Consumer segmentation

A consumer segmentation identifies existing consumer segments within the market, their characteristics, and how they differentiate in their purchase behavior, product usage, and brand perceptions.

They contribute to establish a clear definition of key segments in the market for your brand, product or service through the identification of, for example, common socio-demographic characteristics, perceptions of the existing market, and product usage and patterns.

Most commonly, the consumer segmentation is one of the first studies to be carried out in a product innovation process but the also serve as a valuable tool if you are experiencing shifts in the market dynamics, which require a re-identification of key segments.

Key insights from a consumer segmentation

Using market research to determine, test or adjust your consumer segment definitions give you insights to:

  • Define your key segments
  • Size and value of your key segments
  • Determine or expand characteristics of each segment
  • Determine your key differentiators

The insights gathered from the consumer segmentation assist in optimizing your marketing ROI and identify which customers are the most important for your business.

We perform consumer segmentation using a range of different methods such as Latent Class Analysis, K-means clustering and hierarchical clustering:

Cluster analysis (HC, K-means, K-means+)

  • Needs numeric input variables (can be scales 1-10, natural metrics, composite variables generated by PCA, etc.)
  • We can build predictive (classifying) models based on it

LCA (Latent Class analysis)

  • Categorical or ordinal input variables
  • Can be used together with choice-based conjoint

Rule-based

  • Can use whatever kind of variables
  • Not an exact algorithm – user can define arbitrary rules

If you are in doubt as to what type of analysis is most relevant to apply to answer your business questions, we offer advice all the way through your project from designing your research to custom reporting with business recommendations to maximize the insights you gain from the consumer segmentation.

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Standardize, democratize and accelerate your time-to-market for new products with a streamlined custom concept testing framework
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Take your setup one step further
Standardize, democratize and accelerate your time-to-market for new products with a streamlined custom concept testing framework
Learn more