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Customer Segmentation Research

Market research 04 12
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Table of Contents

With an increase in brands offering similar products and services, customers are becoming increasingly demanding and selective. It is no longer the same as before when brands told customers what to buy. 

Customers are the business, they decide what they want to purchase and where. You have to figure out what motivates your customers to buy certain products. How they search for products, what they expect from your product/service, and what tools they use to make their purchase decision. 

Marketers use Customer Segmentation Research to question their target audience about their influences, consumption habits, buyer behavior, preferences, etc. Information collected from Customer Segmentation Research can help you determine which audience group you want to target. It will also give you an idea of how to advertise to a specific audience group.

01

What is Customer Segmentation?

Customer Segmentation is a method in Marketing Research that includes grouping customers based on their common attributes. These attributes are generally divided into four segments: Demographic, Geographic, Behavioral, and Psychographic. 

The purpose of grouping customers based on these segments is to understand the characteristics the audience shares. This helps a brand to market its product and service effectively and send a convincing message.

For instance, by figuring out how many of your customers belong to medium income and how many to the high-income class, you can advertise your products accordingly.

Customer Segmentation Research2

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02

How can Customer Segmentation Research help you?

Customer Segmentation Research is different from a Customer survey. Segmentation does not involve gathering feedback on your products/service, or their experience with your company. Customer Segmentation Research involves learning about what inspires your customers to buy from you. 

Insights about Customers: You can increase the effectiveness of your marketing and customer service. Customer segmentation gives you insight into customers which helps you individualize them. Every customer does not have the same expectation from your brand. Segmenting them will help you identify the small differences in the needs of the customers accurately. 

Evaluate your Performance: Your customers buying behavior and spending habits can help you understand how strong/weak your marketing campaign is. You can also learn which segment of customers buys what kind of products. This information can help you when you are planning to expand your products. 

Improve Marketing Campaign: Following the previous point, Customer Segmentation Research can help you analyze different attributes that attract a different segment of customers. You can devise different marketing strategies to attract new customers, retain old customers, and build brand loyalty. 

Customer Segmentation Research1

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03

Why is Customer Segmentation Research important?

Before your process of developing a plan to launch products/services in the market begins, the most important factor is to have an in-depth pricing discussion with your target customers. This is the best way to avoid product failure as noted by Madhavan Ramanujam and Georg Tacke in their “Monetizing Innovation: How Smart Companies Design the Product Around The Price”. 

75% of companies fail in promoting their product to success or miss their target revenue because they didn’t listen to the needs of their customers. Customer Segmentation Research tells you exactly who you can target and what their expectations are. 

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04

Benefits of Customer Segmentation Research

There are several benefits you can reap from segmenting your customers. 

Understand issues your customers face: Segmenting your audience based on different characteristics can help you understand their pain points. You can understand the issues they face during their purchase decision, on an intimate level. This will help you plan marketing practices suitable to your customers and resolve their issues faster. 

Covey Right Message: Understanding your customers on an intimate level and learning about their journey to purchase a product can help you create a more personalized message. Instead of creating a general message which may come across as vague, you can use the resource and create a more specific message. 

Target potential customers: By crafting the right message for the right group you can attract prospective customers from the segment that is most likely to purchase. This will help you increase your sale because these customers are the type to actually purchase.

Spread your Business in the Right Channel: Conducting Customer Segmentation Research can help you understand which channel your audiences prefer. You may find that some customers are social media consumers; some attend events and so on. Grouping them based on the channel they prefer can help target the right channel with advertisements. 

Brand Loyalty: Every brand needs loyal customers to reach the top of the marketing world. Segmenting your customers and understanding them on a personal level will help you establish a strong relationship with your customers. This will guarantee that your target customer thinks of your brand when they need to buy something and continue to support your business.

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05

How to Conduct Your Customer Segmentation Research?

Observe your Market

Understand your market and conduct a study. Before introducing your service/product, you should understand the market demand of the particular product. Is the demand huge or little? You should also study how your brand fits in the competitive market. 

Find out the Segmentation you want to work on

Among the four categories, you can choose whichever segment you wish to target. Though the categories are firmly divided, when targeting the audience the segments can be mixed together to understand the audience in detail. You can conduct your research with a few or all the segments together. 

Conduct Customer Segmentation Research

Conduct your research by asking questions focusing on the categories of Market Segmentation. To gather in-depth insight, you should create personalized questions. 

Categorize the result

Collect all the results you have received from the research. Group customers into segments based on common characteristics. 

Create a new marketing campaign

Now that you have segmented your target customers you can plan your marketing strategies focusing on the groups. This can help you find personas within the segments that can help your marketing purpose. 

Customer Segmentation Research3
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06

Tips for Customers Segmentation Research

Prioritize segments to target

You can identify the segment you want to target your advertisements on. You can use the characteristics of each segment such as their consumption habit, or spending behavior to understand the market potential. This can help you focus your resources and plan your marketing strategies in a way to benefit your campaign and earn more revenue. 

Classify your customers in your Database into segments

You should categorize your current customers into segments. Using the purchase history you can classify them into a proper segment. This will help you send targeted marketing proposals to proper segments. Additionally, your customer service and sales team can also tailor their messages and approach depending on the segment of the audience. 

Develop Personas

Personas are like an image of a buyer created to better understand the thought process of the customers. Personas are often made as a profile that provides a guide for the management when developing their products and services.

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07

Sample Question of Customer Segmentation Research

  • What is your age?
  • What is your gender?
  • Which socio-economic class do you belong to?
  • What is the size of your household?
  • Where do you live currently?
  • Which social media platform do you spend most of your time at?
  • Do you use online shopping websites or visit stores to make purchases?
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The Voxco Guide to Market Research 09 12

08

FAQs

Customer Segmentation helps a business understand its customer base on a personal level. The research helps them learn the expectations and needs of the customers based on different segments.

 

Demographic Segmentation is the process of grouping customers based on categories such as age, gender, race, income level, education, etc.

Behavioral Segmentation involves dividing consumers based on their behavioral patterns. It focuses on the lifestyle, usage of products, preferences, etc. of a customer.

A Market Segmentation Strategy focuses on dividing the target audience into smaller and manageable groups. The customers are group based on demographic, behavioral, geographical, or psychometric categories.

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