Do you treat all of your customers the same way? Should you? Just because we want to please all of our customers does not mean that we go about doing so in the exact same way. In marketing this is known as segmentation, which is a three-step process:
First, we collect information to determine how many “pieces” of the market we can detect. This first step is segmentation. Internal data from sales, interviews with customers, discussions with employees, and industry/competitor data are some of the sources of information that can help us better understand the market and any differences between and among customers and potential customers of our products and services. Groups of such customers are called market segments.
After determining the number of segments and capturing a description of them, the next step we take is to analyze details about the segments to try to determine which of them are the most appealing to us. What stands out as appealing will differ by the organization doing the analysis and its plans and goals. Typical measures to help us make these decision are segment size, growth rate, intensity of competition, and whether our current operations (e.g., distribution) can reach a segment. By using tools such as a Fishbein model and/or a product-market growth matrix (aka Ansoff matrix) we can rate and/or rank the segments and target one or more of them, depending on the above analyses and our available resources. Thus, the segment or segments we wish to serve become target markets.
The third step in segmentation is to design a marketing mix for each target market. That is, from our understanding in the determination of the segments and the desirability of serving them we have information that we can use to develop a new product or customize an existing one, plan for where it is best to make our offering available, determine the ideal price for that offering, and design a message that will inform those people (or, for business markets, organizations) about the benefits we are making available for them. This final step is known as positioning, which means the position we wish to occupy in the minds of our target market members.
The most successful organizations practice market segmentation. The end result is the ability to “hit the target” more accurately with a more focused aim, as opposed to hitting all over the target where a few of our offerings will be acceptable by customers but many will languish, being seen as not having the right benefit(s) for a particular customer(s). Previous posts on this site (simplecustomerservicerules dot com) describe some of the concepts mentioned above, and these and other concepts and tools are among the material available on the site’s Resources page. A few of them are also described more fully in our book: Better Customer Service: Simple Rules You Can Apply Today (Routledge 2021). Try them out and see if you can improve your results with current customers and land desired prospects more successfully.