Who am I creating value for and who are my most important customers? Read our resource guide to customer segmentation.
Do you serve the mass market or a niche market? A good example of the difference is Nescafe coffee versus organic, locally roasted, fair trade whole coffee beans. Or perhaps your market is segmented, so that you serve different customers the same core product but in different ways.
Working with the same analogy, a coffee brand using customer segmentation would package coffee beans in small bags for the individual consumer for use at home, then package those same coffee beans in big bags for the restaurant who wants to buy in bulk.
The big lesson to be learned here is simple: once you know which different customer segments you are serving, you can design a service that fits them perfectly.
Key: paid for service registration required official
Get to grips with the fundamental purpose and ethos by reading the benefits of market segmentation from the British Library
WHEN: You have a product or service that does or could serve different types of customers, which you have analysed using the resources in Customer Research.
WHY: One-size-fits-all is never true. Even with the same product, you might need to approach, sell to, and service your market in different ways for the whole customer base to say yes.
WHAT: An article which teaches you how to segment your market in terms of its geographic, demographic, behavioural and psychographic characteristics.
Harvard Business Review
WHEN: You need to assess how your your product/service aligns with the market need.
WHY: Products and services deliver elements of value that address different needs: functional, emotional, life changing and social impact. Knowing what needs you address helps you hone your business strategy.
WHAT: A framework for understanding how you create value for customers at any stage of your product development and sales journey. It’s a bit like an extension to Maslow’s hierarchy of needs. The article is interesting (a long read), but the insight comes in the pyramid picture at the top, which is quick to interpret. Be sure to check out the second infographic in the article, with the subtitle “Which elements are most important?” which shows elements against types of business.
Customer segmentation in e-commerce
WHEN: You have an active e-commerce store with regular transactions.
WHY: If you categorise your customers into smaller groups of people that have something in common, it makes thinking of offers and calls to action easier and more effective.
WHAT: Detailed article outlining the 13 basic customer segments online stores often have, with suggestions about how to reach out to each one with relevant offers.
WHEN: You have developed a customer segmentation and want to know how this can be used to develop your pricing strategy.
WHY: Different customer segments have a different willingness to pay. If you can identify this and set prices accordingly, you can generate much higher profits.
WHAT: This article will teach you how to price products and services for different customer segments. It is particularly useful for subscription-based business models.
Segmentation, targeting and positioning
WHEN: You need to choose which segment to target and how to position yourself.
WHY: Targeting and winning over high potential customer segments will focus your resources and generate the biggest bang for your buck.
WHAT: An article with infographics detailing segmentation, targeting and positioning (STP); a familiar strategic approach in Modern Marketing. It is one of the most commonly applied marketing models in practice.