Impact of Customer Valuation on Market Segmentation
Proper segmentation of a market is one of the most critical tasks of marketing. However, while segmenting a market, you should pay attention to attach proper value to the customers and prioritize them accordingly. Thereafter, you should also make a business impact assessment to validate such segmentation and prioritization.
Here, we will discuss how a business can be benefitted from such a market segmentation approach that is based on customer valuation:
Profitable Pricing Decisions
Firstly, it helps the business to arrive at the most profitable pricing decisions. Market segmentation models based on customer valuation depend on the actual value recognized by and provided to the customers. This allows the business to gauge which customer segment can pay the most profitable price. Based on this, the marketer can decide on different prices to charge from different buyer groups.
Better Assessment of Buyer Needs
Secondly, it gives the business a better assessment of the needs of different groups of buyers. Different buyer groups have different levels of motivation, which influence their needs. Other methods of market segmentations cannot properly correlate between these motivation levels, which are so different from one segment to another. At best, they can prioritize only the needs that are important to the customers. But, they cannot prioritize the needs that have the greatest impact on the ‘costing’ of the business when it attempts to serve those needs. It’s the value-based market segmentation approach that allows the business to prioritize the needs by looking at the costing, constraints and the profitability from the point of view of the business.
In-Depth Interaction with Customers
Finally, a market segmentation approach based on customer valuation facilitates in-depth interaction with the customers. Hence, it allows the business to find out why customers look for certain benefits in certain products. Such important insights help the business to develop new products/services or make improvements to the existing ones.
You may also like to read this blog post about How to Stay Aligned With Your Team and Customers
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