Monday, September 7, 2009

Analytical Leverage, Part 2: Applications

Let's explore the problem-solving value of the sorter that was introduced in the previous post (Analytical Leverage, Part 1). This may be a longer post than usual, but bear with me - it should make sense.

Here's the question: how can something simple like a "sorter" make a difference in serious thinking and problem-solving?

Market Segmentation
Rule #1, from Marketing 101, is "Find a need and fill it." Rule #2, specifically for the bottom line marketer, is "Find the kinds of people who are most likely to have that need." The idea behind this is that advertising, promotion, and other kinds of marketing efforts have a cost - even when done on the internet and the cost is mostly labor. The way to make that cost pay off is to find ways to focus efforts on the right prospects. So serious marketers end up spending lots of time attempting to identify people (or organizations) who are most likely to have particular needs, then finding ways to reach those people more effectively with a more carefully tailored message.

Some of the marketer's work may be calling out the obvious. If your company sells tools for use in gardens, you need to find the people who own (or work in) gardens. For most serious marketers, though, that's not enough; they need to learn more about their "target market." For example:
1. Who actually buys the tools, and are they the same as the people who use the tools?
2. Where and when do they look when they are shopping for tools? What characteristics of tools appeal to what kinds of shoppers?
3. What are the current alternatives to my tools (competition) and how do my tools (and my company, and my prices) compare with theirs?

So marketers ask these questions of a variety of people and gather data on their interests, likes and dislikes. They get demographic data from every respondent in order to be able to correlate responses to the types of people who provided them. At this stage, the object is not so much to find individual customers as it is to find the patterns. For example, males between 55 and 70 who live in rural areas like to buy their tools in person. (Just an example - I have no idea if that's true.)

Do you see the sorters emerging? There are several in that hypothetical result - gender, age, location of residence. Opening a store is expensive. You need to figure out how to get your best prospects to come into your store. If you can get a sense of who wants what you have to offer, you can use your advertising and marketing dollars more effectively. So, in the hypothetical example here, if you have a tool store, and the market research tells you what was suggested in the last paragraph, it might be worth offering some kind of incentive to males 55 to 70 in rural areas to get them to come into your store.

Skill with sorters - with the cognitive skill of classification analysis - underlies your ability to become a more effective marketer by enabling you to be more thorough, more precise, and perhaps more creative in market segmentation. (I'll save the "perhaps more creative" for a later post - this one is already pretty long.)

I plan to provide some examples of the use of classification and sorters in other fields. For now, you might ask yourself: In your work today, where are the problems for which your solution involves using the skill of classification analysis?

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