Customer Segmentationby Lea Le for FASM 415 Non-traditional Retailing

What is Customer Segmentation? Customer Segmentation is the practice of dividing the market into discrete customer groups that share similar characteristics.

Customer Segmentation can be a powerful means to identify unmet customer needs.

The Pareto principle 80-20

Management consultant Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who, while at the University of Lausanne in 1896, published his first paper "Cours d'économie politique."

Essentially, Pareto showed that approximately 80% of the land in Italy was owned by 20% of the population; Pareto developed the principle by observing that 20% of the peapods in his garden contained 80% of the peas.

80% of revenue, or volume or profits responsible by 20% of customers

Who is that special customer?

• LinkedIn example: humanize a market segment. No simple process, it takes time!

• Name, Title , personal image***

• Demographic: 19, male, white, middle upper income

• Story, Challenge, Pain Point

• (Think how to talk to your friend vs you talk to people who you don’t really know, we are naturally psychologically incline to behave differently)

The PERSONA

Persona Example

Persona HOW-TOhttps://xtensio.com/user-persona/

Business and Market Reports (SCAD Research Databases) ****

Mapping Customers onto the Adoption Curve

Secondary Research

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http://www.euromonitor.com/luxury-goods

Adoption Curves

Observe your customers

Who come in to the store, how they move in the space? Do they often look for help? Do they check price in the smart phone? Children? Who tend to buy more than hour? What’s the certain time of the day?

Talk to your customers

Work with market research firm (already have a bank of questions for you can ask your customers)

*E-commerce: Fill out survey, also include some feedback during checkout

*Usability Testing

Primary Research

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In-Class Exercise 2 Team presentation. Each team choose their favorite brand and build the preliminary Persona (Customer Profile).

FENDI , LV