In a consumer society, we are interested in the behaviour of mainstream consumers, but would want to focus on the most valuable customers. Mainstream consumers appreciate and value the product/service and convey these to different segments of customers. Consumers within these segments again carry different levels of appreciation of the product/service. Some of them are high value, corresponding to valuable customers. Some of them are low value, those that we could let go. Customers in such segments are further broken into smaller groups until appreciation and value harmonize. Interplay of recognizing proper segments for a given product/service and refining the product/service for the relevant segments is one important factor in successful businesses.
Customer Segmentation is a process to divide customers into mutually exclusive groups so that:
- Customers within a group are as similar as possible;
- Customers in other groups are as different as possible.
Differentiating customers' needs and values provides you with the ability to:
- Prioritize your efforts and gain the most advantage with your most valuable customers;
- Tailor your company's products and services towards customer's lifestyle, based on customers' lifestyle clusters.
- Leverage the power of one-to-one marketing and the coverage of mass marketing by deploying customer segmentation for lifestyle cluster marketing.
The behavior, needs and value of an individual consumer can be different from another one. But as a group, many consumers share similar characteristics. A few key factors, e.g., the neighborhood we live in, size of the household, annual income, type of car and education level, determine key consuming behavior.
Manifold's Customer Segmentation is an adaptive clustering technique, based on comprehensive and precise demographic, expenditure and consumer behavior databases and customer data. It will enable you to identify, retain and grow the base of the most valuable market segments for your products and services.
Example: In 1892, V. Pareto, an Italian-Swiss socio-economist, derived the 80:20 Rule (a.k.a. The Pareto Principle). This principle is widely applicable to many fields:
| Personal income |
20% of individuals control 80% of the wealth of a society |
| Customer value |
20% of your customers produce 80% of your profit |
| Customer complaints |
80% of complaints are about the same 20% of products/services |
| Advertising |
20% of your advertising produces 80% of your campaign's results |
| Salespeople |
20% of a sales force will develop 80% of the annual results |
| Product defects |
20% of the input errors typically cause 80% of the defects |
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