Customer Segmentation is Vital for Retailers
Very few retailers understand how to fully use customer segmentation to improve trading. Martec recommends lifestyle segmentation over demographic segmentation nearly every time. For example, a home improvement/DIY retailer identified 6 segments including:
- Divorced ladies now owning the family home
- Senior citizens living on their pensions
- Jobbing tradespeople doing small projects for homes and businesses.
The next step is where the value of this approach kicks in big time. When buyers select products for an assortment, do they review the good/better/best structure for senior citizens, rather than for the assortment as a whole? You miss opportunities when you do the latter. Do store operations people recognise that divorced homeowners need more expert consultation than jobbing tradespeople, who might be offended for being treated as less knowledgeable than they are? Do assortment planners recognise that pensioners will likely shop more in the good price points and less in the best? Does marketing recognise these facts and tailor promotions for each main customer segment?
The difference this makes to trading results is huge. To get the more detailed version of this article, click this link. If you don’t have access to our Retail and Consumer Goods Industry WIKI, complete the Contact Us form and we’ll send you a complementary copy.
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Posted by Brian Hume
21st June 2024
