Segmentation for Management Consultants & Business Analysts

Segmentation is vital for every business. It helps you make decisions on strategy, products, branding. In this section, we will have a look at essential methods used to segment the B2C market

Segmentation allows us to do a lot of things

• Understand customers

• Measure segments

• Define your strategy

• Target customers

• Helps you pick the right 4P Mix (Product, Place, Price, Promotion)

• Notice opportunities

• Notice threats

The process of preparing segmentation consist of 5 main stages

• Check what data are available

• Choose segmentation method

• Create segmentation sample

• Analyze segments

• Do necessary changes

Let’s have a look at the main methods of segmentation used in B2C

• Geographic segmentation

• Demographic segmentation

• Behavioral segmentation

• Psychographic segmentation

• Mixed

One of the first types of segmentation used is geographic segmentation. Let’s see how and when we use it in practice.

Let’s imagine that we were asked to analyze the geographic segmentation of customers who make purchases in convenience stores. Let’s have a look at assumptions and data.

In this lecture, we show the solution to the previously introduced case study.

In this lecture, we show the solution to the previously introduced case study.

One of the most popular and commonly used types of market segmentation is demographic segmentation. Let’s see when and how it is used. In demographic segmentation, we use the following characteristics to divide customers into groups:

Age, gender, family size, the lifecycle of the family, income, occupation, education, nationality

Let's see when we use this sort of segmentation

You were hired by a Fashion Retailer to segment the market and analyze the value of customers as well as the size of segments. Let’s look at the assumptions and data.

In this lecture, we show the solution to the previously introduced case study.

In this lecture, we show the solution to the previously introduced case study.

In this lecture, we show the solution to the previously introduced case study.

If you gather a lot of information on customer behavior you can consider using behavioral segmentation. Let’s see when and how it is used.

In behavioral segmentation, we divide customers by following characteristics

• Product usage rate

• Loyalty status

• Benefit sought

• Historical behavior

• Ready to buy stage

• User / Customer status

Imagine that you were hired to prepare a behavioral segmentation for a multichannel apparel firm. Let’s have a look at how you can do that.

In this lecture, we show the solution to the previously introduced case study.

In this lecture, we show the solution to the previously introduced case study.

In this lecture, we show the solution to the previously introduced case study.

People within the same demographic group may still make different choices. Let’s have a look at how and when to use psychographic segmentation.

In psychographic segmentation, we divide customers by following characteristics

• Attitude

• Believes

• Lifestyle

• Social Class

• Interests

• Opinions

• Values

• In targeting you evaluate segments and you decide which you will concentrate on

• You can pick 1 segment, a few segments, or attack all segments at once

• In evaluation, you look at the size of the segments, profitability of segments, and how easy it is to conquer a specific segment

• Certain segments may require modification of the product, different sales channels, different marketing

Here we will discuss the relationship between targeting and the product.

To segment the market you need data. Let’s have a look where you can look for the data that you will need.

• Surveys & Consumer Research

• Data from your website / social media

• Internal Transactional Data

• Loyalty Program

• Market Data Aggregators i.e. AC Nielsen

• Customer Reviews

• Ready-made consumer reports and consumer surveys i.e. TGI

• Public Data

• Data gathered on the behavior of customers

In this brief section, we are going to explore some methods of segmentation that can be used on B2B markets

Let’s have a look at how B2C segmentation differs from B2B segmentation.

Let's see what you should do if you have a firm with many business units

One of the most often used tools for segmentation is Excel. In this section, I will show you the essential formulas that will help you segment customers and analyze them.

In this lecture, I will show you how to use one of the most useful functions - the VLOOKUP

In this lecture, I will show you how to use one of the most useful functions - the VLOOKUP. We will look at the additional value coming from the so-called approximate match

In this lecture, we show you what you can use the VLOOKUP function for. It is one of the most widely used functions that simplifies a lot of things

We start with basic VLOOKUP Usage just to show you the flavor and basic construction of VLOOKUP.

We start with basic VLOOKUP Usage just to show you the flavor and basic construction of VLOOKUP.

VLOOKUP can be used to assign categories. This helps you easily by creating rules divide data into segments, cohorts and analyzing them, drawing conclusions

HLOOKUP is a cousin of VLOOKUP. It is not that often used independently but has some serious application when combined with VLOOKUP.

Another useful function is the so-called MATCH. We will see what it gives you.

In this lecture, I will show you how to assign categories using VLOOKUP and MATCH. You have the categories described in the matrix and you want to use them

In this lecture, I will show you how to assign categories using VLOOKUP and HLOOKUP. MATCH can be used as an alternative to the HLOOKUP

To assign categories that are numbers you can also use Sumifs which works for many criteria. In this lecture, I will show you how to use it. Later on, I will use it to assign also categories that are not number but for example names

Now we will use the SUMIFS to assign to every person a segment that he belongs to. We will do it in 2 phases. First, we will assign a number that will represent a specific segment, and then using VLOOKUP we will change this into a name.

In this lecture, I will show you the data we will need to solve the case study.

In this lecture, we will solve the previously introduced case study.

