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How to Conduct A Customer Segmentation Study and why it is so important?

A Love Letter from A Marketer!

The beautiful aroma of your favorite coffee is enough to kickstart your day and have all the adrenaline rushing through your body screaming ….” productive”. But, what if you are a tea lover? Coffee won’t hold the same magic to a person if they don’t prefer and like coffee in the first place. Moral? You are attracted more towards things, products, and ideas that are in alignment with your thoughts, feelings, preferences, and emotions.

Ever wondered how this genius theory can be in favor of brands and business? Well, cutting to the chase, the art of segmenting and targeting customers who match with your business offering is called customer segmentation. Jargon much? Let’s break this down for you.

As we said, customer segmentation is perhaps the best method of identifying the target audience of your business. We, marketers, love to critically analyze the market and target people who would resonate with a brand from an emotional level, because trust us, that works the best!

It’s a fact! By simply identifying the correct customers to target, businesses can save a huge number of investments that they put into advertising and campaigns. So, why not put this to good use?

Source: DataFlair

Today, it’s more about hitting the right nerve of the customers and getting them to think what you want them to think. If a brand is advertising a product, there is an obvious comparison that the consumer runs keeping in mind the homogenous market. So, it’s important to stand out.

It’s a great tool to dive into the psychology of your customers, understand what they want and offer them just that in a platter full of tempting offers. Cutting the chit-chat short, now that we know the WHAT’S & WHY’S of customer segmentation, let’s understand HOW to do it.

Customer Segmentation: The Process Behind The Understanding The Consumer Mind!

The customers today are very diverse, fragmented, and emotional. Thus, segmenting them is in itself a huge challenge. Before even thinking about segmenting customers there are three initial stages that a brand has to go through.

  • Market Analysis
  • Factors Affecting The Market
  • The Plan Of Action

Having said that, let’s have a look at 5 parameters based on which customers can be segmented.

1. Demographic Segmentation

Talking about one of the most important parameters of customer segmentation, demographics is an essential eye to nail. This analysis is used in the segmentation of the customers. Demographics include values like age, education, ethnicity, occupation, income level, and many other factors.

Source: Data-Driven Business

Let’s consider denim jeans as an example. Earlier, jeans were designed for males. But this soon changed when women showed interest in these jeans. This increased the sales in jeans companies by a huge manifold.

2. Geographic Segmentation

When you target your customers, you also need to understand where they come from and which location has a demand for the product you are offering. Only then will it hit the success button, right? So geographic segmentation follows the location of the customers. It includes utilizing information like country, continents, zip codes, localities, etc. to identify customers for their products.

Source: Adamant Links

For example, a product designed in India will be successful in its home country but we can’t say the same for other countries. Geographic segmentation is useful when trying to achieve generalization amongst the customer base in certain locations.

3. Behavioral Segmentation

Behavioral segmentation is the closest that brands can get to understanding the human emotions that affect the product. It includes noticing the behavior of customers towards a product and the patterns they display while buying it.

Now some customers might not like product A and choose a product B over it. On the other hand, some customers might buy product A after every three months. While running this survey, the research helps the marketers understand the customers and their buying behavioral patterns.

Source: Pointillist

4. Psychographic Segmentation

This is a subset of behavioral segmentation that aims towards understanding the psychological feedback of customers of using a product. It also aims at analyzing the personality traits that regular customers of a brand or product display.

Source: Gary Fox

Certain products like gaming phones are designed for customers that display a specific personality trait, in this case, an interest in gaming. Thus, psychographic segmentation is trying to understand the working of the brains of customers while choosing a product.

5. Firmographic Segmentation

This is a segment of Demographic Segmentation that is of special interest to B2B brands. It aims at understanding the type of industry a brand sells to also including the size of the company or the employee count and similar details. This type of segmentation is required by brands that offer middlemen services or products to other industries.

What Do You Need Before Performing This Survey?

Before you dive into conducting any kind of survey, you need to have the right set of questions. These questions help you make or break the situation and are the key performing index to analyze the success of your survey.

The questions should address the pain point of your customers and should offer a solution to the same. The response to your solution will derive the market demand for your product or service and help you understand how well it will perform. Having said that, there are a few points that you have to keep in mind while conducting a customer segmentation survey. These are;

  • Ask questions that are specific to your company
  • Analyze the answers from a neutral viewpoint
  • Include customers in your focus group instead of having a huge company executive bias
  • Understand your customer’s viewpoint
  • Decide your survey parameters before designing your survey.

It’s A Win-Win Situation For Your Business: Understand How!

We are sure you are not interested in chasing the crowd but more interested in making it to the limelight. But the question is; Is customer segmentation beneficial for your business? One might wonder and it is a valid question. Customer segmentation surveys are difficult to implement but at the same time, they offer businesses a unique edge over their competition.

So when we are talking about getting an edge over your competitors in the market, let’s talk about the benefits of performing a customer segmentation market survey;

  • Better Returns on Investment for Marketing: By utilizing customer segmentation surveys, businesses can tailor their marketing strategy according to their needs. This allows them to invest in advertising only to a select group of customers, who they are sure will use their products.
  • Newer Opportunities: When a brand conducts a customer segmentation survey, it can find out about the customers and not just about their product reviews. This can allow them to identify a customer segment that was not previously given enough importance earlier.
  • Personalization: A Customer Segmentation survey allows brands to customize their products according to the need of the customer segment that they are targeting.

The standards of customer experience have changed rapidly. Today customers are choosing brands that are willing to go the extra mile to offer a better customer experience. Customer segmentation surveys help brands to nail just that and more.

They help you stay in the competition and innovate in your products to match the market better. In the end, it all boils down to data. If the data collection game is strong and you can gather as many details of your customers in the drive, trust us when we say this, you are going to win!

About Maction Consulting

Maction Consulting was founded in Ahmedabad in 2015. Since then, we have grown to support our clients as they seek to take advantage of new growth opportunities across the world with our offices in India, the USA, Canada & France.

Since launch, we have expanded our client base to get a global reach of a large research company, but we have never lost the agility and the personalized service of a small boutique. We have won various awards and regularly been appreciated by clients for our exceptional performance.