![]() Each consumer group feels strongly enough to pay for a different version of the product or service, tailored to their preferences.There is a very clear difference in the level of profitability each group represents for the organization. ![]() The groups require relationships of different kinds.The group needs a separate Distribution Channel to be reached.The customer groups have a particular need which justifies the creation of a product to match this need.Then, the organization must create a value proposition and employ a business model best suited to servicing their chosen customer segment’s needs.Īn organization can categorize consumers into distinct groups if they have the following characteristics Hence, it is fundamental for an organization to understand the trade-off between different customer segments and carefully select which segment it wants to target. An organization can choose to target a single group or multiple groups through its products and services.īy matching your customer segment to your value proposition, you can achieve a more lucrative revenue stream. A customer segment may also be defined through demographics such as age, ethnicity, profession, gender, etc or on their psychographic factors such as spending behavior, interests, and motivations. Customer segments is one of the most important building blocks in the business model canvas for your business, so getting this building block right is key to your success.Ĭustomers can be segmented into distinct groups based on needs, behaviors and other traits that they share. WHAT IS A CUSTOMER SEGMENT?Ĭustomer segments are the community of customers or businesses that you are aiming to sell your product or services to. In this article, we will look at 1) what is a customer segment?, 2) types of customer segments, 3) creating a customer profile (customer jobs, customer gains and customer pains) and 4) a case study. © Entrepreneurial Insights based on the concept of Alex Osterwalder
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