ClustersYour best chance of success

Precise targeting is the difference between investing money wisely…

...and simply spending it

WHO?

HOW?

What’s wrong with demographics?

£100k £100k £100k £100k

£100k £100k £100k £100k£100k

LOVES COOKING SHOWS

LOVES COOKING SHOWS

LOVES COOKING SHOWSNEVER WATCHES WATCHES

OCCASIONALLYWATCHES

OCCASIONALLY

WATCHES OCCASIONALLY

Example: cooking channel targeting women 18-39

£100k

NEVER WATCHES

LOVES COOKING SHOWSNEVER WATCHES NEVER WATCHESNEVER WATCHESLOVES COOKING

SHOWS

Demographics do not differentiate audiences…

41% 40% 37% 35%

22% 22% 24% 22%

27% 27% 27% 32%

10% 12% 12% 11%

Girls 10-15Boys 10-15Girls 4-9Boys 4-9

Men 18 - 35

Women 35 - 59

Men 35 - 59Women 18 - 35

Brand 1 Brand 2 Competitor #2

Competitor #1

Using demographics, all brands have the same audience profile

…..but segmentation does

41% 40% 37% 35%

22% 22% 24% 22%

27% 27% 27% 32%

10% 12% 12% 11%

Girls 10-15Boys 10-15Girls 4-9Boys 4-9

Using demographics, all brands have the same audience profile

33% 35%

12%

12%

25%

29%19%

39% 21%

13%17%

14%26%

31%15%

Aspiring teensSortedDad's LadsBuzzersSunny DsUmbilical

Segmentation tells a very different story… clearly-differentiated audiences + a targeted strategy to grow at competitors’ expense

Men 18 - 35

Women 35 - 59

Men 35 - 59Women 18 - 35

Brand 1 Brand 2 Competitor #2

Competitor #1

Adult Adventurers

Midnight Callers

The Lads

Worried PlannersWeekend Grandma

Segments as living peopleProfiled in detail: core beliefs and attitudes, lifestyle, media usage

Who to target based on evidence and data

Size

Tota

l TV

view

ing

Fact

ual T

V

His

tory

Nat

ure

Crim

e

Geo

grap

hy

Ani

mal

Pla

net

Nat

Geo

Dis

cove

ry

12%

31% 28% 35% 30%22% 25% 30% 27%

38%14%

22%

10%

14%

25% 38% 29%9%

35%6%

22%30%

24%28%

26%

17%17%

10%

19% 31% 14%

11%

21%Seg H

Seg G

Seg F

Seg E

Seg D

Seg C

Seg B

Seg A

Tota

l mov

ie s

pend

We told them who to target based on hard data…..

Fam

ily m

ovie

s

Ani

mat

ion

Act

ion

Com

edy

Dra

ma

Pira

tes

of th

e C

arib

bean

Ice

Age

Shre

k

Too blunt to target usefully as will be full of fans of the wrong type of movie.

Launching a family comedy drama movie

Size

Tota

l TV

view

ing

Fact

ual T

V

His

tory

Nat

ure

Crim

e

Geo

grap

hy

Ani

mal

Pla

net

Nat

Geo

Dis

cove

ry

12%

31% 28% 35% 30%22% 25% 30% 27%

38%14%

22%

10%

14%

25% 38% 29%9%

35%6%

22%30%

24%28%

26%

17%17%

10%

19% 31% 14%

11%

21%Seg H

Seg G

Seg F

Seg E

Seg D

Seg C

Seg B

Seg A

Tota

l mov

ie s

pend

We told them who to target based on hard data…..

Fam

ily m

ovie

s

Ani

mat

ion

Act

ion

Com

edy

Dra

ma

Pira

tes

of th

e C

arib

bean

Ice

Age

Shre

k

Launching a family comedy drama movie

Starts to be useful.

New important family segments emerge: segments C and E

Size

Tota

l TV

view

ing

Fact

ual T

V

His

tory

Nat

ure

Crim

e

Geo

grap

hy

Ani

mal

Pla

net

Nat

Geo

Dis

cove

ry

12%

31% 28% 35% 30%22% 25% 30% 27%

38%14%

22%

10%

14%

25% 38% 29%9%

35%6%

22%30%

24%28%

26%

17%17%

10%

19% 31% 14%

11%

21%Seg H

Seg G

Seg F

Seg E

Seg D

Seg C

Seg B

Seg A

Tota

l mov

ie s

pend

We told them who to target based on hard data…..

Fam

ily m

ovie

s

Ani

mat

ion

Act

ion

Com

edy

Dra

ma

Pira

tes

of th

e C

arib

bean

Ice

Age

Shre

k

Launching a family comedy drama movie

Becomes really useful as it gets more focussed and

granular.

