Chapter 6. Dividing Customers into Groups

In This Chapter

  • Defining what market segments are

  • Coming up with ways to group customers

  • Creating market segments that you can use

  • Predicting how market segments behave

It's nice to think of your customers as being flesh-and-blood people – the Tom, Dick, and Mary who regularly walk through your doors. But it's also tempting to think of customers as being everybody out there – hey, shouldn't the whole world want your products and services? Unfortunately, neither of these views is practical when it comes to creating your business plan.

Take a closer look at your customers (a good place to start is Chapter 5). One of the first things that you'll notice is that many of them have a great deal in common – a fact that gives you a golden opportunity to divide customers into specific groups based on their similarities. Eureka! By planning your business around these customer groups, you can serve your customers' particular needs effectively.

In this chapter, we look at your customers in groups, introducing the concept of market segments in detail. We explore various ways to identify market segments based on who is buying, what they buy, and why they buy. Then we show you how to create practical market segments that you can use in your business plan. Finally, we talk about things you can do to figure out more about how market segments are behaving.

Defining Market Segments

Take a moment to think about your customers. You'd no doubt call many of them good customers, ...

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