Strategic Customer Segmentation

In Strategic Customer Segmentation, the goal is to uniquely identify sub-groups within a customer base that are relevant to the marketing process. These segments (or clusters) ideally contain individuals who are very similar to each other, but collectively very different from other customers.

Strategic segmentation allows companies to:

Develop effective strategies and value propositions for different segments
Allocate marketing resources for best R.O.I.
Develop specific offers and creative materials for different segments
Target direct marketing and advertising efforts
Identify gaps in product portfolios, develop and evaluate new products
Assess alternate distribution strategies

Strategic Customer Segmentation Steps

Strategic segmentation projects consist of two distinct steps. The first step is to define the customer sub-groups most relevant to the business and then provide detailed descriptions of the customers in each sub-group. This first step usually is based on a number of different descriptive statistical techniques.

The second step involves developing a set of assignment rules, based on available data, which can be used to classify customers into the appropriate sub-group. This step often involves the use of a predictive statistical model to calculate the probability that a given customer belongs in each of the potential sub-groups.