This PPT slide, part of the 47-slide Customer Segmentation PowerPoint presentation, outlines the critical steps and methodologies involved in customer segmentation, emphasizing its importance in targeting and serving different customer groups effectively. It begins by defining customer segmentation as the process of dividing customers into homogeneous groups, selecting target segments, and formulating value propositions tailored to these segments. This structured approach is essential for maximizing profit potential.

Three primary types of segmentation are identified: needs-based, behavioral, and demographic. Needs-based segmentation is highlighted as the most challenging yet the most rewarding, indicating that it requires a deep understanding of customer needs. The slide suggests that Bain primarily focuses on this type, which involves creating a comprehensive list of customer needs, gathering relevant data, and employing Factor/Cluster analysis to identify distinct segments.

Two methodologies for segmentation are also discussed. The first is the 80/20 method, which categorizes customers based on profitability, allowing businesses to hypothesize the variables influencing this profitability. This method facilitates the combination of various factors to create meaningful segments. The second methodology involves analyzing behavioral or demographic databases to derive insights into customer characteristics.

Lastly, the slide stresses that regardless of the segmentation method employed, the resulting segments must adhere to the principles of being meaningful, measurable, substantial, and actionable. This ensures that the segments are not only theoretically sound, but also practically applicable in driving business decisions and strategies.

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Customer Segmentation Value Proposition