“Do you know who your customers are?” Segmentation

One old and critical saying for any business is “Know who your customers are”

Regardless if you are trying to gain market share, grow your customer base, enter new markets, sell new products/services; it is extremely important to know who you are targeting because this will increase the probability of “getting the order”.

One of the key activities in knowing who your customers are is called segmentation.

Markets are people or groups with needs, ability to purchase and buy products and or services.  Examples are: the transportation industry, sports arena

Overall markets can be divided into two major sections; Business (industries) and Consumers.  These are sometimes called B2B (Business to Business) and B2C (Business to Consumers).

Market segments are groups of potential customers with common characteristics. Examples of a segment are within transportation, sports cars or within sports, football fans.

Dividing a market into meaningful and relatively similar groups or segments is called market segmentation

Segmentation is divided into two major sub catorigies.  Macro segmentation and Micro Segmentation.

In the Business markets, Macro segmentation consists of the following attributes: geographic, customer type, customer size, and product use. Micro segmentation consists of the following type attributes: purchasing criteria, purchasing strategy, importance, and personal characteristics.

In the consumer markets segmentation consists of geographic (city, metro, size, etc.), demographic (age, gender, family size, etc.), psychographic (lifestyle) and behavioral (occasions, benefits, uses).

Other considerations for defining/segmenting your targeted groups are:  competitor comparisons, potential technology disruption, are the segment(s) large enough, are the segment(s) unique, are the segment(s) financially independent, are the segment(s) reachable/accessible, are the segment(s) measurable?


A well-developed segmentation plan will fail unless the following issues are addressed:

  1. How should the sales force be organized relative to the targeted segments?
  2. What services, if any, will the new segment(s) require?
  3. Who will provide the new services for the segment(s)?
  4. How do you contact the new segment?
  5. Can you support the new operations for each segment?

Also note that if you are considering international segments than there are many more areas to consider, which a topic is for another time.

For more information, contact us to have a more detailed discussion and also receive our Segmentation Check List.

RHL   4/19/2016

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