DISCOVER YOUR CUSTOMERS THROUGH SEGMENTATION
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The customer segment is a category of customers who share similar characteristics and common needs. In other words, it is a specific group of people or companies that a company decides to focus on and target with its product or service offering. Customer segmentation is an important step in creating an effective marketing strategy. Enables the company to focus on the most valuable customers and tailor your offer to their specific needs, which can increase conversion rates and customer loyalty.
Examples of customer segments may include
- Luxury clients: those who are looking for high quality products or services and are willing to pay more for them.
- Budget customers: those who are looking for inexpensive products or services and are willing to sacrifice quality for price.
- Business customers: companies looking for products or services to meet their business needs.
- Young clients: a specific demographic group that may have different needs and preferences than other age groups.
- Urban customers: those who live in urban areas and have specific needs, such as easy access to public transport or fast delivery services.
In summary, a customer segment is a specific group of persons or companies targeted by an enterprise. Identifying and targeting these segments can help a company adapt its offer and improve its marketing strategy. Both target and customer segment refer to a group of people whom a company intends to reach with its products or services. However, there are some differences between these two concepts.
Differences between target and customer segment
The target refers to a broader group of consumers who share some demographic or behavioural characteristics. For example, a target might be young women interested in fashion and beauty. The target can be broader or more specific, but is based on general consumer characteristics. On the other hand, the customer segment is a more specific subdivision of the target. Segments are defined by a more specific set of needs, problems or desires that consumers have that the company can address with its product or service. For example, within the target of young women interested in fashion and beauty, a company may identify a segment of women looking for vegan or natural products. Segments are based on more specific needs or wants that consumers have in common.
In short, the target focuses on a general group of consumers with common demographic or behavioural characteristics, while the segment focuses on a more specific subdivision of the target that is defined by more specific needs, problems or desires. Both concepts are important for a company when defining its marketing strategy and reaching consumers effectively. An entrepreneur is interested in going much deeper than the target and getting to know his or her segment very well!!!
Why should an entrepreneur segment his customers and what are the advantages?
Customer segmentation is important for entrepreneurs because it allows them to focus their resources and efforts on those customer groups most likely to buy their product or service.
THERE ARE SEVERAL ADVANTAGES TO SEGMENTING CUSTOMERS, INCLUDING THE FOLLOWING:
- Identify the most valuable customers: By segmenting customers, entrepreneurs can identify the customer groups that are most valuable to their business. This allows them to focus on the customers that generate the most revenue and profit.
- Better understand the needs of customers: By segmenting customers, entrepreneurs can better understand the needs and preferences of each customer group. This allows them to tailor their products and services to better meet the needs of each segment.
- Improve marketing effectiveness: By segmenting customers, entrepreneurs can design more effective marketing campaigns, as they can tailor their message and offer to each segment.
- Reduce costs: By focusing on the most valuable customers and better understanding their needs, entrepreneurs can reduce costs by offering more precise and segment-appropriate products and services.
- Increase customer loyalty: By better understanding customer needs and offering products and services that meet those needs, entrepreneurs can increase customer loyalty and improve customer retention.
In short, customer segmentation is important for entrepreneurs because it allows them to better understand their customers, tailor their products and services to their needs and reduce costs, which translates into higher revenues and profits for the business.
What are the problems of "non-segmentation"?
NOT SEGMENTING CUSTOMERS CAN HAVE SEVERAL DISADVANTAGES AND PROBLEMS FOR A COMPANY:
- Lack of efficiency in communication: If customers are not segmented, the company may end up sending the same messages to all its customers, which may be inefficient and not generate the desired impact. For example, a message that may be relevant to one customer may not make sense to another.
- Waste of resources: If marketing efforts are targeted too broadly, resources may be wasted on customers who are not interested in the company's products or services. Therefore, segmentation can help identify the most profitable segments and make marketing spend more cost-effective.
- Difficulty in getting to know customers: Lack of segmentation makes it difficult to obtain detailed information about customers and their buying behaviour. Segmentation allows companies to better understand the needs and wants of each segment, which in turn helps to personalise offers and improve customer satisfaction.
- Lack of differentiation from the competition: If a company does not segment its customers, it can be difficult to stand out from the competition and offer something different and attractive. Therefore, segmentation can help to identify opportunities to differentiate and stand out in the market.
In short, a lack of segmentation can have negative consequences for a company, including inefficient communication, wasted resources, difficulty in understanding customers and lack of differentiation from competitors. Customer segmentation is an important tool that allows companies to better understand their customers and offer personalised and effective solutions to their needs and desires.
Tips for an entrepreneur to identify customer segments
HERE ARE SOME TIPS FOR AN ENTREPRENEUR TO IDENTIFY HIS OR HER CUSTOMER SEGMENTS:
- Research and analyse the market: It is important to conduct market research to understand the needs and demands of consumers and how to satisfy them. In addition, competitors and their market segmentation strategy should be researched.