Address key segments’ category triggers and barriers

Give key segments what they want. Stop giving them what they don’t want.

Triggers for considering DramaEntertaining stories 73%

Compelling characters 68%

Romance 35%

Action-packed plot 26%

Special effects 23%

Barriers to considering DramaToo much male testosterone 82%

Complex plots 67%

I don’t like sequels 31%

Too sentimental or soppy 23%

Acting not good enough 9%

Rational and emotionalSegment C

Address key segments’ brand triggers and barriers

Give key segments what they want. Stop giving them what they don’t want.

Triggers for considering Disney The animation tradition 85%

Great story-telling 63%

I love everything Disney 43%

Happy endings 34%

Long-running stories 27%

Barriers to considering Disney Too safe and predictable 77%

Too formulaic 38%

Not as good as they were 18%

Too many sequels 15%

Don’t use the best actors 5%

Rational and emotionalSegment C

Effective precision targeting

Message: Drama & Relationship Media: Magazines

Message: ActionMedia: Cinemas

Message: AdventureMedia: Outdoor

Faster start, higher long term potential

Time

Expertise and existing infoResults

Faster start, higher long term potential

Time

Informed by segmentation Results

Faster start, higher long term potential

Time

Segmentation fully integrated into learning systems and business processes Results

About Clusters

Introduction to Clusters

Our focus is to use analytical rigour and actionable outcomes to replace assumption (eg demographics) with evidence

Segmentation specialists since 2006

Blend of client and agency experience

Proprietary algorithms and software deliver more accurate segmentations

Projects in multiple categories and in >30 countries

Building on core segmentation and tracking insights

We apply proprietary algorithmic solutions to a range of business improvement opportunities:

CRM optimisation: attribute segments, prospecting and customer journey management

Packaging & pricing: tailor product or service design to segments; optimise competitive pricing and tactics

Proposition testing and digital campaign design: align brand offer to its highest value audience, and know what to say to or provide for them

Network optimisation: redesign digital channels and bricks & mortar networks to drive share and margin in a competitive “gravity” environment

Case study

Financial services (savings focus)

Case study: new savings brand

Challenge

Launch a new regional brand in a crowded, inert savings market

Approach

Replace product-centred approach with customer targeting

Data relevance to deliver commercially-driven segments leading to real business actionsData relevance

Current behaviours

Data relevance to deliver commercially-driven segments leading to real business actionsData relevance

Current behaviours Motivations & barriers (category and brand)

Data relevance to deliver commercially-driven segments leading to real business actions

Proposition

Data relevance

Current behaviours Motivations & barriers (category and brand)

The 8 financial services market segments

Buy a lot of different financial products1

Don’t save yet2Use specific

financial products5

Already saving regularly Segment 1 are the core target for established savings brands

All 1 2 3 4 5 6 7 80%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Life insurance Premium bonds Shares Personal pension ISA

Very low churn intention

Intend to start saving regularly Segment 7 have the highest purchase intent for every product

Life insurance Premium bonds Shares Personal pension ISA0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1 2 3 4 5 6 7 8

The status quo

3

4

5

1Other segments receive messages targeted at segment 1

but segment 7 is largely ignored.

No one has built a brand around segment 7

This is the opportunity: build a differentiating, disruptive launch strategy around segment 7.

No one has built a brand around segment 7

This is the opportunity: build a differentiating, disruptive launch strategy around segment 7.

Building a brand around segment 7 forces us to be different and stand out. Being like everyone else will not work: solid, long-established competitors; minimal churn.

No one has built a brand around segment 7

This is the opportunity: build a differentiating, disruptive launch strategy around segment 7.

Building a brand around segment 7 forces us to be different and stand out. Being like everyone else will not work: solid, long-established competitors; minimal churn.

If we do this well, other segments will take note, especially financially savvy segment 1 who are most likely to spot something new and different.

