Segmentations are a popular market research solution for companies seeking to better understand their consumer audience by isolating how needs and behaviors differ among the consumers who buy their product. This is done by creating a survey containing the questions that will be used to define the segments.
Once the survey completes, the data is analyzed by a statistician, who uses different forms of analysis (such as Cluster Analysis or Decision Trees) to see which questions pull respondents into groups with similar behaviors, and which questions pull them apart into mutually-exclusive groups. Once a certain group of clusters is chosen to be the final segmentation, the questions that define the clusters are used as the variables in a Segmentation Algorithm. This algorithm is then used for future surveys to calculate a respondent’s unique score, and thus allocate them to the corresponding segment.
- A clothing brand that segments its customers by factors including attitude towards fashion, brand loyalty, and average spend
- A candy brand that segments its customers based on factors including gender, age, income, and frequency of purchase
- A B2B IT provider that segments its customers by factors including number of employees, industry type, and attitude towards customer service
- A kitchenware manufacturer that segments its customer based on factors including attitudes towards cooking, gender, employment status, and family size
When a company already has a segmentation, and wants to analyze a new research project using their segmentation, they will use a typing tool that contains the Segmentation Algorithm.