For every campaign, marketers are constantly attempting to provide an answer to one fundamental question: what do our customers want?
Naturally, not every buyer has the same preferences. Because of this, many businesses divide their target markets into several consumer categories and give priority to those based on how much value their goods and services provide.
One of the most effective methods of market segmentation is benefit segmentation. Since Haley (1968) introduced the idea of benefit segmentation to marketing literature, both consumer and business markets have employed it. Its superiority is due in large part to the fact that customer benefits are the underlying causes of real market segments’ existence.
What is Benefit Segmentation?
Benefit segmentation is a technique for market segmentation that entails dividing your customer base into groups according to the benefits customers perceive they will get from your product. This may entail classifying consumers in accordance with their perceived value and benefits for things like quality, features, customer service, etc.
In short, benefit segmentation is a marketing strategy that divides your target markets based on the perceived value they will receive from your specific good or service.
Why is Benefit Segmentation important?
The advantages of benefit segmentation account for the majority of the variation in consumer decision behavior and predict consumer behavior considerably more precisely than other segmentation factors like demographic, regional, lifestyle, price, wealth, etc. Additionally, this strategy lacks descriptive elements while other segmentation strategies do. Benefit segmentation’s main goal is to determine the benefits that different market segments want and, in turn, to determine to provide those benefits in the most efficient and effective way.
To gain the most from the benefit segmentation, marketers must be able to define benefit segmentation, know how to combine it with other market segmentation techniques and understand real examples of benefit segmentation in action at actual organizations.
What are the advantages of Benefit Segmentation?
1. Identification of target population
Benefit segmentation is a technique used by businesses to identify the target populations who will profit most from their goods and services. The goal is to identify people of your target audience who are most likely to purchase your product or service because they have a need for it.
2. Reducing Customer Churn
Customer churn reduction is one advantageous byproduct of benefit segmentation. You may give a potential customer exactly what they want if you understand how your good or service benefits them. Then, if your product or service is consistently fulfilling distinct consumer groups’ needs through your marketing plan, those clients are more likely to stick with your business over time.
3. Improvement of Customer Acquisition
Benefit segmentation can also be used to strengthen acquisition tactics that are directed at particular consumer groups based on the advantages your product can provide them with.
4. Improvement of Product Development
Benefit segmentation can also improve the creation of products. This can be accomplished by examining different target customer segments that your existing product or service offerings are failing to adequately satisfy, and determining whether there is a chance to develop a solution that might provide a more advantageous outcome.
5. Optimization of Marketing Strategy
Benefit segmentation helps to optimize marketing strategy to maximize the marketing revenue. Because it assists in lowering costs, optimization plays a crucial part in marketing because it can result in bigger earnings and success in the marketplace.
Examples of Benefit Segmentation
1. Toothpaste Companies
Based on the various benefits that customers seek from their toothpaste, toothpaste companies target various client segments. A variety of toothpastes are produced by companies including Colgate, Pepsodent, Sensodyne, and others.
For instance, there are toothpastes specifically made for teeth whitening and another for sensitive teeth. Based on the various benefits that customers seek from their toothpaste, toothpaste firms target various client segments. These businesses will modify their product portfolios and marketing plans to cater to various customer segments. They can figure out what tactics will successfully target each category by examining the characteristics of those who buy whitening toothpaste and those who pick gum care toothpaste.
2. Car Companies
Benefit segmentation can help automakers position their products in the market. Depending on their benefits, various client categories prefer various types of vehicles. Adventuresome consumers who frequently go to locations with difficult terrain will need a vehicle that is strong, resilient, and incredibly shock-resistant. New parents will want vehicles that are appropriate for their family, so they must have room for more than two passengers and be secure. Customers that view their vehicle as a status symbol may prefer something expensive and opulent that sticks out from the majority of other vehicles on the road.
3. Shoe Companies
Based on the various benefits that consumers demand from their shoes, shoe firms can segment a market. Football players could prefer a different type of shoe than those who wear them for running. People who frequently go to work have different preferences than those who go on excursions and treks.
Sportsmen’s preferred footwear depends on the place where they compete. Football players who use indoor courts will need shoes with indoor soles made of non-marking rubber. These flat, grooved soles are appropriate for use on hard wooden floors.
4. Music Streaming Services
Streaming companies like Spotify have tailored their advertisements to reflect how consumers benefit most from using their apps in order to keep their marketing efforts current. Spotify’s market segmentation is focused on how they choose to target those who enjoy listening to music in different places like cars, gyms, outdoor, etc. They also focus on the placement of this advertisement in significant places to make an impression on thousands of people.
Market segmentation is crucial in contemporary marketing difficulties. Benefit segmentation is one of the appropriate bases for segmenting customers based on their qualities. Marketers must segment the market according to how consumers view a product’s or service’s benefits. The garment, appliance, consumer, cosmetic, and a number of other businesses may all use this kind of segmentation.