Customer Segmentation What is Customer Segmentation? Dividing the market into meaningful subgroups What is it good for? Finding underserved consumers Targeting products or marketing to a specific user group Understanding who your consumers are

Customer Segmentation What Should I Segment By? Demographic – Age, Gender, Socioeconomic – Income, Education Product Usage – Usage level, Purchases per month Important Product Benefits – Cost, Color, Brand Geographic – City, Region

Customer Segmentation Methods Of Customer Segmentation Quantitative Ask Around, Mental Exercise Qualitative SPSS Pivot Tables

Customer Segmentation New Electric Orabrush Known: Cost will be $60 Which consumers would want an electric Orabrush? What would they expect to pay? What channels should we sell it through? What features should it have? Etc

Customer Segmentation Methods Of Customer Segmentation Quantitative – Do the mental exercise, try to drill down Pros – Cheap, Fast, Easy, Better Than Nothing Cons – Subjective, No New Data NewlywedsInsecure TeenagersSalesmen 30%50%20% PriceColorPerformance Online Brick & Mortar $15$10$40

Customer Segmentation Methods Of Customer Segmentation Qualitative – SPSS – Build and run survey, input and massage data Pros – Data Driven, Finds non intuitive answers, Robust Cons – Expensive, Time Consuming, Hard to learn

Customer Segmentation Methods Of Customer Segmentation Qualitative – Pivot Tables – Build and run survey, input and massage data Pros – Data Driven, Finds high level connections, Cheap Cons – Not very robust, Somewhat Subjective

Customer Segmentation Pivot Table Customer Segmentation Sent out a survey to heavy users asking Demographic Questions Job Age Gender Location Product Feature Questions Most important feature Preferred sales channel Expected Price

Customer Segmentation Identify Segments $ 30 $ 40 $ 50 $ 60 $ 70 Female Newlywed13516% Salesman6410% Teenager172 Male Newlywed514 Salesman27 Teenager515 Female Salesmen and Newlyweds are good segments

Customer Segmentation Identify Segments East is a better location Row Labels $ 50 $ 60 $ 70 Female Newlywed East442 West531 Salesman East14 West32

Customer Segmentation Identify Segments Age is not relevant for segmentation Row Labels $ 50 $ 60 $ 70 Female Newlywed Salesman

Customer Segmentation Identify Product Features Performance and cost are the most important product features for their segments Row LabelsColorCostPerformance Female Newlywed East253 Salesman East14

Customer Segmentation Identify Product Features Performance is most important product feature Row LabelsB & MOnline Female Newlywed East55 Salesman East5

Customer Segmentation Target Consumer Segments East Coast Female Salesman 10% of population Values performance Willing to spend $65 Shops at B&M Stores East Coast Female Newlywed 6% of population Values cost Willing to spend $61 Shops at B&M Stores