- Analyse customer data: Data that can be collected from existing customers can be very valuable in identifying patterns and common characteristics. Tools such as surveys, interviews and data analysis can be used to collect and analyse this information.
- Identify the different customer groups: It is important to segment customers according to their needs and common characteristics, such as age, gender, geographic location, income, purchasing behaviour and preferences. This helps to define customer segments.
- Determine customer profiles: After segmenting customers, profiles of the different customer groups can be created. These profiles can help to better understand the needs, behaviours and preferences of different customer groups.
- Try different market segmentation strategies: Once the different customer segments have been defined, different strategies can be tested to reach each of them effectively. This can include different marketing and advertising channels, targeted promotions and personalised messages.
- Continuously analyse and adjust: Customer segmentation is not a one-off process, but must be continuously analysed and adjusted according to changes in customer needs and behaviour and in the market in general.
In summary, to identify customer segments, it is important to research the market and analyse customer data, identify different customer groups, create customer profiles, test different market segmentation strategies and continuously analyse and adjust.
Examples of customer segments in famous companies
HERE ARE SOME EXAMPLES OF CUSTOMER SEGMENTS IN FAMOUS COMPANIES:
- Apple: has several customer segments, but one of the most important is consumers looking for innovative and high quality technology products. Apple also focuses on more specific customer segments, such as graphic and creative designers, students and young people.
- Nike: focuses on customer segments that are looking for high quality sports products and attractive design. Nike's customers include athletes professionals and amateurs, as well as people looking for comfortable and fashionable clothing and footwear.
- Coca-Cola: focuses on a broad segment of customers looking for refreshing and delicious beverages. The company targets consumers of all ages, but it also focuses on more specific segments, such as the young people and sportsmen and sportswomen.
- Amazon: focuses on customer segments that seek a wide selection of products at competitive prices and fast delivery. Amazon's customers include people who buy electronic products, books, clothing and other items online.
- Airbnb: focuses on customer segments looking for affordable and authentic accommodation around the world. The company caters to travellers who want to experience local culture and life, as well as to people looking for a more affordable and authentic alternative. affordable and personal to hotels.
APPLY THIS TIP TO YOUR PROJECT
Now that you have learned all about this TIP, you should be able to answer these questions:
- Do you have the list of customer segments to which you will address your value proposition? Write down all the potential customer segments you can satisfy.
- What do each identified customer segment have in common?
- Describe your main target customer: What is the profile of your main customer segment that you are going to start with?
- If you are thinking of opening a real estate agency specialising in super-luxury properties in a high-end tourist area, which two of the segmentation criteria we propose would be the most decisive? Mark your answer with an X.
- Tell us which segmentation criteria you distinguish in this sentence:
Juan wants to open a company distributing products for sale in hairdressing salons in the Canary Islands. These products are very expensive and only a few people can afford them. The end users have problems with alopecia.
- Match the following products/services with the three segmentation criteria you consider most relevant:
- Safari in Africa.
- Art gallery.
- Industrial cleaning and maintenance.
- Indian Restaurant.
We encourage you to do the exercise of answering them!
CASE STUDY FOR AN ENTREPRENEUR TO LEARN HOW TO SEGMENT CUSTOMERS
Suppose an entrepreneur wants to launch an online clothing shop. The products he is going to sell are high quality clothes for men and women between 25 and 40 years old.
TO SEGMENT HIS OR HER CUSTOMERS, THE ENTREPRENEUR COULD FOLLOW THE FOLLOWING STEPS:
- Identify segmentation factors: In this case, the entrepreneur might consider factors such as age, gender, geographical location, lifestyle, income level and profession.
- Choose the most relevant segmentation factors: Once the segmentation factors have been identified, the entrepreneur must select those that are most important for his or her business. In this case, the most relevant factors could be age, gender, lifestyle and income level.
- Create customer segments: Using the chosen segmentation factors, the entrepreneur can create customer segments. For example, he could segment customers by gender (male and female), by age (25-30 and 31-40), by lifestyle (casual, sporty, elegant) and by income level (high and upper-middle).
- Identify the needs and wants of each segment: Once customer segments have been created, the entrepreneur must identify the specific needs and desires of each. For example, the segment of 25-30 year old women who prefer a casual lifestyle might be interested in comfortable and fashionable everyday clothing, while the segment of 31-40 year old men who prefer an elegant lifestyle might be interested in high-quality clothing.
- Tailor the offer to each segment: Finally, the entrepreneur must adapt the offer of his online shop to each customer segment. For example, he could offer a selection of casual clothing for women aged 25-30 and a selection of suits for men aged 31-40. He could also create specific marketing campaigns for each customer segment, using messages and channels that are relevant to each.
By following these steps, the entrepreneur could successfully segment his customers and offer an offer tailored to the needs and wishes of each segment, which would increase the chances of success of his online shop.
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