Cash Management Market Segmentation

Market segmentation is one of the most fundamental concepts in business. Rather than being treated as one homogeneous mass, customers are grouped by particular characteristics and then targeted with tailored marketing offerings in the hope that a more focused approach generates a more favourable response. Wind and Cardozo (1974, p. 155) summarised the nature of the market segment as: ‘A market segment is a group of present or potential customers with some common characteristic which is relevant in explaining (and predicting) their response to a supplier’s marketing stimuli’. Whilst the concept is simple, its successful implementation is not always so straightforward in many types of organisation. Industrial marketers, such as cash management banks, may argue that the concept and its related techniques are fine for mass markets, for retail banking and financial services, for the emotional and irrational domestic purchaser. For the cash management bank, segmentation may be seen as irrelevant as each customer may be seen as a distinct ‘segment’ in their own right, as Evans (1994, p. 329) states: ‘the trend in segmentation is towards closer relationships with customers — even on a personalised basis’, which he set in the context of the increased use of databases in fast moving consumer goods marketing. The cash management bank may concur with this statement in the context of their individual relationships with large and unique (in terms of many of their most important characteristics) customers.