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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.

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All opinions my own. Originally posted to Quora. Public domain photo by hbieser via Pixabay.