Segmentation Methods for Management Consultants & Business Analysts

Description
Segmentation Methods for Management Consultants & Business Analysts
A practical guide on how to analyze segments of customers during consulting projects
If you are participating in a consulting project devoted to Sales & Marketing or Strategy most likely you will have to either do segmentation or analyze existing segments of customers. You will try to achieve it on the basis of internal data, market research as well as other external data. In this presentation, I will teach how to rapidly and efficiently segment customers and analyze existing segments during consulting projects.
In the presentation you will learn the following things:
1. How you can segment customers?
2. When to use a specific segmentation technique?
3. Crucial Excel formulas you will need to do segmentation
4. How to do simple segmentations in Excel using internal or external data
5. How the B2B segmentation differs from B2C segmentation
We will start by discussing the 4 main methods of segmentation used in consumer markets.
1. Geographic segmentation. One of the first types of segmentation used is geographic segmentation. In this sort of segmentation, we divide customers by physical areas to which they belong. Customers that live in different regions, cities, or countries may belong to totally different segments.
2. Demographic segmentation. One of the most popular and commonly used types of market segmentation is demographic segmentation. In the demographic segmentation, we divide customers into groups on the basis of their age, gender family size, education, nationality, etc. Usually, you will use 2-4 characteristics to define unique segments.
3. Behavioral segmentation. If you gather a lot of information on customer behavior you can consider using behavioral segmentation. In the behavioral segmentation, we divide customers by looking at how often they use the product, at what stage of purchase there are, their status, the benefit sought, etc. This method requires much more data and is heavily used in the case of digital products. With the rise of loyalty programs and direct-to-consumer business, it has become extremely popular.
4. Psychographic segmentation. People within the same demographic group may still make different choices. That’s why some analysts prefer to use Psychographic segmentation. In psychographic segmentation, we divide customers by looking at their believes, attitudes, values, lifestyle, interests. This method has been pretty popular 10-15 years ago. Unfortunately, it’s pretty difficult to make it actionable. On top of that, we have seen segments of people with similar believes making different choices. It’s also difficult to use this segmentation if you are operating in many geographical markets