Customer-oriented segmentation is process that involves determining the kinds of customers that exist in the market and a critical analysis of their needs (Weinstein, 2013). There are several variables that can be used to carry out customer-oriented segmentation. Demographic variable is a factor that can be used to segment the market where personal statistics such as gender, income and level of education can help a business carry out market segmentation (Faraone et. al., 2012). In the market there exist customers who have similar taste while other customers choose to stand apart. Customer with similar tastes and preferences can be used in carrying out market segmentation. The behaviour and benefits sought by consumers are variables that can be used to differentiate one customer from another. Customers have different interests and desires and they will seek to satisfy them through the purchase of products.
After customer segmentation has been fully carried out, a business may decide to target one or more of the identified segments. The choice made by a business with regards to choosing segments will depend on whether the existing segments are served fully with current companies, the size of the segment and the whether the company is capable of serving the chosen segment. A company might choose to serve a specific customer group based on past purchases and demographics.
Customer-oriented segmentation and targeting tend to be more specific for B2B businesses compared to B2C. The products offered at B2B tend to be targeting a specific group of people therefore the process of segmentation and targeting tend to be more direct. For B2C businesses the target on the consumers is larger compared to B2B. They cast a wide net to ensure that they cover all the potential markets. Therefore, customer-oriented segmentation and targeting process tends to be more detailed and a closer evaluation has to be carried out. Segmentation and targeting process plays a significant lead in B2B business as it helps it generate leads through the providence of education resources with regards to their products and establishing solid relationships. For B2C, customer-oriented segmentation and targeting process plays a role in helping the company make a sale and generate revenue.
The company’s market is the health and beverage market where there has been a strong emphasis on the production of products that can deliver nutritional benefits without necessarily having to lose the taste. There has been an increase in the demand for nutritional and performance drinks by on-the-go customers who desire to consume nutritional products without spending a lot of time preparing the product (Armstrong et. al., 2015). This can be attributed to the busy lifestyles which do not give them an opportunity to prepare drinks from scratch. The company has huge potential of growth as there are many untapped opportunities in the health and beverage market.
B2B Market Segmentation
Business-to-business (B2B) is defined as a situation where two businesses make commercial transactions with one another (Simkin, 2008). B2B situations mainly occur when one business is seeking for materials, needs services of another firm or is seeking to resell its goods and services to another business. The main approaches used in B2B segmentation include firmographics segmentation, value-based segmentation, and needs-based segmentation (Simkin, 2008).
Firmographics segmentation is a market division that is carried out based on the available customer data such as the size of a company and industry. Naturally Cheeky is a company dealing with a health drink called apple cider vinegar therefore must focus on looking into the size of the companies and industries specialised in manufacturing health beverages. Value-based segmentation seeks to divide customers based on the economic value they place in an organisation in terms of both completed and predicted sales. This approach is appropriate when the company is focusing on acquiring high-value customers. There are many well-established companies that seek to buy manufactured health drinks, critical evaluation is important for the team before signing a deal to make the most out of each transaction in terms of expanding the profit margin. Needs-based segmentation is a segmentation where customers are grouped according to the validated needs they have for certain products or services. Research has revealed that needs-based segmentation is the most accurate method for targeting customers.
B2C Market Segmentation
Business to consumer (B2C) is defined as direct transactions that occur between a company and consumers who are the end users of the product. B2C is a business model that caused ripples in the mid-1990s when small businesses could sell directly to consumers through the internet without necessarily having to own huge amounts of stock (Lilien & Grewal, 2012). B2C segmentation can be carried out using different techniques and information.
Demographic segmentation is a technique that seeks to categorise customers on dimensions such as education, gender, income and marital status. Geographic segmentation uses location to segment customers while behavioural segmentation divides customers based on attributes such as product awareness and loyalty, purchasing patterns and social media usage. Psychographic segmentation groups customers based on their personality traits, lifestyle, and social class (Lilien & Grewal, 2012).
