Customer Segmentation

Training – Sample Material

Poll Question

Segmentation is a process of dividing the market

to profile the customers that we want to focus on.

Is this statement:

(a)True

(b)Partly True

(c)False
April 3, 1973
Examples
Why is Segmentation Important?
Drive Growth Enhance Profitability

Implication Example Implication Example

Focusing efforts Creating efficient
to win in target value chain to meet
markets known needs of
defined target
segment

Improve Innovation Success Improve marketing performance

Implication Example Implication Example

Creating product Setting clear
and business objectives for
model innovations marketing to
with highest maximize
effectiveness and
relevance to efficiency
target segment
How is most Segmentation Done?

• Demographics
 E.g. age, income, location, etc.
• Product Segments
 E.g. Silver, Gold, Platinum
• Purchasing approaches
 E.g. individual/joint decision,
existing relationship, etc.
• Situational Factors
 E.g. immediacy of need, specific
applications
Why Do We Segment the Way We Do?

This is the way

We have always data is reported
looked at our in our industry
market this way Seems logical

This is the way

we are organized

Our product has

a real advantage
Our sales team in segment X
has analyzed
our past deals
What is Segmentation?
• “Segmentation is finding customers in a context with a
common need.”

• You do not segment market entities like customers or

channels

• When you have only half a dozen customers, you

segment their needs in serving their customers
Segmentation and Targeting

1. Market segmentation is the process of finding the

cluster of unique customer needs.

2. Targeting is then the selection of segment(s)

to serve.

Segmentation and Targeting are two separate concepts.

What is NOT Segmentation?

• Classification of customers

• A description of customers

• Customer status - current vs. non-current

customers

• Something the marketing department does and/or

uses