Pivot Tables help you group data and analyze them fast. You can go from general to specific within seconds thanks to pivot tables. I will show you in this lecture how to use pivot tables, what you can use instead.

We start with basic usage of pivot tables

A cousin of pivot tables is the pivot chart. I will show you how to use the pivot charts and how does it relate to pivot tables

It is not easy to get data from pivot tables. I will show you how to do it without any complications and special formulas

Slicers are a nice add-on to pivot tables and pivot charts that enable you fast filtering without any knowledge of pivot tables. They can be successfully used to create i.e. dashboards

Sometimes you need more Excel-like to build on the basis of this. I will show you how to get the same results without pivot tables

Pivot tables enable you to go from general to specific. I will show you how to do it 

In this section, we will look at more case studies that will be devoted to segmentation.

Imagine that you were hired to help the alcohol producer analyze customer segments and check their shares in revenues as well as margin generation.

In this lecture, we show the solution to the previously introduced case study.

In this lecture, we show the solution to the previously introduced case study.

Let’s imagine that you were asked to analyze customer segments and baskets using selected receipts from your client – a chain of gift stores.

In this lecture, we will be solving the previously introduced case study.

In this lecture, we will be solving the previously introduced case study.

In this lecture, we will be solving the previously introduced case study.

In this lecture, we will be solving the previously introduced case study.

In some cases, you have no access to internal data, and you have to attempt to segment customers just by looking at external data. Let’s have a look at how it can be done in practice.

In many cases, you will have to do not only store checks in physical stores but also in online stores. We will discuss this subject in this lecture. Before going deeper into this lecture I would recommend revising the lecture on offline store checks. In the online store checks you can compare different types of stores:

1. Compare different offline stores

2. Compare different online stores

3. Compare offline to online for the same brand

4. Compare offline to online for different brands

We will discuss this in this lecture in more detail. Later on, we will have a case study devoted to online store-checks

During online store-check you most likely will be gathering the following information:

• Name, photos of the product & assigned categories

• Prices of specific products

• Available quantity

• # of reviews

• Rules for organizing data on the webpage

• Rules for presenting data

• Additional information on the availability in offline stores

• Discounts on the product

We will discuss this subject in more detail in this lecture

Let’s see how you can use the online store checks to analyze the market. This time around we will do a store check for cosmetics

In this lecture, we look at the data on cosmetics producers and their products that we will need for this case study.

In this lecture, we look at the data on cosmetics producers and their products that we will need for this case study.

In this lecture, we solve the case study on online store checks.

In this lecture, we solve the case study on online store checks.

The information from customers is extremely important. Nowadays we have plenty of sites that gather customers reviews. We will discuss how you can use them in market research. Below is a short summary of what you can learn from sites with a review.

In this lecture, we will discuss where you can find customer reviews for:

• Consumer Goods

• SaaS Products

• Restaurants / Hotels

• Local Services

Let's see how we can use Capterra for researching customer reviews.

Imagine that you were hired by a firm to analyze the emailing software market and to tell them whether there is a niche for them to create a new product. Use the customer reviews.

In this lecture, we will be solving the case study introduced in the previous lectures.

In this lecture, we will be solving the case study introduced in the previous lectures.

In this lecture, we will be solving the case study introduced in the previous lectures.

One of the ways to understand the market and competitors is to try and compare products especially from different firms. You can do that using comparison tools/sites.

In this lecture, we will be solving the case study introduced in the previous lectures.

Now let's see how you can define your competitors, through the customer's lenses. We will apply the jobs to be done framework.

We will define the Starbucks and Netflix competitors.

In this section, I will show a powerful framework that can be used to understand the role which the product plays in the life of a customer. This will help you innovate, find new business ideas and most of all identify the right competitor landscape from the point of view of the customers.

Let’s start with a short definition of Jobs to be done

• When we buy a product we essentially hire the product to get a specific job done.

• We define the “job” as the progress that the person is trying to make in particular circumstances and area

• The very same job can be done by totally different products or services

• Therefore, don’t fall in fall with your product, and don’t look too narrowly at the competitive landscape

• Be obsessed with the problem and the job that the customer hires you to do

• The same product for the specific customer can perform different jobs in different circumstances

Let’s try to define what jobs does the coffee and Facebook

Let’s see the process that will help you understand the Job To Be Done for a specific group of customers

• Understand the Jobs to Be Done

• Define the changes to your product

• Implement the changes and adjust the organization

• Change the positioning and the messaging

• Keep Focused on the Jobs to Be Done

Let’s see the process that will help you understand the Job To Be Done for a specific group of customers

• Understand the Jobs to Be Done

• Identify who is currently doing the Job

• Create the prototype of the product

• Start selling & marketing

• Keep Focused on the Jobs to Be Done

There are 5 main ways to find the Jobs to Be Done

• Observe jobs in your own life

• Analyze non-consumption

• Analyze workarounds & compensating behaviors

• Negative jobs

• Spot unusual usage of the product

Now let's see how you can define your competitors, through the customer's lenses. We will apply the jobs to be done framework.

We will define the Starbucks and Netflix competitors.