Customer Segmentation and Targeting
Last updated
Last updated
Customer segmentation and targeting involves dividing a broad consumer or business market into sub-groups of consumers (known as segments) based on some type of shared characteristics. The overall aim of segmentation is to identify high-yield segments – that is, those segments that are likely to be the most profitable or that have growth potential – so that these can be selected for special attention. Targeting involves choosing specific segments identified as a result of segmentation to sell products.
Imagine you're a Product Manager at an electric car company like Rivian. You've been tasked with developing a new feature for the first electric vehicle. To do this, you would need to consider how this feature aligns with the needs and preferences of the vehicle’s target customers.
Let's consider a hypothetical scenario. Suppose Rivian plans to introduce a new feature that allows for enhanced off-road navigation. As a PM, you must understand how this feature would benefit your target customers. You will need to conduct user research, perhaps through surveys or interviews, to gather insights about your customers' off-road driving experiences. You will need to thoroughly understand their pain points, needs, and expectations.
Based on this understanding, you work with your cross-functional team to design and develop this feature. You need to ensure that it not only meets the functional requirements of off-road navigation but also aligns with the adventurous spirit that characterizes your target customers.
Once the feature is developed, you will need to work with your marketing team to effectively communicate the benefits of this feature to your target customers. You will need to highlight how this feature enhances the off-road driving experience and how it aligns with your customers’ adventurous lifestyle.
Understanding customer segmentation and targeting is not just about identifying who your customers are, it's about understanding their needs, their preferences, and their lifestyle. It's about ensuring that every feature you develop and every message you communicate aligns with these insights.
One of the challenges in customer segmentation and targeting is ensuring that the segments are distinct and meaningful. It can be difficult to identify clear boundaries between different consumer groups, especially in a diverse market like electric vehicles. Additionally, targeting a specific segment means focusing resources on that segment, which can be risky if the segment doesn't respond as expected.
Imagine you were a Product Manager for a new feature for an electric car targeted at a close family member or friend. How would you understand whether this feature aligns with their needs and preferences? What research methods would you use? How would you communicate the benefits of this feature to your target customers?
Customer Segmentation [ | ]
Target Market [ | ]
User Research [ | ]
Feature Development [ | ]