Abstract
This report from Mercator Advisory Group' s Corporate Banking Practice talks
about the importance of industry segmentation, especially for finding unique
high value market niches.
Today' s economy and competitive environment requires bank marketers to define
their target markets and to tailor product services, and messages to meet the
specific needs of those targeted customers. Large national banks use industry
segmentation to parse American businesses into their industry categories and
then monitor economic trends affecting those specific cohorts. Market
segmentation drills down to specifically focus on identifying, within those
business verticals, B2B buyer needs, purchasing preferences and marketing
leverages industry segmentation, market segment information and insights into
the significant variables that define the broader competitive landscape.
Major fortune 500 corporations use industry segmentation to measure market
penetration and make strategic adjustments. Banks need to take time to examine
businesses in their footprint and evaluate their customer penetration.
Industry segmentation takes time and money and many large corporations have
fulltime resources committed to this important function. This report provides
simple proven concepts used by corporate leaders that can easily transfer to
bankers and produce insightful results.
The process begins by organizing a banks existing customer database by NAICS
(North American Industry Classification) codes. The benefit of doing this
first step is the U.S. government agencies over the last five years have
converted their SIC (Standard Industry Classification) codes to the newer more
detail NAICS codes. Most banks are in the process of converting from SIC to
NAICS codes. Using these new codes banks can link customer information with
U.S. Census data or look at the U.S. Bureau of Labor data to create an
industry composite. For example banks can determine what percent of a specific
industry is represented by their customer base.
To help banks broaden their industry perspective and align with their market
strategies this report identifies what other interesting things banks are
offering in industry niche markets and how well they are doing. Some banks
have successfully tailored industry specific programs to meet the needs of
their customers. Banks like Wells Fargo contribute some of their success to an
industry focused business strategy. Industry segmentation helps attract and
retain customers, boosts profits and strengthens customer relationships.
Understanding a market and developing a niche strategy can be very profitable.
Banks need to better understand industry specific trends and needs to capture
more market share. Customers are attracted to solutions that meet their needs
and there are many choices to select from.
Sarsha Adrian, Senior Research Analyst in Mercator Advisory Group' s Corporate
Banking practice and author of this report, comments, "This is the first of
a series of reports that will put corporate banking and small business banking
perspective. Corporate banking is changing. Corporate banking product managers
need to recognize the huge potential selling through existing relationships.
Bank corporate relationship can be extended to reach new business markets and
banks can play a strategic role in their business customers' future."
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