As your business grows, you will need multiple conditions and parameters for segmentation
Arun Pillai, February 27, 2019
Let us say you open a burger kiosk near your home. You might start off by making 30 burgers a day, for which you would buy the raw materials on a daily basis. You would focus more on getting the ingredients fresh every day, and on being able to sell all those 30 burgers off, in order to avoid wastage and losses.
As more and more people start buying your burgers, you would start getting specific requests for more ketchup or less onions, or a double patty. You would begin to make some of them less spicy for the kids, while for some others you would add the special chilly pickle which some people loved.
You might also begin to think of making fliers to send to people in their homes. As your business grows, you might hire another person to handle another kiosk in a different part of the city. For that part, you might design some fliers with promo codes etc.
In case your business grows big enough for you to expand to a different city, and then to multiple cities, then your messaging for each city would be different, and your product also might need some tweaking depending on local tastes.
The above is just a simple example of a moderately standardized product, and how both the product and the messaging need to be fine-tuned as the business grows.
When you are selling products or services with more variations possible, the need for multiple conditions and parameters for segmentations will also increase. Let us take a quick look at three segmentation approaches that any growing business need to take.
The basic segmentation that continues to hold true even as the business grows is on the basis of what the consumer wants. In the example given above, a simple segmentation would be clients who want ketchup in their burgers and those who do not. For any business, such needs could either be conveyed upfront by the clients or prospects themselves, or the business could find out these needs by basic market research.
Many companies look at segmentation from the other end of the stick, especially as the business grows. This is with respect to the value that a particular consumer brings to the business.
If we take the example of a bank, for instance, then as per the consumer needs, there could be many customers who need to open a savings account. But not all of them would keep the same amount of funds in their accounts. The bank could, therefore, segment them into high net worth clients and regular clients on the basis of their average balances.
As the business grows, another common variable on the basis of which segmentation can be done is the geographical indicator. For example, as a company grows, the customers could be from several countries. The messaging, the selling proposition, delivery conditions, and of course the price would need to be fine-tuned for different sets of customers.