Management Bug
By definition, customer segmentation is the process of dividing customers into groups based on common characteristics so companies can market to each group effectively and appropriately. The lack of this customer segmentation results in a mess!
Segmentation allows marketers better to tailor their marketing efforts to various audience subsets. Those efforts can relate to both communications and product development. (1)
Customer segmentation involves grouping customers into specific marketing groups, narrowing them by gender, interests, buying habits, or demographics. The process requires a thought-out strategy, understanding how to manage and group your customers and which data you will use to do this. By differentiating their customer base, businesses can better target individuals, maximize sales, link-sell appropriately, and provide more tailored shopping experiences. (2)
Without customer segmentation, companies will not gain a competitive edge over rival companies and, significantly, demonstrate better knowledge of your customers’ needs and wants. If companies have a lack of customer segmentation, it will reflect in the loss of some benefits like:
- Achieve Marketing efficiency;
- Determine new market opportunities;
- Get a better brand strategy;
- Improve distribution strategies;
- Improve customer retention. (3)
- Identify the most valuable customer segments
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