Approaches to Segmentation
Every marketing group does, in effect, some amount of customer segmentation. However, the methods they use to do this might not always be clear. These may be based on intuitions and hunches about certain demographic groups, or they might be the output of some marketing software, where the methods used are obscure. There are advantages and disadvantages to every possible method and understanding them allows you to make use of the right tool for the job. In the following sections, we will discuss some of the most commonly used approaches for customer segmentation along with considerations when using such approaches.
Traditional Segmentation Methods
A preferred method for marketing analysts consists of coming up with rough groupings based on intuitions and arbitrary thresholds. For this, they leverage whatever data about customers they have at their disposal – typically demographic or behavioral. An example of this would be deciding to segment customers...
