How to select customer segmentation schemes mindset or behavior or both? part 1

All customers are unique individuals, and therefore have unique mindsets. For every existing category of product (or service) and every new category, you can dream up segmentation schemes. You can use characteristics of the customers’ mindset, usage scenarios, buying behavior, channel preferences, brand preferences; all sorts of “reasons” to define your segmentation schemes. You make sure it’s some intrinsic property of the person that “stays coupled to him or her” (at least for your business cycle duration). If you are new at this game, you might first consider a pure 2 set partition, think of a two segments that comprise the totality of all your (potential) customers, or “your target market”. The key is to make sure that your customer segmentation is not tied to marketing channel. More and more customers are not “situated” in their zipcode, but they are mobile, their phones (smartphones, tablets, e-commerce transactions) are all mobile. So customers are no longer 1:1 with a location; that’s so old school. If you are concerned only with physical distribution, local vendors, bricks and mortar, branch offices, than fine, use region.

It’s easiest to consider a partition with hard (crisp) boundaries; for example either a person falls into segment 1, or 2. Never both. In the big picture, segments that work best may have loose or fuzzy boundaries, and also may overlap. Consider the crisp age group segments 18-24, then 25-40. They are well defined and don’t overlap. The age group segments 18-24, 20-30, overlap quite a lot, yet remain crisply defined. Now consider those who’s favorite color is silver, vs. gold. How can you possibly define who’s in which set from the outside, without speaking to each individual. This can be tested online, uniquely by your firm, but chances are you cannot buy a third party report with two list of such customers.

Now consider the set of customers who’s behavior is “relational”, vs. “transactional”. This slideshare presentation below is a great example of a “mindset” 2-set partition on a potential target market. For each brand, product category, and product instance, with appropriate awareness in the market, you can test which customers “behave” in such a way that they can be categorized into those two segments.

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