Any color as long as it's black. Why Henry Ford's famous quote is no longer relevant.
When we utter Ford’s words today, they are often said in jest. Ford lived in a time of limited competition and his goal was straightforward: minimize costs through mass production. And the consumer was more than happy with the deal. Today’s consumers are different: they wants choice, lots of it, and with the proliferation of brands and channels, it’s there for the taking. Whether you're a large or small business or non-profit organization, whether you're selling a product or a service, by segmenting your market and customers into groups with similar needs and buying criteria, and then adjusting your marketing mix to meet the needs of each group, you enhance opportunities for growth and customer retention and stimulate innovation.
Segmentation is also the first step in an effective marketing strategy to ensure that you are reaching the right customers with the right message. So what's the easiest way to segment your customers? Just make sure that your segments meet the following 5 criteria:
HOMOGENOUS: the needs within each segment should be homogeneous within the segment, and different from the other segments. In other words, all your customers should be seeking to fulfill a similar requirement: whether it's a new type of restaurant/cuisine or the solution to a persistent problem, all the customers in the segment should want/need the product offering.
IDENTIFIABLE: the customers within the segment must be identifiable and specific; it may be a specific industry or demographic, but it should always easily be identified.
PROFITABLE: the more segments identified, the greater the opportunity to offer a targeted high value offer. Even a specific industry can be divided into several segments: for example, if your target is the aviation industry, customers can be divided into multiple segments:
commercial, general or business aviation, by region, by service type. Airlines or airports, service providers. Remember, however, that the number of segments identified should be balanced against the cost to serve those segments.
ACCESSIBLE: the customers in the segments should be readily accessible in order to be able to serve them effectively.
ACTIONABLE: the segmentation should be such that the company has the resources to effectively act on the segmentation in order to implement appropriate programs for each segment.
Once you understand the different segments, you can then determine which are the best segments on which to focus: which segments offer the greatest growth, the maximum profitability and the optimum barriers to entry? What does the competitive landscape look like for each of the segments? Is it the same, or is it different?
Once you know the WHO, you can then determine the HOW. How will you market to each of the segments? Is it possible to use the same marketing mix for all segments (same products & pricing, same distribution method, same positioning and marketing message) or does it need to be adjusted for each segment?
While we would like to think that a "one size fits all" strategy works well all the time, in today's world of mass data and choice, that may not always be the ideal solution, especially if you're looking to long growth, customer retention and innovation potential.
About the Author: Dora Cheatham, Founder & President of Austen Marketing & Communications has over 20 years' experience in International Business Development & Marketing, specializing in B2B Marketing, Aviation Industry Marketing and New Product Development Processes.
Contact Dora Cheatham @ firstname.lastname@example.org for a free copy of the Austen Marketing & Communications Business Plan Guidelines and information on how to Develop a Better Business Plan.
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