[MUSIC] Okay, so let's get back to the Santander Serfin example. And in the second part of the segmentation, let's try to see finally what criteria amongst many alternatives, have they use to segment their customers. Based on the surveys that they did to their own customers and the non-customers with the bank. In the end they decided for this type of segmentation, that includes age and income. What type of segmentation basis have they finally used to come up with these five segments? Correctly, you have identified that they have used a demographic segmentation, but were there different alternatives to these demographic segmentations? Certainly they were, for example, we can look at the spending on outstanding credit of each one of the segments. What sort of segmentation criteria or segmentation basis will you be using if you had instead had to come up with different customer groups, based on spending an outstanding credit portfolio? Correct, this will be a clear reflection of how customers behave with their credit cards, this will be a behavioral segmentation. As a test experiment, let's think about how many different groups of customers will you have identified instead, rather than using the demographic segmentation? As you can see here on my right, we could have come up with, more or less, three homogeneous groups among themselves. On the one hand, the basic segments, which has the low-level of spending and outstanding credit. Then, the young, the young middle, and the mature middle, which could constitute another different segment. And finally the high segment with the highest level of spending and outstanding credit portfolio. But we could have gone even further and here is a very rough description of the different five segments that they have identified. Can you come up with an alternative segmentation basis? For example, some customers are conservative and others are financially savvy. Some customers are loyal to their banks and other ones are willing to switch. Some customers pay their credit cards in full at the end of the month, versus there are other ones that actually do use and presumably need credit to make it to the end of the month. You can see that we have mixed different kinds of segmentation criteria and there is different possibilities for how to address the market. I have been discussing here somewhere between psychographic, need-based, and behavioral based alternative possibilities for segmenting customers. But the possibilities don't stop right here. Let's think about some more possibilities and alternative ways of addressing a specific segment of customers. For example, we know from the case that roughly speaking, 11% of the customers rotate or churn or switch banks every year. When you concentrate on this particular set of customers, it will be a behavioral based segmentation. But certainly you're not interested in every customer that actually switches banks. For once half the rotation is voluntary, and the other half is unvoluntary. What kind of customers out of these 11% do you wish to have? If you have suggested the voluntary rotation, that's probably the right answer. The involuntary rotation probably means that these guys were hired or have been spotted in the delinquency with higher fraud costs. And most likely if you are concerned with the profitability of your new customer base, you will not be incorporate this non-voluntary rotation customers. Alternatively as I've stated before, we can think that some customers pay their credit cards in full at the end of the month. And there is a higher proportion of the high segments and the more wealthy segments in this groups. While other customers actually do use revolving credit and these are mainly found in the basic segments, in the lower income segments of the population. But can you think if psychographic and more useful or even segment [INAUDIBLE] allow them to position the products in a much more defendable and meaningful way? Could you conceive of psychographic criteria for segmenting these Mexican customers? I certainly can, look at this for example. Credit card is associated to football clubs America for example, or Chivas from Guadalajara, the two most popular football clubs in Mexico. Would this be a good idea? Certainly the minute you start going this route, you're starting to get more into niche products. Whereas this can be a very interesting way of appealing to the people's passions, it is not clear that it will be delivered at the speed at which the bank needs to acquire the next 750,000 customers. But, nevertheless, something for you to think about. [MUSIC]
