Why Are Businesses Shifting Their Focus Towards Customer Segmentation?
As quoted by Peter F. Drucker – the father of modern management “The major aim of marketing is to know and understand customers so well that the product or service fits their requirement and sells itself.” Though most of the businesses today have a specific niche to which they cater, it has become the need […]
As quoted by Peter F. Drucker – the father of modern management “The major aim of marketing is to know and understand customers so well that the product or service fits their requirement and sells itself.” Though most of the businesses today have a specific niche to which they cater, it has become the need of the hour to have a clear-cut customer segmentation strategy to satisfy the individual needs of the customers. In a nutshell, customer segmentation refers to dividing customers into various groups based on certain dimensions such as their age, gender, spending patterns, and geography to name a few.
How does customer segmentation help a business?
The growth and market sustainability of a company depends primarily on satisfied customers. The happier the customers, the higher is the goodwill of a company. This is one of the main reasons why businesses are focused on identifying better ways to target their customers. And to achieve this, customer segmentation could be the answer.
Improves the focus
Wouldn’t it be great if you felt that a product/service is tailor-made for you? That’s exactly what customer segmentation does for a business. It helps businesses to identify specific customer needs and fine-tune the products/services to meet this need.
Helps grab a bigger slice of market share
Providing products/services to meet the customers’ need results in brand loyal customers. This, in turn, increases the sales of a business, helping them become market leaders in the long run.
With brand loyal customers and a considerable market share, a business is bound to grow financially. Effective customer segmentation also helps a business venture into new customer segments and areas of focus; thereby, expanding the business’s level of operations and group of customers they cover.
Generates more brand loyal customers
From a customer’s perspective, brand loyalty for a customer comes majorly with having a sense of belongingness and satisfaction of needs from the brand. Customers feel a sense of belongingness when their needs are being taken care of by the brand. Customer segmentation helps a brand to identify the individual needs of a target customer segment and develop products/services accordingly.
Helps a business dive in at the right time
Customer segmentation facilitates a business to identify specific customer groups. It gives them an insight on what and when a customer is most likely to make a purchase. This helps them tailor products/services at the right time and gain a first mover advantage over their competitors.
Effectively targeting and segmenting the customers based on the most relevant dimensions could be a tedious task for a business taking into consideration the complexity involved. Customer segmentation is largely based on the type of business, the geographic reach of the business, behavioral pattern (spending/consumption habits, desired benefits) of the customers, and their physiographic (social class, lifestyle, personality traits) traits. Consequently, it is important for any business to undertake the right customer segmentation mix in order to deliver as expected to their customers.