Your customers come in all shapes, sizes, and backgrounds. Market research will identify those customer segments so that you can meet their individual needs...
Aside from hats, gloves, and socks, one size rarely fits all. The same can be said about a marketing plan. Tailoring your marketing efforts so they resonate with a specific audience increases the effectiveness of your message.
Additionally, focusing on common groups of customers enables you to provide a product or service that more closely matches their needs. This “customization” is most efficiently and effectively accomplished by first profiling and segmenting your customers.
Segmentation is the process of dividing your target market or customers into sub-sets consisting of people who share a commonality. The idea being that because they share similar characteristics, they will demand similar products or services. Demographic segmentation is the most common, but your market can be segmented by geography, behavior, needs, or psychographic characteristics.
Our approach to segmentation starts with a detailed assessment of your objectives. Typically the next step is the development of a detailed survey followed by data collection. Next we analyze the results of the survey using statistical measures such as K-means or other cluster analysis tools to identify your core segments and visually classify them using a dendrogram or heat map.
We can also segment your customers using our text analytics capabilities. This method is especially applicable if your have a large database with customer information.
Once completed, the applications of segmentation are many. For example, you may wish to identify a location for a store in a new market. Matching your customer’s demographics to those of the market would allow for the identification of good trade areas for the location.
Segmentation is also a useful tool in customer retention. For example, a college wishing to decrease its dropout rate may wish to identify specific demographics and other factors associated with students who drop versus students that go on to graduate. Incoming freshmen with characteristics that are typically seen among students who drop could be “flagged” and proactive measures taken to better ensure the students success.
If you have never segmented your customers, you may be surprised at what you discover when you do. But most importantly, you will have a much richer knowledge of who your customers are and how to better meet their needs.