customer segmentation what is customer segmentation? dividing the market into meaningful subgroups...
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Customer SegmentationCustomer 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 SegmentationCustomer 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 SegmentationCustomer Segmentation
Methods Of Customer Segmentation•Quantitative• Ask Around, Mental Exercise
•Qualitative• SPSS• Pivot Tables
Customer SegmentationCustomer 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 SegmentationCustomer 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
Newlyweds Insecure Teenagers Salesmen
30% 50% 20%
Price Color Performance
Online Online Brick & Mortar
$15 $10 $40
Customer SegmentationCustomer 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 SegmentationCustomer 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 SegmentationCustomer 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 SegmentationCustomer Segmentation
Identify Segments
$ 30 $ 40 $ 50 $ 60 $ 70
Female
Newlywed 13 5 1 6%
Salesman 6 4 10%
Teenager 17 2
Male
Newlywed 5 14
Salesman 2 7
Teenager 5 15
• Female Salesmen and Newlyweds are good segments
Customer SegmentationCustomer Segmentation
Identify Segments
• East is a better location
Row Labels $ 50 $ 60 $ 70
Female
Newlywed
East 4 4 2
West 5 3 1
Salesman
East 1 4
West 3 2
Customer SegmentationCustomer Segmentation
Identify Segments
• Age is not relevant for segmentation
Row Labels $ 50 $ 60 $ 70 FemaleNewlywed20 4 130 4 140 1 2 150 4 1
Salesman20 330 1 140 2 150 1 1
Customer SegmentationCustomer Segmentation
Identify Product Features
• Performance and cost are the most important product features for their segments
Row Labels Color Cost Performance
Female
Newlywed
East 2 5 3
Salesman
East 1 4
Customer SegmentationCustomer Segmentation
Identify Product Features
• Performance is most important product feature
Row Labels B & M Online
Female
Newlywed
East 5 5
Salesman
East 5
Customer SegmentationCustomer Segmentation
Target Consumer Segments
East Coast Female Salesman10% of populationValues performanceWilling to spend $65Shops at B&M Stores
East Coast Female Newlywed6% of populationValues costWilling to spend $61Shops at B&M Stores