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Why segmenting your customers will help in the long run

Written by: Mark Gwilliam

Article Overview: Every customer is different, so why treat them all the same?

Why segmenting your customers will help in the long run

To start treating customers as individuals, look at how and when they buy. This will help to start putting them into groups and understanding the needs of each group. For example:

1. High volume / high value buyers…who place frequent large orders
2. High volume / low value buyers…who place frequent small orders
3. Low volume / high value buyers…who place occasional large orders
4. Low volume / low value buyers…who place occasional small orders

Groups of customers who have similar needs or who behave in a similar way are known in marketing as ’segments’. You will probably need to use different marketing techniques and approaches to reach different types of customer.

Now you can identify why each customer segment buys your products and services and what ‘benefits’ they are seeking. This in turn will help you to target existing and new customers more effectively with specific products and services. As a result you can make better profits. For example, low volume/high value buyers may be more profitable for you than high volume/high value buyers who may continually squeeze you on price.

You deliver benefits through what marketing people call the ‘”marketing mix”. These are essentially the tools of the marketing trade. Your goal here is to define your “unique selling proposition” (USP) - something that truly sets you apart from your competitors.

The basic marketing mix consists of:

1. Product - the goods and services you are offering, including packaging and service content, such as warranty, after sales.
2. Price - what the customer pays. Remember that there are different types of prices, such as list prices, discounted prices, and many different ways to arrive at prices. Price may be used to communicate the position and values of the product/service.
3. Place - how and where the customer obtains the product/service. For example, a catalogue company may allow customers to buy through the catalogue itself, on the company’s web page or through off-the-page advertising.
4. Promotion - the means and mix of activities used to promote the product or service, for example, advertising, direct marketing, PR, exhibitions and trade shows.

So, take some time to review your current marketing mix and identify if its giving you the best results.

Related Articles
  HOW TO DEMOGRAPHICALLY AND GEOGRAPHICALY SEGMENT THE MARKET FOR EFFECTIVE ADVERTISING AND PROMOTION.
  Target Audience – One of the Four P’s
  Not all customers are good customers
  Lean your Marketing thru Segmentation
  Understanding Customers

Article Tags: basic marketing, customer segment, high volume, many different ways, marketing mix, marketing techniques, profits, segments, service content, specific products, unique selling proposition, unique selling proposition usp, warranty, web page



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