Consumer segmentation

Understand consumer segmentation within the market to optimize targeting and marketing strategies

A consumer segmentation identifies existing consumer segments within the market, the characteristics and the differences in purchase behavior, product usage and brand perceptions of each segment. The insights generated will contribute to a clear definition of key market segments based on differentiating attributes, perceptions of the existing market and/or product usage and patterns.

Key insights

The insights gathered from the consumer segmentation will assist you in:

Define the size, value and main characteristics of each key segment and their key differentiators
Understanding your customers profile, their behavioral traits and preferences
Optimizing your marketing strategies and ROI
Targeting your consumers more effectively and increase their loyalty and spending habits
Identify needs for new products and services

K-Means clustering

Technical set-up

To identify consumer segments, possible dimensions to be used as segmentation criteria and profiling variables are defined.

The questions are then combined into compound measures of dimensions and cluster analysis is used to profile the resulting segments.

Data analysis and reporting

A segmentation methodology is used to identify “homogeneous” groups within customers. Depending on your business questions, needs and goals one of the following segmentation methodologies is used to process data.

Cluster analysis (HC, K-means, K-means+) to build predictive (classifying) models based on it
Latent Class analysis can be used together with choice-based conjoint or MaxDiff
Rule-based, there is not an exact algorithm, the user can define arbitrary rules

Example of segments characteristics and profile segmentation

Learn how consumer segmentation guides product development and marketing

Why consumer insights are your best weapon right now

The market is in a historic anomaly: employment is high and on the rise as many countries recover from the pandemic years. But booming inflation and supply chain shortages are causing record-low consumer confidence. Are we in a crisis? Or are we making it self-fulfilling prophecy by employing a crisis behavior? Regardless of how your business is addressing the situation, you are better off keeping in touch with your consumers.