Week 4 - Segmentation and Customer Obsession

Successful businesses obsess over their customers. One of the primary tools businesses use to accomplish this is segmentation. Segmentation is the identification of clusters of consumers with homogeneous purchasing behavior. More specifically, segmentation is identifying customers with similar needs, habits or attitudes that can be addressed through marketing. Without segmentation businesses have no choice but to market their product very broadly. Segmentation facilitates the process of customer obsession through identifying different customer segments for a business to target. Once a business has identified the market segments, they evaluate them and choose a market(s) to target. The next step is to create a positioning strategy that differentiates the business’s product offering and emphasizes selling points that customers in that market would find meaningful. This process allows the business to focus with precision on specific markets with specific products and marketing strategies. Ultimately, this process should reveal the unmet needs of customers and create a product to meet those needs. This process and the constant reevaluation of segmentation breeds customer obsession and one company that does this very well is Procter and Gamble.

P&G sells products that are generally targeted to everyone, so do they use segmentation? Yes. I’m going to steal from Dr. Talbott’s lecture and use P&G’s Tide as an example. Tide is a laundry detergent that conceivably (and hopefully) everyone that is responsible for washing clothes would be interested in. Laundry detergent isn’t necessarily a product that screams the need for a variety of choices, but that’s exactly what Tide has discovered. Through segmentation, Tide has discovered many different market segments and has created specific products for those segments. Take a look at the picture below. On the left, the product filter identifies six needs that Tide addresses and five different ways of applying it! Obsessing over the customer through the process of market segmentation has allowed Tide to discover niche segments that their one-size-fits all product was not addressing. The picture below is a screenshot of the Tide home page, and a basic Tide isn’t even on the front page! Segmentation leads to obsession, and obsession leads to this many types of laundry detergent!