Customer Segmentation (PowerPoint PPT Slide Deck)

This PPT slide outlines a structured approach to customer segmentation, essential for retaining and acquiring customers. The process begins with categorizing customers based on specific criteria, laying the foundation for subsequent actions. After segmentation, selecting target segments focuses efforts on the most promising groups aligned with strategic goals. Businesses should then create tailored value propositions for each segment, addressing unique needs and enhancing engagement. The segmentation process leads to 2 primary outcomes: retaining target customers through loyalty strategies and acquiring new customers fitting identified segments. This roadmap helps organizations refine marketing and customer engagement strategies, aligning offerings with customer expectations to drive growth and profitability.

Smith’s Fashion Center, a discount women's retailer, undertook a structured process to analyze customer behavior for expansion. Key drivers influencing retail purchasing behavior were identified, forming the basis for deeper analysis. Approximately 20 targeted questions were posed to customers to capture their needs and preferences, providing essential feedback for tailoring offerings. A Factor/Cluster analysis categorized customers into distinct segments, revealing patterns crucial for effective marketing strategies. The size and revenue potential of each segment were quantitatively assessed, guiding prioritization for targeting during expansion. Insights from segmentation analysis refined the merchandise strategy for the selected expansion market, enhancing understanding of customer dynamics and informing strategic market entry decisions.

This PPT slide presents a customer segmentation analysis for Smith's Fashion Center, categorizing customers into 4 segments based on spending habits and fashion preferences: "Fashion on a Shoestring," "Fashion Value," "Unfashionable Bargain Lover," and "Fashion Forward Shopping Lover." The vertical axis represents the percentage of total customers, while the horizontal axis indicates the percentage of current customer spending. The primary target segments are "Fashion Value" and "Fashion on a Shoestring," reflecting a strategic focus on affordability and style. The positioning shows that "Fashion on a Shoestring" attracts a significant customer base and spending share, while "Unfashionable Bargain Lover" has lower alignment with strategic goals. This analysis suggests differentiated offerings tailored to each segment's needs, enhancing customer loyalty and driving sales. Understanding these segments allows Smith's to refine marketing strategies and product offerings effectively.

This PPT slide compares 3 customer segmentation methods: needs-based, behavioral, and demographic. Needs-based segmentation, though time-consuming, provides the highest value by requiring primary research to gather actionable insights directly from customers, effectively identifying their needs and purchasing drivers. Behavioral segmentation also requires primary research when client data is insufficient, showing correlation in purchasing behaviors, but lacking depth in motivations. Demographic segmentation relies on existing demographic data, offering limited usefulness with primarily descriptive insights and low correlation. Selecting the right segmentation method is critical for developing effective strategies, with needs-based segmentation yielding the most actionable insights despite higher initial effort.

This PPT slide focuses on customer segmentation, outlining essential requirements and methodologies for effective segmentation and value proposition development. Key criteria for segmentation include meaningful differentiation, adherence to the MECE principle, measurable market share, and substantial volume for analysis. The "Value Proposition Development" section details tailoring offerings across product, service, and distribution dimensions, emphasizing features, pricing, and delivery channels to optimize resources and enhance market share. The "Target Segment Selection Matrix" categorizes segments into 4 quadrants, guiding decisions on developing capabilities or adjusting propositions based on segment attractiveness. Finally, "Profit Potential Quantification" outlines a systematic approach to assess profit potential by calculating revenue increases and costs to serve, enabling informed resource allocation and strategic focus.

This PPT slide outlines a structured approach to customer segmentation, focusing on segmenting both existing and potential clients. Key segmentation methods include needs-based, behavioral, and demographic approaches, which are essential for relevance and effectiveness. The selection of target segments is based on attractiveness and the organization's capacity to serve them uniquely, with attractiveness evaluated through profit potential, including revenue opportunities and service costs. Each target segment requires a tailored value proposition addressing specific customer needs across product, service, and distribution. Finally, determining profit potential involves assessing revenue and cost implications, including direct profits and hidden costs like training and marketing expenses, ensuring alignment with customer expectations and maximizing profitability.

This PPT slide outlines customer segmentation, categorized into Cost, Customers, Competitors, and Capabilities. The Cost category focuses on identifying cost reduction opportunities through efficient resource allocation. The Customers section highlights strategies to maximize revenue and profit by tailoring offerings to diverse customer needs. The Competitors category emphasizes differentiation and understanding market position to craft competitive strategies. The Capabilities section aligns strategies with core competencies, ensuring strengths are leveraged to meet customer needs. Tools for implementing segmentation include Purchase Criteria Rating, Company Positioning, Attractiveness Analysis, Value Proposition Development, Customer Retention and Loyalty, and Customer Acquisition, providing a framework for analyzing segments and developing targeted strategies.

This PPT slide presents 2 methodologies for customer data segmentation: the 80/20 approach and CHAID (Chi-squared Automatic Interaction Detector). The 80/20 approach segments customers based on profitability, hypothesizing variables that contribute to profitability,, but suffers from low statistical validity, reliance on intuition, and potential omission of key variables. In contrast, CHAID is a structured analytical tool that identifies drivers of a dependent variable, such as profit, through a rigorous process of variable selection, data collection, and analysis, resulting in high statistical validity. However, it requires collaboration with the Bain Research and Data Analysis Group for software and expertise, which may not be feasible for all organizations.

This PPT slide outlines a structured approach to customer segmentation, essential for identifying distinct customer groups. The process begins with segmenting existing and potential customers to understand diverse market needs, allowing businesses to categorize them into homogeneous groups for targeted marketing strategies. Next, companies select attractive target segments that align with their strengths and market opportunities. Following this, tailored value propositions are created for each segment, defining how products or services meet specific needs. Finally, assessing the profit potential of these segments is crucial for informed strategic decisions, ensuring effective resource allocation and maximizing return on investment.