Develop a deeper understanding of your customers
Segmentation principles can add several layers of intelligence to what you already know about your customers. This extra information is based on some key differentials, like spending habits, gender, where they live, demographics, and socio-economic groups.
What you are looking for are not the differences that appear on the surface, but those underlying differences that actually affect buying behaviour. You're looking to uncover the motivations that trigger each person to buy.
You're seeking information that gives you a competitive advantage and represents a deeper understanding of the consumer – information that your competitors may not have. Your research should identify and describe your target market.
It should also identify key pain points for your customers and shifts in consumer behaviour or makeup. You should also be looking for information that helps you predict the demand and reaction to your product or service.
The initial steps to take are to divide the market into meaningful and measurable segments according to customers' needs, their past behaviours or their demographic profiles. Then to determine the profit potential of each segment, you'll need to analyse the revenue and cost impacts of serving each segment. It is then, with this information, you'll be able to invest the appropriate resources to tailor product, service, marketing and distribution programs to match the needs of each target segment.
Never overlook the importance of regularly measuring each segment's performance and adjusting the approach as market conditions or your business needs change.