The best solutions expanding the customer base is one of the main goals of business activity. Whether an entrepreneur manages to achieve this goal depends, of course, to a large extent on the quality of the products or services they offer. However, regardless of how refined the products or professional services an entrepreneur offers, not every person will be interested in them.
Customer needs and preferences can be different, as can the factors that influence them. Age, place of residence, wealth or education – all of this has a significant impact on customers’ purchasing decisions. In order to optimize the process of acquiring them, an entrepreneur can conduct market segmentation, which will allow them to identify the target group of recipients and increase sales. In this article, we answer the questions of what customer segmentation is, according to what criteria it can be carried out and what benefits it brings to the entrepreneur. We also indicate examples of segmentation carried out by well-known companies.
What is customer segmentation?
The best solutions. As we said in the introduction, customer preferences and needs may vary. However, this does not mean that they are completely unique for each truemoney database person. On the contrary, people who are similar in some respects, e.g. have a similar lifestyle, usually make similar purchasing decisions. Knowing this relationship, the entrepreneur can divide – segment – customers into groups, according to the adopted criteria – one of them may be, for example, lifestyle – and then direct the offer to the group that is most likely to use the products or services offered by him. We can therefore say that customer segmentation is the division of the market into groups of customers, carried out according to specific criteria, who, due to the similarity of certain features, make similar purchasing decisions .
Customer Segmentation Criteria
The following customer segmentation criteria can be distinguished:
- demographic criteria – related to the social structure, natural increase or migration; these criteria include: age, gender, nationality or family size,
- socio-economic criteria – related to the social and material status of clients, in particular: education, financial situation or profession,
- psychographic criteria – related to the lifestyle and personality of clients, e.g. interests or non-professional activities,
- behavioral criteria – related to customers’ consumption habits and attitudes towards products or services.
It should be remembered that there are many more criteria for dividing customers, and their segmentation should be adapted to the nature of the business in each case. It may happen that customer segmentation carried out in accordance with the criteria distinguished above will not bring the desired results. Sometimes it will be necessary to distinguish specific criteria – appropriate for a given business.
B2B customer segmentation, or firmographic division
The above-mentioned criteria for customer segmentation are related to the relationship between the entrepreneur and the consumer. In the case of business relationships between two entrepreneurs, the division can be made according to firmographic criteria. These include, among others, the profit achieved, the size of the business, the industry, the type of ownership, the number of employees or the organizational form. It can be said that filmographic segmentation is for companies what demographic segmentation is for consumers. Thanks to it, the entrepreneur can identify future business partners.
What benefits will customer segmentation bring to an entrepreneur?
Customer segmentation is associated with numerous benefits for the entrepreneur. First of all, it will serve as a means of optimizing marketing activities. Knowing which lead conversion: strategies and tools customers should be directed to these activities, the entrepreneur can choose appropriate marketing strategies, thus reducing the probability of failure. Marketing efficiency is associated with cost reduction – funds allocated for marketing can be significantly reduced. Thanks to segmentation, the entrepreneur will also gain information about those customers who have not been interested in their products so far. This information can serve as a reference point for expanding the business and, for example, developing a new product. It should also be remembered that customer segmentation is an effective tool for increasing the competitiveness of the entrepreneur and improving their image.
Customer Segmentation – Examples
Many well-known companies on the global market conduct customer segmentation. The example of The Coca-Cola. Company proves the usefulness of using several segmentation criteria simultaneously in the case of international companies. The basis of Coca-Cola’s marketing activities are segmentations made using demographic criteria. Such as age, race or religion, psychographic criteria, such as customer personality, and behavioral criteria related to the customer’s attitude to the products offered by the company. Similar segmentation methods can also be found in other international companies, such as McDonald’s, Nike or Nestle.
A good example of filmographic segmentation is the activity of IBM. The company, having divided its customers according to the industry criterion, created a special blockchain network for entrepreneurs in the fashion industry.
Its goal was to provide transparency of information related to clothing
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Customer Segmentation Summary
The best solutions into customer groups according to the adopted criteria. These include demographic, psychographic, and behavioral criteria. In the case of some entrepreneurs, segmentation is carried out using criteria other than the ones listed. In business practice, segmentation activities are used very often – they are used in particular by international companies.
