This article has been lifted from our Digital Marketing Modern Apprenticeships support material on market segments – myma.sixthsense-training.com
Market segmentation is the process of establishing different groups of customers and potential customers with a shared characteristic. For example, customers differ in…
- What they want from a product or service
- The amount they are able to or willing to pay for it
- The quantities they buy
- The types of media that they use
- The time and place that they buy
These are just examples, there are actually countless ways of segmenting a market. But, by grouping customers with similar characteristics together, you can market to them more appropriately.
So, it makes sense to identify these characteristics. Once this information is clear, you can develop an effective marketing strategy which reaches people with product information that they actually want and is relevant to their needs.
Market segmentation is different from Customer Classification.
Customer Classification is the process of assigning a label to your customer based on how ‘good’ they are. For example, a regular customer of yours might be classed as a ‘valued’ customer and is therefor eligible for certain benefits.
Customer Classifications are generally used at the discretion of each business, however, common types of customer classifications are Valued Customer, VIP, Premium Member, Founder, Gold, New Customer etc.
It’s important to remember that these two types of groups are different and usually unrelated. For example, your own business may have many ‘good’ customers, but they are probably from a variety of market segments. Your valued customers probably live in different areas, buy different products and respond to different types of marketing. So, customers although in a different marketing segment, can have the same customer classification.
Think about your own business just now. Are there any obvious market segments which stand out? And do you split customers into classifications?
This course is theory. Once you have studied the lessons enough, complete assignments in Google Classroom for your assessor to review.
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