Customer Segmentation

1. Customer 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

2. Customer 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

3. Customer Segmentation • Methods Of Customer Segmentation • Quantitative • Ask Around, Mental Exercise • Qualitative • SPSS • Pivot Tables

4. Customer 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

5. Customer 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

6. Customer 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

7. Customer 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

8. Customer 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

9. Customer Segmentation Identify Segments • Female Salesmen and Newlyweds are good segments

10. Customer Segmentation Identify Segments • East is a better location

11. Customer Segmentation Identify Segments • Age is not relevant for segmentation

12. Customer Segmentation Identify Product Features • Performance and cost are the most important product features for their segments

13. Customer Segmentation Identify Product Features • Performance is most important product feature

14. Customer Segmentation Target Consumer Segments East Coast Female Salesman 10% of population Values performance Willing to spend $65 Shops at B&M Stores East Coast Female Newlywed 6% of population Values cost Willing to spend $61 Shops at B&M Stores