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Author: Laird Reed Contributors: Barbara Bilodeau, Dorie Krawiec bc Segmentation Customer March 1998 Copyright© 1998 Bain Company, Inc. 1 2021/7/5 The customer segmentation concept Applications Customer segmentation steps segment customers choose target segments create value propositions for target segments determine profit potential of serving target segments with value propositions Examples needs-based behavioral Key takeaways Agenda 2 2021/7/5 The customer segmentation concept Applications Customer segmentation steps segment customers choose target segments create value propositions for target segments determine profit potential of serving target segments with value propositions Examples needs-based behavioral Key takeaways Agenda 3 2021/7/5 Competitors Customer Segmentation Purchase Criteria Rating (Importance Analysis) Company Positioning (Effectiveness Analysis) Attractiveness Analysis Value Proposition Development Customer Retention and Loyalty Customer Acquisition Customers To identify cost reduction opportunities Customer segmentation is an important tool for customer analysis. Cost Capabilities Strategic Purpose: Tools: To identify revenue and profit maximizing strategies To achieve differentiation and to preempt competitors’ moves To determine the strategies that fit best with a company’s core competencies Context 4 2021/7/5 *In some cases, there will be only one target segment Customer segmentation is a process of identifying homogeneous groups of customers. Once customers have been segmented, a company chooses target segments and approaches each segment with a value proposition that meets the segment’s needs. Each customer segment describes a homogeneous group of customers Segment customers(existing and potential) Choose target segments* Create value propositionfor each target segment Determine profit potential Target segments are the most attractive customer segments for a given company to focus on A value propo