For the company which is focusing on expanding its production and sale, behavioural and psychographic segmentation seem to be the most appropriate technique for dividing the market. Behavioural segmentation refers to the dividing customers based on how each customer makes purchasing decisions. Some of the attributes displayed before a potential customer purchases a product include the willingness to purchase, loyalty towards a particular brand and the number of times a customer has interacted with a particular brand. The main aim of behavioural segmentation is to determine the purchasing, usage and spending habits of potential customers. The marketing team will highly benefit from behavioural segmentation as they will be able to know whether the product will be able to meet the needs of potential customers, they can tailor the product and marketing message to their needs.
Psychographic segmentation is a method where the company divides the market based on the personality traits, lifestyles, attitudes and values held by potential customers. It is an accurate method as the data acquired by the company can help it tailor the product according to the characteristics of the potential customers. Some customers really care about their health and lifestyles and they will purchase any product that will help them boost their health levels. Learning the different interests, attitudes and traits of these customers will help the company target the right group of people to carry out their marketing campaigns.
Profile data for consumer markets
A consumer profile is a method where a company describes a potential consumer categorically in order for each to be grouped for marketing and advertising purposes (Wind & Bell, 2007). Consumer profiling is the best way a consumer can experience success in its marketing and advertising campaigns. For the marketing team to be successful, it needs to find data related to the preferences, lifestyle, attributes and personality traits of potential customers in the market. This data can be used to categorise customers in different tiers (Wind & Bell, 2007). The first tier can group customers according to demographics, socio-economic status, and product usage. The second tier categorises the customer further according t psychographics, behavioural and benefits sought.
Microsegments are an advanced form of market segmentation where customers are grouped into specific segments based on several factors such as behavioural predictions (Powers & Sterling, 2008). Psychographics and behavioural methods play a key role in grouping customers into specific groups. Health fanatics might be a good group to consider when seeking for the appropriate micro segments for the company. The behavioural predictions that the marketing team can utilise in choosing the appropriate microsegments include brand loyalty and purchasing patterns with regards to sensitivity in price.
Macrosegments is a technique that can be used when a company is interested in classifying customers based on variables covering a bigger scope such as industry and organisation (Solomon et. al., 2014). A large organisation will buy products differently compared to small organisations. Most large organisations will demand high standard services and discounts compared to the small organisations. The industry in which an organisation belongs to will determine the kind of products it will be purchasing. For Naturally Cheeky, the marketing team needs to target organisations that exist in the health and fitness industry. It is important for the company to carry out an in-depth analysis of the industry before embarking on carrying out marketing campaigns.
Behavioural segmentation is described as the act of categorising potential customers based on the way they act when making purchasing decisions. The B2C niche customer segment that the company should focus on is behavioural segmentation. The customer behaviours that the marketing team should focus on include the willingness to purchase, level of loyalty and the number of times a potential customer interacts with the brand. Behavioural segmentation will help the marketing team tailor the company’s products to meet the needs of the customer and align the marketing strategies and initiatives to be able to reach out to the individuals who have shown interest in the product (Powers & Sterling, 2008). Behavioural segmentation can be categorised into six types of behaviours that is the purchasing behaviour, occasion, usage rate, benefits sought, loyalty and user status. Purchasing behaviour can be influenced by the frequent purchases made by a customer or the desire for them to explore new products. However, the marketing team should focus on the benefits sought by the customer who constantly uses health drinks.
The Rationale for Selecting Behavioural Segmentation
Behavioural segmentation is distinct as it can help the company promote its products especially apple cider vinegar in a highly streamlined manner as it captures a potential customer based on their needs. This makes it easier for the company to target the potential customers and market the product. For the individuals with consistent behaviour, the company can use a uniform marketing campaign to reach out to them as they are most likely to purchase the product (Hollywood, Armstrong & Durkin, 2007). Brand loyalty can be easily constructed by the company around customers who have shown an affinity towards a particular brand.
Relevant Concepts and Theories
Stages in decision-making process
A potential customer recognises the problems or deficiency he might be exp