Customer segmentation basically deals with the exercise of making groups and further sub groups of the customers depending upon their different needs. It is the making of sections of consumers based on their specific behavior and needs, so that we could easily target them. The objective behind customer segmentation strategy is to integrate the market into the sets of individuals that shows similar behavior. These sets are designed on the basis of various characteristics like gender, age group, their likings and dis-likings, the interest levels, their buying habits and many other characteristics, etc. Customer segmentation is also known as client segmentation, which is developed to make better customer relationships with them.
Companies that are marketing upon the agenda of customer segmentation market, knows that each customer is unique in itself, so they make small segments and groups of people with similar needs and try to influence them with their marketing efforts and motivate them towards buying their products. It is also based upon the fact that all customers are different in their buying pattern and attitude and you can’t fit one marketing approach to target the entire market. Segmenting the market plays vital role in your marketing approach. It helps you to make more thoughtful understanding towards your customer’s need.
With the help of segmentation you can show better care to your customers. With applying segmentation strategy you become keener towards you customer and will be able to provide them what you promise them to deliver. The outcomes of customer segmentation are also big. You can bring more customer loyalty by focusing on them and by surpassing their expectations. As you satisfy the customers by making small segments you increase the word of mouth value and will bring new clients towards you.
How to make Customer Segmentation Strategy
There are three mainstreams with the help of which you can understand how to segment your customers and build a strong customer segmentation strategy for them.
- Be empathetic
The first point towards making the customer segments is to consider yourself as a customer, be an image of themselves so that you can consider how to satisfy them and make their segments. Observe what different attitudes and behaviors as a customer you experience and as a result segment upon that imaginative attitude. So to beat customer’s expectation you have to understand customer satisfactory level and make segmentation upon that basis.
- Upon your database Segmentation
Your customer relationship management system retains the data about your clients. Therefore by examining and investigating that data you can make further segments of your customers and can satisfy them. By viewing customer behavioral pattern and with the help of data you have, you can make segments and can satisfy their needs. Thus it also approved that customer segmentation strategy is more cultured than simple targeting.
- By conducting surveys
You can gain insight about how to make segments of your market by conducting surveys and knowing about their buying needs. This will help you to know hidden purchasing patterns of the customers, so by consulting your customers and asking about their buying and behavioral pattern can make segmentation.
After the identification of your target market and dividing that target market into different groups and further sub groups, it’s time to make your customer segmentation strategy. It is the marketing strategy of approaching the customers based upon their different attributes and characteristics. After dividing the market into different sets and subgroups it would be easy to communicate the definite particular message to each. At this point, you have to be structured while adopting the marketing mix for your particular segment. As some segments will like to be approached through direct marketing like mail and some other possible ways, so you may prefer the advertising method based upon the living pattern of the targeted market. Based upon the distinct needs of the customers the philosophy of customer segmentation strategy can be made upon different strategies and variables like:
The demographic factor has further different layers like
- Age group
- Socio economic elements
- Income level
- Customer occupation
- Family structure like either you undergo traditional customs and norms or you are a single parent, or is divorced
- The size of the family
- Your religion
- Ethnic group with which you belong such as nationality
- Customer’s native language
- Culture that the customer undergo
These are the demographic features with applying which you can reach your target market effectively. By applying them you can better fulfill the needs and wants of your customer and can better approach them and can built customer reliability and loyalty.
While launching a product, when the company don’t use specific message for communicating to target market regardless it uses the general approach, the product may fail in some parts of the country because of the change in culture.
Another example is while marketing your product to children and to families having young kids; company should specifically focus on demographic marketing strategy. Company should focus the ways and publications that seem catchy to these families like magazines, distributing pamphlets at shopping malls where families along with children come for shopping. Along with pamphlets, also distribute some ice cream or cartoon mask to the families passing by to make it an attractive appeal.
Size of the family is of crucial importance while applying demographic strategy for segmenting the market as you can give offerings like jumbo pack of your product and some other services like this.
The significant differentiators upon which can make geographical segmentation are
- The place/country where the customer lives and works
- Climate of the country
- Size of the town
- Rural and urban part
- The area to which you are focusing or segmenting like hilly area, countryside or some coastal area.
It includes the division of the market upon the basis of the location and can be segmented with respect to the neighborhood. The geographical segmentation strategy helps you to know about the need of specific location and defines the type of the product require in specific area.
The mobile network companies that focus on coverage of the vast network in rural areas will reach its target market more effectively by placing its billboards and making wall chalking in the countryside. Their efforts will be fruitful if they communicate in the right way to the specific group.
Psychographic approach in segmentation is also known as AIOs approach because it is based upon the factors like attitude, opinion and interest. It is the division of customers market into sub groups like;
- Personality type
- Attitude (AIOs discussed above)
- Behavioral aspects
- Social standing
It also depends upon the social bindings and the marketing efforts that affect the psychology and opinion of the customers. This type of segmentation also represents the personality type in which social connections, personal affiliations, skills and habitual way of a person matters. Psychographic segmentation splits the market upon the fact that how an individual who undergo certain attitude and social standing, react to the thought and obtaining of a certain product.
Those with having dare personality trait and life style adapted towards the sports, you can introduce some energy drink or beverage focusing such characteristics regardless of some general one which are more show conservative traits. With the help of this strategy you can retain your customer by marketing your product by showing these characteristics. For example the strategy adopted by the Mountain dew whose slogan is “Do the dew” and represents such personality traits in their advertisements.
This type of segmentation strategy is based upon the customer’s desires, their needs and how they act and react to those needs. It depends upon the
- Buying behavior of customer
- Their spending patterns
- The desired benefits that they obtain by usage
- and how they act in response to the benefits gain by consumption
The drawing pattern of this segmentation strategy is the behavior of the customer. If you are dealing with the consumers having different needs, then their behavior towards the product and reaction will also differ based upon the marketing technique you use. Division of the behavioral segmentation is based upon the manner with which the customer uses the product or the intensity of customers use. It also negotiates the behavior like either are customers are modest in their buying attitude and have limited budget. For example with the help of data gathered for behavioral segmentation, helps the company to increases its product lines and company can approach more loyal customers.
You can turn your potential customers into the actual ones by proper targeting and segmenting them. Segmentation will help to retain your customers and increase profitability and hence by segmenting the market you deliver your message to the more specific groups. It is indeed the need of the time to target your message more specifically to the targeted customer instead of giving a broader approach of same message to the entire market. It will allow you to retain your customer satisfaction and can delight them more appropriately by focusing on them precisely.