Strategic Planning with the Customer Segmentation Framework

Customer Segmentation is a technique that enables better strategic planning in business.

Customer segmentation is a method of defining categories and classifying customers based on common behaviors and attitudes. Segments should have clear boundaries (i.e., each customer should fall into only one segment) and meet the following conditions: it is distinct from other segments (different segments have different needs), it is homogeneous within the segment (exhibits common needs); it responds similarly to a market stimulus, and it can be reached by a market intervention.

Customer segmentation can be used to analyze both consumers (B2C) and business customers (B2B) using similar approaches. For a segmentation to be useful it must be predictive: it should be possible to classify a non-customer into the segments based on available information, qualifying questions asked during the sales process, or educated guesses.

The results of a segmentation can be used for many purposes:

• Develop products tailored to the distinct needs of each segment
• Set pricing based on price elasticity of each segment
• Target sales and marketing campaigns to the most profitable or highest-value prospects
• Develop targeted retention campaigns

Other Strategic Planning Frameworks

• 4P's Marketing Mix
• Seven S (7S) Management Framework
• AIDA - Attention, Interest, Desire, Action - Buying Process
• Ansoff's Matrix - Product-Market Growth Matrix - Expansion Strategy
• BCG Growth-Share Matrix
• Bass Diffusion Model - Product Adoption and Innovation
• Blue Ocean Strategy
• Choice Model for Decision-Making Behavior
• Competitive Advantage
• Core Competence - Collective Learning in the Organization
• Cost-Benefit Analysis
• Delta Model
• ERG (Existence, Relatedness, Growth) Theory of Motivation
• Experience Curve
• Framing Effect on Psychology and Marketing
• GE (McKinsey) Matrix
• Growth Phases
• Predicting Industry Evolution and Change
• OODA Loop - Observe, Orient, Decide, Act
• PDCA (Plan, Do, Check, Act) - The Deming Cycle
• PEST Analysis - Political, Economical, Social, Technological, Environmental, and Legal Factors
• Perceptual Mapping - Brand Marketing
• Porter's Five Forces
• Product and Marketing Positioning
• Product Lifecycle (Industry Lifecycle)
• Root Cause Analysis
• SWOT Analysis - Strengths, Weaknesses, Opportunties, Threats
• Technology Adoption Curve
• Value Chain
• Balanced Scorecard
• Benchmarking
• Customer Segmentation
• Pricing Strategy & Price Optimization
• Mergers and Acquisitions (M&A)