No one has built a brand around segment 7

Launch a disruptive brand targeting segment 71. Get noticed and heard2. Appeal to their intention triggers3. Overcome their saving barriers

Designers

Target market for the brand

The middle class

Their overall business

Segment 7: Intenders

Aspirational and looking ahead towards their future

“I’ll need to start saving sometime soon, but I don’t know much about it”

7

Life insurance

Important segment for:

ISAPersonal pension

SharesPremium bonds

I AM…Financially cautious

Health consciousCareer oriented

POPULATION

AGE

KEY LIFE EVENTS IN THE PAST/NEXT YEAR

HH INCOME

GENDER

27,979K

28%(49.5m)

Skewed 25-40

48% 52%

Job change

Purchasing a house / flat

Moving in with partner

Moving out of parent’s home

HH WITH KIDS WORKING STATUS

LIVING IN

Urban

Suburban

Semi-rural

Rural

Full TimePart TimeRetiredNot workingKids 0-15

Kids 0-6

Kids 7-17

MARTIAL STATUS

Married/living together

In relationship

Single/divorced

7

Savings products purchase

They would save with...Motivations To secure my family’s future

Barriers I don’t have family yet

Reason to choose They have a user-friendly website

Buy through Bank, Internet

Life Insurance

Premium Bonds

Shares

Personal Pension

ISA

Accounts they have Intend to buy

7

Motivations & barriers

Easy to buy from my bank Hassle to swap accounts

To feel proud that I’m actively taking care of my family It’s another expense

Chance of a big win No guaranteed return

More exciting than other savings products Difficult to get good information

I don’t get enough through work To much of a long-term commitment

MOTIVATIONS TO BUY BARRIERS FOR NOT BUYING

7

Premium Bonds

Lifeinsurance

PersonalPension

ISA

Shares

Media Use day per week State of mind

Social media 4.8

Internet 5.8

Music 4.6

Podcasts 1.0

Radio 2.7

Video games 2.2

TV 5.2

Magazines 1.6

Newspapers (print) 3.1

Newspapers (online) 4.1

Media Usage (Top brands)

Media usage

The Times (32%)The Guardian (26%)

The Sun (17%)

The Guardian (46%)Daily Mail (36%)The Times (18%)

BBC (88%)Facebook (81%)

Yahoo (70%)

National news (56%)Technology (54%)Local news (53%)

Spectator (24%)Private Eye (18%)Marketing (17%)

Listening to musicChatting to friends

Movie reviews

Films (78%)News (69%)

Sitcoms (56%)

NetworkingChatting

Reading other peoples’ updates

Searching DiscoveryLearning Time-wasting

Websites

Use social media for

Simultaneous activities

Newspapers (online)Newspapers (print)

Print sections Magazines (print)

TV genres

7

Attitudes toward life

I AGREE WITH I DISAGREE WITH“I always need to understand how things work” “Money is the best measure of success”“It is important to be well informed about things” “I don’t want responsibility. I’d rather be told what to

do”“I love travelling abroad” “Family traditions are very important”“I consider myself fashionable” “I would like to know more about how to eat healthily”“It is important to be well insured for everything” “I am very good at managing money”“I want to provide a good lifestyle for my family” “I am interested in fine dining & wines”“It’s worth paying extra for quality goods” “I like giving advice”“Watching TV is my favourite pastime”“I am interested in fine dining & wines”“Once I find a brand I like I tend to stick to it”“I always look out for special offers”

7

Building a great business

The task

1. People need to know you exist

2. People need to put you on their consideration list

3. People need to ask you for quotes and accept them

Aware

Consider

Quote

Purchase

Customer decision funnel

Segment targeting works

Highly successful market entry strategy: awareness, consideration and brand KPIs.

Success has been driven by segments 1 and 7.

The strategy is working: appeal to 1 by building the brand around 7.

Ambitious commercial targets exceeded and multi-country roll out accelerated.

Segment targeting creates a powerful brand

Within 15 months, the #1 savings brand for ‘standing out from the crowd’, ‘ a better new savings brand’ and ‘innovative online service’.

Again, driven by segments 7 and especially 1.1

50%

25%

AwarenessThere is a pattern of increasing and sustainable responsiveness to marketing

Consideration: a tough nut to crack

2average number of savings

brands considered

Consideration is progressing impressively

Of all savings brands, we rank #7 in awareness and #2 for consideration.

Of everyone aware, 32% would consider. Only one competitor has a higher conversion rate.

Segment 1 is driving consideration, and subsequent conversion to customer.

The reasons for considering are consistent with the strategy focused on segment 7

New style of savings

Memorable advertising

Clear, informative website

Barriers to considering are consistent with the 7-focused strategy

My agent didn’t recommended to me

Not enough product choice

Not a bank

The top reasons to recommend

1. GOOD CUSTOMER SERVICE

2. CLEAR BROCHURE

3. HELPFUL CALL CENTRE

4. USEFUL INFORMATION ON WEBSITE

Outcome

Top 5 brand within 18 months of launchBased on initial success, brand rolled out into 4 new markets with 2 per year planned 2017-18

Outcome

Clusters Limited, 30 Park Street, London, SE1 9EQ, UK. Registered in England and Wales. No. 5716244.Copyright Clusters Limited.