Creating Customer Value:

Customer Satisfaction

Market Segmentation

Developing Insights Into Customer Needs and Optimizing Your Resources

By: Vadim Kotelnikov

Founder, Ten3 Business e-Coach Inspiration and Innovation Unlimited!

 

Two Purposes of Segmentation

  1. Optimizing resources: segmentation as a strategy you use to concentrate, and thus optimize your resources within a overall market.

  2. Understanding customer needs: segmentation as the group of techniques you use as a vendor to segment your target market to develop insights into customer needs.

Winning Customers (PowerPoint download)

Market Research

Defining Market Segment & Customer Profile

  • Demographic (education, occupation, income level, age, gender, etc.)

  • Geographic location

  • Business markets (type, size, location, turnover, etc.)

  • Consumer behavior characteristics

Market Segmentation by Consumer Behavior1

  1. Consumer Characteristics: who buys

    • Geographic (e.g., region urban or rural)

    • Demographic (e.g., age, gender, and marital status)

    • Socioeconomic (e.g. income, social class, and occupation)

    • Cultural (e.g., lifestyles and culture)

  2. Consumer responses: what is bought

    • Benefits

    • Occasions (when used)

    • Attitudes (e.g., customer loyalty)

    • Usage frequency (heavy or light)

 

 

Why Market Segmentation?

Divide and conquer!

Successful marketers qualify their current and prospective customers. By doing so, they can better target their value propositions to different customer groups, which results in higher sales.

Yin-Yang of Customer Value Creation

Selling Is Problem Solving

 Success Story  Michael Dell

Discovering the Power of Segmentation at the Age of 16

 

Michael Dell, the Founder of Dell Computer Corporation, discovered the power of market segmentation when he was 16. Michael got a summer ob selling newspaper subscriptions to The Houston Post. "At that time the newspaper gave its salespeople a of new phone numbers issued by the telephone company and told us to cold call them. It struck me as a pretty random way of approaching new business", says Michael Dell.3

Michael soon noticed a pattern, however, based on the feedback he was getting from potential customers during these conversations. There were two kinds of people who almost always bought subscriptions to The Houston Post: people who had just moved into new houses or apartments and people who had just married. having discovered this trend, Michael wondered how he could find all the people who were getting mortgages or getting married. He hired two of his high school buddies to identify sources of such information. Michael created a personalized letter for high-potential customers offering them a subscription to the newspaper. Within a matter of weeks, Michael created a steady income stream. The subscriptions came in by thousands. His income was about $18,000 that year. Actually, he made more money that year than his economics teacher did.

Creating Sustainable, Profitable Growth

Creating Customer Value: 9 Questions

Surprise To Win: 3 Strategies

Innovative segmentation and resegmentation of your target market is the starting point of your sustainable profitable growth. Any market is the sum of many segments. Each segment fulfills a need, and these needs are constantly changing.

There are many ways to segment a market. You can resegment a market by consumer age, culture, motivation and buying behavior, customer value sets, value proposition, technology, price points, distribution channels, line extensions, and the like. You can also define a new segment, i.e. define a customer need that nobody else has thought of or addressed before. Besides, segmentations is not once and for all, it's a dynamic, ongoing exercise and state of mind.

When you break your market down into segments, you've got a powerful methodology for developing insights into customer needs and generating growth ideas. Think expansively, observe people, learn everything you can about customers' needs, including those that the customers haven't yet identified. Think outside-the-box to generate market stretching concepts that will change the name of the game.

 

 Discover much more in the

FULL VERSION of e-Coach

Types of MarketSegmentation...

 Case in Point  Ford Motor Company...

 Case in Point  Black & Decker (B&D)...

 Case in Point  Dell Inc...

 Case in Point  Nike...

 

 

 

 

 

References:

  1. Marketing Management, Czinkota Kotabe

  2. Every Business is a Growth Business, Ram Charan and Noel. M. Tichy

  3. Direct from Dell, Michael Dell with Catherine Fredman

  4. Winning Customers, Vadim Kotelnikov

Marketing Strategy

Knowing Your Customer

Selling Is Problem Solving

Differentiation Strategy

Differentiating With Different Types of People

Cultural Intelligence

Emotional Marketing