approved and funding obtained, a site analysis process
was implemented to define the distribution and marketing strategy.
Results
The initiative made back its investment in two years rather than the projected five. Over the course of the last twelve months, our client has expanded their efforts to No. California, Texas, Oregon and New Mexico, and now owns over 40% market share of the funds transfer market to Mexico.