Segmentation the key to Hemisphere GPS success
What do marketing and Global Positioning Systems have in common? According to Steven Koles, President and CEO of Calgary’s Hemisphere GPS, they both require precision to be successful. Koles’ recent presentation to the Calgary chapter of the Canadian Marketing Association illustrated how Hemisphere has boosted marketing results by using finely tuned market segmentation strategies.
Hemisphere’s product niche is “precision agriculture”, using satellite and other technologies to auto-steer machinery. Precision agriculture saves gas, driver fatigue, and allows for more efficient land use, but it’s not the same for every type of farmer.
“One size fits all marketing and product development wasn’t working,” said Koles. “For example we couldn’t continue to treat a Manitoba grain farmer the same as a corn farmer in Iowa.”
A few years ago that “one size fits all” approach was common, but even the size of farm (large corporate versus smaller family) had a profound influence on the user’s needs. Other influences on product and service development included location, crop, budget, and technological sophistication.
“We did a lot of customer research, from focus groups to surveys and farm visits,” stated Koles, “and we found what farmers wanted were simple, effective solutions tailored to their needs and circumstances.”
Hemisphere analyzed against need categories like guidance systems, automation, and rate control. They came to realize that different segments required different channels, sales models, support structures, and that no one dealer could handle all lines.
Through their research they also determined that large farms were getting all the attention, but the need was in some sense greater in the “sweet spot” of the small to medium farm.
“We did best in the middle of the market,” noted Koles, “which, happily, was where the greatest opportunities seemed to be.”
So Hemisphere decided to move their game to where others weren’t playing, choosing to focus on the mid-market segment, meaning those farms medium in size, capability, and budget. They relentlessly pursued a product development and refinement agenda aimed at these customers.
“We scheduled extensive farm visits that led to great product improvements and innovations,” said Koles, “and we continue to do that today.”
Customers and prospects told Hemisphere they wanted four things:
- Give me value-added capabilities at a reasonable price
- Help me to change my practices to be more efficient
- Save me time and money in running my operation
- Make it simple to use, install, and operate
The precision derived from this intense focus on the customer drove Hemisphere’s annual revenue growth to 35% and improved profitability due to less waste in “go to market” rollouts.
When asked why Hemisphere chose this segmented marketing approach, Koles replied simply “We didn’t want to be selling products ‘by engineers for engineers’.”
Mr. Koles’ presentation slides are available for download here
* * *
Doug Lacombe, MBA is a Calgary-based blogger and communicator with over 20 years experience in media, marketing, and communications. More info on Doug can be found on DougLacombe.com.
