1. Customer Segments

The total customer pie is divided into segments based on the way organization’s products or services address a specific need for the segment. The customer segment is an essential part of an organization’s business model and is the key to ensuring that the product features are aligned with the segments characteristics and needs.

Customer Segmenting is the practice of dividing a customer base into groups of individuals that are similar in specific ways, such as age, gender, interests and spending habits.

To carry out an effective customer segmentation, a company must first know its customers, both through their current and future needs. Then the organization must list its customers in terms of priority, including a list of potential future customers. Finally, the company should do a thorough assessment of its customers by understanding their strengths and weaknesses and exploring other kinds of customers who the company may benefit from more if they are to focus on them.

Various customer segments are as below:

1. Mass Market: An organization opting for this type of customer segment gives itself a wide pool of potential customers because it feels that its product is a relevant need amongst the general population. A potential product for such an organization could be Coca-Cola.
2. Niche Market: This customer segment is based on highly specific needs and unique traits of its clients. An example of an organization with a niche customer segment is Louis Vuitton.
3. Segmented: Organizations adopting the segmented approach create further segmentation in their main customer segment based on slight variations in the customer’s demographics and resultantly, their needs.
4. Diversify: An organization with a diversified market segment is flexible in the iterations of its product or service tweaking it to suit the needs of segments with dissimilar needs or traits.
5. Multi-Sided Platform/ Market: This kind of segment serves customers who have a relationship to each other, i.e. blogging sites need a large group of active bloggers to attract advertisers. And they need advertisers to create cash flow. Therefore, only by creating a pull with both segments will the blogging site be able to have a successful business model.

The basic questions you must answer in this category are:

Which groups are you creating value for? Who is your most important audience? What are the characteristics of the people who are looking for my value propositions? Who will you help?