Elements Involved in Customer Segmentation

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Customer analysis
Segmentation: segmentation means the identification of customer group’s responds differently from other groups to competitive offering. It must have following features: feasibility, sustainability, and profitability. Generally speaking, we often use five criteria to segment the market. The segmentation can be defined by several methods; the first one is by demographic characteristics. It is effective partly because person’s life stage affects his or her activities, interests and brand loyalties. The second one is the benefits, because the selection of benefits can determine a total business strategy. The third one is price sensitivity, and it represents the trade-off between low price and high quality. The next important criterion is loyalty. Each cell of the brand loyalty matrix (organized by loyalty level and customer type) represents very different strategic priority and can justify a very different program. The last one is applications, as some products and services, particularly industrial products, can best be segmented by use or applications. In the end, we also have to pay attention that two distinct segmentation strategies are possible. Customer motivations: After identifying customer segments, the next step is to consider their motivations: what lies behind their purchase decisions. There are four steps to determine the customer’s motivations. The first step is to determining motivations. Although a group of managers can identify motivations, a more valid list is usually obtained by getting customers to discuss the product or service in a systematic way. The next step is to cluster the hundreds of motivation to groups and subgroups. Another task of customer motivation analysis is to determine the relative importance of the motivations. A fourth task is to identify the motivation that will play a role in defining the value proposition of the business. Also, there are three other important points that we have to pay attention to in...
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