Think about it. Not all your customers are the same! They do not buy the same things, with the same spend or even with the same frequency. So, what should be done?
Well, the solution is to leverage the power of ‘customer segmentation’. This involves breaking down your target customers into different and homogenous sub-groups based on various shared characteristics.
After all finding out the disparate needs of different sub-groups makes it easier to come out with a product that meet the customer needs. When customers find the product pertinent to their requirement, they are influenced into buying it. Here are the four main customer segmentation models that are particularly used to divide markets to find and target the right audience.
➡️Demographic Segmentation (the who) – Dividing the market through different variables such as age, gender, income, education level, family etc. For example, H&M used age-based demographic segmentation to push their trendy apparel amongst the university students. They segmented their existing customers based on their age, grouped those falling in the student age-ranges, and offered discount, resulting in massive increase of their sales and revenue.
➡️Behavioral Segmentation (the how) – Forming groups based on their behavior, the way the population respond to, use or know of a product. For example, Olay brand through its Skin Advisor app got to know that a large number of its customer base wanted fragrance free products. Subsequently, after this information they went ahead with their manufacturing and in short time they saw a rise in their product sales.
➡️Geographical Segmentation (the where) – Identifying & grouping customers based on their physical location such as country, region etc. For example, brands that typically sell winter apparel such as Burton should market their products in areas that are cold all year-round, because they would probably fail to profit by marketing to warmer climates.
➡️Psychographic Segmentation (the why) – Forming groups according to psychological traits that influence consumption habits drawn from people’s lifestyle and preferences. For example, Porsche divided its customers based on their lifestyle choices, personality traits, and values. The company then constructed specific profiles for each list, such as ‘The top gun’ for ambitious individuals who desire power and want to be noticed. This allowed Porsche to create personalized content & to distribute relevant content to the right customers.
Understandably you cannot please all customers. But then through dividing your larger market into sub-groups you will be able to tailor your product design, marketing efforts, & sales process to the people who will actually be interested in your product, thereby positioning your business for maximum success!
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