Customer Segmentation Not all customers are the same. So stop taking a one-size-fits-all approach to your marketing and start segmenting your customers into smaller groups

introduction Customer segmentation is the practice of dividing a company’s customers into groups relevant to a particular business. The goal of segmenting customers is to decide how to relate to customers in each segment in order to maximize the value of each customer to the business.

Segmentation is simply a way of arranging your customers into smaller groups according to type. These distinct sub-groups or segments should be characterised by particular attributes. Now you can target specific, relevant marketing messages at each group.arranging your customers into smaller groups Segmentation does not have to be complex. For a small company, it could be about recognising that you have two or three distinct customer types with different needs.

Segmentation principles can then add several layers of intelligence, based on key differentials, such as: spending patterns gender where they live age socio-economic group.

Characteristics age gender geographic location income spending patterns cultural background demographics marital status education language mobility

Market Segmentation 4 commonly used bases for Segmentation Descriptive geographic location demographic Behavioural psychographic benefits

Market Segmentation geographic location - based upon where people live (historically a popular way of dividing markets) demographic - based upon age, gender and income level (very often used)

Geographic Segmentation The reason why we study geographic segmentation is because WHERE people live has a big effect on their consumption patterns. Additionally, WHERE people live in a city is also a reflection of their income level and we can make certain assumptions about their ABILITY TO SPEND. This helps people plan store locations and the location of other services.

Demographic Segmentation Demographic Segmentation is the most common approach to Market Segmentation Variables are: age gender (male/female) income occupation education household (family - style) size

Market Segmentation Psychographic / lifestyles - based on people’s opinions, interests, lifestyles eg, people who like hard rock music probably prefer beer to wine benefits - based on the different expectation that customers have about what a product/service can do for them eg. People who want to but “lite” food cause it will help them lose weight

Demographic Segmentation is the most common approach to Market Segmentation Variables are: gender (male/female) gender is an obvious way to divide the market into segments since so many products are gender-specific clothing medical products sports products/services entertainment

Demographic Segmentation is the most common approach to Market Segmentation Variables are: age age is another obvious way to divide the market into segments since so many products are based upon “time of life” diapers for babies toys for children entertainment for “over 18”

Demographic Segmentation is the most common approach to Market Segmentation Variables are: household (family - style) size Segmenting by the “stages in the family life cycle” There are different buying characteristics of people in each stage of the family

household (family - style) size BUYING PATTERNS 0-5young children 6-19 school children 20-34young adults 35-49younger middle-aged 50-64older middle-aged 65+seniors 80+ SUPER seniors

income Segmenting markets on the basis of income and expenditure patterns. Income is possibly the most common basis for segmentation Upper High Class High Class Uper Middle Class Middle Class Lower Middle Class Toyota Lexus for high end Camry for the middle of the roaders Corolla for low end HUL soaps - Dove for high end, Hamam

Psychographic Segmentation “ The use of psychological attributes, lifestyles and attitudes in determining the behavioral profiles of different customers”

Marketing Tools for Segmentation html

Sources strategy/your-target-market/the-art-of-customer-segmentation

Cluster Analysis Cluster analysis helps marketers look at the information they gather about consumers to identify segments to which they can market. To use cluster analysis, you must know the characteristics and demographics of your target market. You then enter variables into a cluster analysis software program. For example, if service is very important to your customers, enter that variable into the software along with other demographic information to see what segments of your market feel service is also important. The results show segments that are potentially a ripe market for your products and services.

Segmentation Trees If you do not have a database of information available from which to find segments for your marketing efforts, a segmentation tree comes in handy. Similar to a family tree, a segmentation tree starts with the name of your product or service at the top of the tree. Then you start breaking down your potential market into branches. For instance, if you sell bottled water, you would list that at the top of the tree. Next, break down the market into branches of the different people who drink bottled water, such as athletes, office workers and adults buying groceries. Next, you further break down the market into how often they buy bottled water, and then break down the groups even further to show what’s important to them, such as taste, purity or cost. The end result is a list of segments you can evaluate for potential marketing opportunities.

ZIP Code Research Obtaining demographic information by reviewing ZIP codes works if you want to get a general feel about the households or businesses in certain areas. Several companies offer free online ZIP code look-up programs that provide a range of information for any ZIP code you enter, such as the total population living in that ZIP code as well as the median age and income. Other information provided includes the number of households broken down by income and the population by race and ethnicity as well as who makes up the households living in the area, such as married couples with and without children

Lifestyle Segmentation Understanding your consumer’s lifestyle is the premise behind lifestyle segmentation tools. The tools provide you with information on your prospect’s shopping, technology and financial preferences based on information from millions of households. You also learn about the online and traditional types of media potential customers pay attention to