Join Doug Ladd for an in-depth discussion in this video Why do people buy your product?, part of Marketing Foundations: Customer Segmentation.
- The toothpaste market is one of the clearest examples of where marketers segment their customers based upon the benefits they seek. We all buy toothpaste right? At least I hope you do. So let me ask you this. Do you buy the toothpaste you use because other people in your zip code buy the same one? Or because you see other people with the same level of education or income using the same brand? Probably not. The toothpaste market is commonly segmented by the reason why or benefits sought method.
There is a segment of the market that seeks a toothpaste that doesn't hurt their sensitive teeth. Another group is looking for teeth brightening. One is searching for breath freshening and then another is looking for cavity prevention. Some marketers will use benefits sought segmentation as a way to augment their other segmentation methods. Lets look at the timepiece market as an example. Clearly you can segment the watch buying market on demographics. Women have different tastes than men.
Higher income people in general are more likely to buy luxury brands such as Rolex and IWC. You can also divide the watch market using behavioral segmentation methods. There are those who simply want a watch to be able to tell time. Then there are those who are looking for style. In a style category, there are some watches that make it really difficult to tell what time it is. But they deliver on the benefit of looking unique or stylish. Another way to look at your customers or targets in is the occasion or timing of the purchaser consumption.
When was the last time you had orange juice with your lunch or evening meal? People tend to think of orange juice as a breakfast drink. But lemonade is another fruit drink that people enjoy later in the day. Why is that? Have you ever seen an advertisement showing someone drinking orange juice at anytime other than with breakfast? To the best of my knowledge there aren't any laws against drinking orange juice after noon. But you wouldn't know that from the marketing campaigns of the big juice companies. There are other categories of products and services that you can think of as occasion-based.
If you own a flower shop, your business certainly sees large fluctuations around Valentine's Day, Mother's Day, and weddings. Developing customer segments based upon benefits sought or occasions can be very useful for your business. Doing this starts with data analysis and tracking. If you haven't already done so, here's how you do it. Understanding what benefits consumers are seeking, is accomplished by interviewing customers and targets. The key is to focus on what features are most important to them when shopping in the category.
Going back to our toothpaste example. You can imagine the emphasis of market researches around understanding why fresh breath is important to some consumers and when talking with the customers who have sensitive teeth, you need to learn what other options they consider beyond your brand. This emphasis on the features and benefits that customers are seeking, is key. As you hear customers verbalize why they benefit from using the product, you should look for commonalities and patterns. Creating buckets into which you can place these insights will help you.
Be sure to pay attention to different motivations that you hear. At a minimum, you can look for benefits that line up with Maslow's Hierarchy of Needs. You could say the person who buys the toothpaste that doesn't hurt his sensitive teeth? Is looking for benefits in the area of safety and security. The person looking for fresher breath? May be pursuing benefits in love and belonging. While the brighter teeth seekers are interested in self-esteem benefits. This will ultimately help you with other components of the marketing mix.
Defining your product, price, distribution, and promotional plans, based upon the benefits your customers want most, can help differentiate your brand. To develop hypotheses around the occasion shoppers, you begin by tracking your sales trends by date and making note of spikes and dips. Again, looking for patterns is important. I'd suggest you look at changes between days of the week, special events, sporting seasons, holidays, even the weather.
Does your business move appreciably when it rains? There may be some opportunities for you to consider in your business plan, after you perform this analysis. In the end, we all buy products and services because we expect to receive some benefit from consuming them. If you can understand how your customers and targets prioritize the different benefits you offer, you'll be well on your way to segmenting them in a meaningful way. What will you learn when you begin this work?
- Segmenting by location
- Segmenting by demographics
- Segmenting by usage or other behavior
- Why segmenting is important
- Creating and using customer personas