Customer segmentation is the act of identifying the different types of customers that might buy our product and creating value for each segement based on their unique needs. Knowing the types of customers who will buy our product will help us tailor our product and marketing for each segment. Customer segmentation, consumer behavior, market research, and the Marketing Mix make up FH Gizmos’ marketing strategy.
Let’s pretend FH Gizmos is a coffee shop. What type of customers might we serve? Can you break down our coffee customers into segments? Some segments could be:
- The busy business man who wants to get his coffee and get to work quickly
- The college student who is looking for a good cup of coffee and a quiet place to study
- The old friends who want to catch up over a cup of coffee
All of the above customers are buying our coffee, but they have different needs. How can we meet those needs? By providing value for each customer segment: we could install a coffee express line for the business man, free Wi-Fi and high-backed booths for the college students, and circular tables for the old friends who want to catch up.
What’s important to the busy business man is not important the college student, etc.. As a Marketeer, it is your job to communicate to the busy business man one message about the value of our product, the college student a different value, and to the old friends a third value.
Simple Rules for Customer Segmentation:
- Divide buyers into segments
- Identify each segment’s needs
- Create value for that customer segment by meeting their needs
- Communicate the correct value to the correct customer segment