Differentiate Your Customers – Market Segmentation

Updated: Jul 27



When I was teaching Business Marketing at both Kean and Rutgers Universities one of my favorite mantras I would teach my students was “Differentiate or Die” which I, of course, got from Jack Trout’s book of the same name.

What Trout talks about in the book, and what I was trying to ingrain in my students is that as a company takes a product to market, they must differentiate themselves from their competition, hopefully through something the customer values. The concept of differentiation is essential to your business and your products, and it would be hard to find people who do not understand the concept, even if they may not have differentiation in their product or company.

In this blog I want to take a different approach to Differentiation, perhaps using the fairly common knowledge of differentiating your product or company and applying it in an area where I see many companies struggle – customer and market segmentation. Just like we want to be differentiated in our customers' eyes, we need to realize that we have to apply the same concept to our customers and the markets we play in. Not every customer is the same and we need to differentiate them. Can we identify characteristics, motivations or needs that differ within our customer base? [Hoping everyone is saying Yes!] Then let’s start differentiating our customers. Let’s differentiate them into groups that are similar, have similar needs and motivations, and have different groups for other customers that have their own similarities.

This is the key concept around market segmentation – understand the differences in your customers and markets, group your customers and markets into segments that are similar, and treat these different segments differently. If you have a segment that is motivated by price and a different segment that is motivated by service levels, you should have different products, prices, or channels for those different market segments. You may even have different branding and positioning. Acknowledging these differences in your customers and taking action to treat different segments based on what drives them is key. It will improve your company, your results and the value proposition for your customers.

So how do you get started? Here are my three favorite ways to start:

Analyze Data

Analyze any data you can get your hands on. Data on pricing or discounts, data on usage, demographic data, whatever data you have access to, and look for trends and clustering – these could be the signs of differences in your customers/market and market segments.


Talk to Customers

Talk to your customers, customers of your competitors, customers who haven’t bought a solution yet but you think are in your market. Learn about their motivations, why did they buy, what was important, other factors that could differentiate them from other customers, and look for trends and similarities to start grouping them into segments.


Build a Hypothesis

Already have some ideas? Build a hypothesis on segments and start testing. Once you have the segments, start changing how you engage with and talk to the segments, based on what makes them similar or different, and see if it changes your success rates (open rates, click-through rates, engagement time, etc.). I am willing to bet you will see changes for the positive.

If you are interested in learning more about how you can Differentiate Your Customers into Market Segments and how you can then leverage those segments to build and execute successful strategies feel free to e-mail me at grant@growthstrategylabs.com. I always enjoy a good conversation about the power of market segmentation.

Stay tuned for my other take on Differentiate Your Customers – Help them add value to their customers.


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