What does "customer segmentation" entail?

Customer segmentation involves dividing customers into distinct groups based on shared characteristics. This approach allows businesses to identify and target specific needs, preferences, and behaviors within different customer segments, leading to more tailored and effective marketing strategies. By understanding the unique traits of each group—such as demographic, psychographic, or behavioral factors—companies can design personalized marketing efforts, improve customer satisfaction, and ultimately boost sales.

This strategy contrasts sharply with the idea of adopting a one-size-fits-all marketing approach, which could dilute the effectiveness of campaigns. It also emphasizes the importance of inclusivity across varying demographics, rather than isolating or neglecting certain groups or exclusively targeting only affluent customers. By employing customer segmentation, companies can optimize their resources and enhance overall engagement with a diverse customer base.