5 Steps to Understanding Market Segmentation



  • Find out who your customers are. Don’t rely only on quantitative data. Get out there and mystery shop. Find out who is buying your products and services, and why.
  • Break up your customers into segments. Don’t focus on superficial single factors like age and gender. Rather, try to find a consumer insight for each of your key groups. For example, full-time caregivers take their toddlers to Panera so they can get a quick, wholesome meal, let the kids run around and take a bit of a break.
  • When you believe you have arrived at your key customer segments (keep the number of segments down, let’s say 5 at most), start optimizing your offering for each one. For instance, Panera might want to set up a child-safe area near the eating booths; offer table-side service for caregivers watching the children play; and offer add-on specials for take-home dinners.
  • Test out how well your efforts are going by developing a tester group for each demographic and checking in with them regularly. Also keep tabs on how well you’re generating revenue for each new initiative.
  • As the market evolves, your customer segments will evolve as well, so the process of catering to your key customer segments should always be considered a work in progress.
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By Dannielle Blumenthal, Ph.D. All opinions are the author's own. This is a personal account unrelated to and not sponsored by the author's employer or any other entity. Public domain photo via Pixabay.

About

Dr. Dannielle Blumenthal is an author, independent brand researcher, and adjunct marketing professor with 20 years of varied experience. An avid researcher and prolific, creative writer, Dr. Blumenthal's interests span communication, marketing, qualitative media content analysis, political rhetoric, propaganda, leadership, management, organizational development, and more. An engaged citizen, she has for several years worked to raise awareness around child sex trafficking and the dangers of corruption at @drdannielle on Twitter. You can find her articles at Medium, www.AllThingsBrand.com and www.DannielleBlumenthal.com, and she frequently answers questions on Quora. All opinions are Dr. Blumenthal's own.