Market Segmentation Techniques: A Priori vs. Cluster PPT
This PPT slide, part of the 27-slide Customer Segmentation and Targeting PowerPoint presentation, outlines 2 primary techniques for market segmentation: A Priori and Cluster, each with distinct characteristics and implications for businesses.
The A Priori method is based on pre-determined criteria, often driven by hypotheses or sector-specific insights. Examples include segmenting markets by size (small vs. medium vs. large cars) or age demographics (young vs. middle-aged vs. old). This approach has notable advantages, such as requiring little additional time or expense. It allows organizations to leverage existing data to understand behavioral differences among known segments, facilitating quicker decision-making and action. However, it also has drawbacks. The predetermined nature of this method may lead to groupings that do not accurately reflect actual consumer behavior, potentially resulting in sub-optimal segmentation.
On the other hand, the Cluster technique employs a statistical approach, relying on customer-driven data. This method focuses on benefits segments, needs-based segments, and attitude segments. The advantages here include a greater likelihood of uncovering genuine insights, as this method is not based on management assumptions. It can provide a more nuanced understanding of customer preferences. Yet, it presents its own challenges. The lack of a straightforward answer means that segmentation can be complex and may not align neatly with existing models. Additionally, it often requires new data sets and may necessitate changes in business processes to act on the insights derived.
Understanding these techniques is crucial for organizations aiming to refine their market strategies and enhance customer targeting efforts. Each method has its place, depending on the specific goals and resources of the business.
This slide is part of the Customer Segmentation and Targeting PowerPoint presentation.
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Customer Segmentation Targeting Consumer Behavior Market Segmentation
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