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Trending on MyMA… Market Segmentation

Market Segmentation

When we talk about you or your organisation’s market, we’re talking about all customers and potential customers. This means that any time you’re doing or saying anything which could possibly promote your business, this is classed as marketing. It makes sense then that all types of marketing endeavors should be well planned and understood so that they are as effective as possible.

A Market Segment is a group of customers with shared characteristics. Market segmentation is the process of establishing different groups of customers and potential customers with a shared characteristic. For example, a sports retailer might segment their customers into different groups with a shared interest in specific sports like football, golf, tennis etc.

 

Other shared characteristics which are different from a business’ other customers are…

  • 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
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Market Segmentation

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 therefore 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.

Identifying Characteristics, Motivations, and Behaviours of Potential Target Customers

There are many different ways of getting this information. Some companies ask for feedback after doing business with their customers. This allows the company to find out what made them buy from them at that point in time.

Another way of finding out what characteristics your potential customers may have in common is to hold a focus group. This is when a group of consumers are gathered together and then given the opportunity to share their opinions on a product or service. The information is then taken back to the company and analysed.

However, the most common way of gaining this information is to simply ask your customers for it! Surveys, or questionnaires are cheap and they allow you to find out exactly what your customer’s needs and expectations are.

 

These are all effective forms of market research and allow you to cluster your customers based on their characteristics.

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