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Mistake #6

Not Segmenting Your Customers

I often hear small business owners say, “I don’t need segmentation. I know exactly who my customers are.” Or, when I ask them what customers they focus on, they say “everyone.” Really?

Segmentation allows you to aim and utilize your scarce dollars more effectively. Segmentation helps you with:

1 Targeting – By breaking customers into smaller groups, it’s possible to determine which ones are a good fit and which ones aren’t.

2 Pricing – Different customer groups will value your product or service differently. Segmentation allows you to price based on different perceived values.

3 Positioning – Having different segments allows you to position yourself against various competitors in those segments.

4 Promotion – You can be more relevant to customers and prospects by changing how you pitch your product or service.

5 Product – Even your product features can be altered to fit different segments because each segment has various problems.

How Do You Segment?

After you’ve determined your core or primary customer (see mistake #4), there will be other groups of customers that need your focus. These are called segments. In business-to-business marketing, a company might segment customers according to factors such as industry, number of employees, products purchased, and location. In consumer marketing, segments usually involve demographics like age, gender, marital status, location (urban, rural), or life stage (single, married, retired, etc.).

Whatever characteristics you pick, they should help you understand and predict how your customers will act. Sometimes the criteria aren’t demographic or geographic; they’re behavioral. Have customers exhibited behavior that makes them more likely to buy your product? Finally, make sure the segments are large enough to target. If you’ve refined the target segment so precisely that you only have 13 people in it, it won’t do you much good.

Developing your segments usually requires research. You’ll need to gather specific information about customers and analyze them to see if any patterns can be used to create segments. Here are the typical ways of getting customer information:

 Face-to-face interviews

 Surveys

 General research using published data (e.g., trade journals)

 Focus groups.

99 Marketing Mistakes

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