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the science and discipline of market segmentation – part 2

customer segmentation characteristics

by Kenneth Rudich

By separating customers into meaningful groups, you’ll have an opportunity to do a better job of satisfying wants and needs – and thereby enhance the overall level of fulfillment across the board.  

In Part 1, we covered the question of what qualifies as a market segment by noting the characteristics it should possess in order to be regarded as one. 

In Part 2, we’ll look at a framework for unearthing insights about a market segment.  The objective is to help a business to better understand, and relate to, the characteristics of each individual market segment.

customer definitions

Segment management can make productive use of customer definitions.  Strategy and tactics should be molded around the implications of these customer definitions.  They include:

  • customer type: organization or person
  • customer state: current, former, prospective
  • customer group: uses product, experiences service, or both

b2c market segment attributes

Segments can be further clarified on the basis of the attributes they exhibit within a customer definition.

As you peruse the list of potential characteristics provided below, keep in mind that it is not intended to be an exhaustive list.  Rather, it is meant to be a point of departure when first getting started with a market segment analysis.  As you become increasingly familiar with the customer base, you’re likely to discover other key characteristics that can make a material difference to you and/or for them.

Here is the list of potential characteristics:

  • Geographic segmentation: based on variables like location, physical boundaries, climate, population density, and population growth/decline rate.
  • Demographic Segmentation: based on variables such as age, gender, ethnicity, education, occupation, income, and family status.
  • Behavioral Segmentation: based on variables such as usage patterns or customer affinities, price sensitivity, brand loyalty, and benefits sought.

b2b market segments

  • Organization characteristics: based on variables like sector (business, government, education, community agency); also size of organization, organizational structure and composition, industry category, industry growth/decline rates.
  • Geographic: based on variables like location, or the geographic scope of the enterprise.
  • Firmagraphics: based on variables like corporate culture, corporate population composition, human resource policies, mission, and business objectives. 

a final note

The science of market segmentation goes well beyond the task of merely identifying distinctive customer groups.  It rests with being able to leverage the information to either serve them better or gain a competitive advantage. 

We saw a vivid example of this with the University of Phoenix in the video “4 Value Creating Strategies in Marketing,” and also the written post titled, “U of P a Brilliantly Executed Market Opportunity Scan – pt2.”  I recommend a visit to one or the other to see how they applied these concepts back in 1976, just prior to opening the university’s doors.             
  

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