KYC Know your customer

Key to Marketing Success - Being able to effectively spend your marketing

budget by targeting customers who are likely to respond to your message
Identifying who they are is segmentation.

Use of Segmentation

Segmentation provides insight into existing and future customers

Segmentation helps us in determining Pricing strategies and promotional
plans.
Refining distribution strategies
Modify service levels
Saves time and money
Gives you competitive advantage
Create Custom Marketing efforts
Enhance existing products
Prioritize new products and projects

Types of Segmentation
Geographic Segmentation (also known as advertising by zip
code)

Right Customers in the Right place.

Dividing customers into groups based on location
People tend to live in a place where they are able to relate with others in the
locality.
Neighborhoods Share
o Cultural values
o Level of education
o Housing
o Income level
Segmentation Specifics
o Geographic Area India- Western India- Kerala- Southern Kerala
o Specific Location Trivandrum Nair Housing Colony
Direct mail Marketers target customers by location.
Example: School Admission notification flier to all residents in school vicinity
o Opening of a new Gym or restaurant flier to all residents in the vicinity

Demographic Segmentation

Dividing Customers based on age, sex, income, education level, race,

nationality etc
People belonging to groups tend to behave in the same manner similar to
others in the same group
Identify things that make them common and draw insights based on it.
Examples: Teenage girls purchasing vs. Elder woman purchasing
o Higher Income Group vs. Lower Income Group [Value/Mode (Online or
offline)]
Life stage Category: As they age the amount of disposable income available
changes
Product Acceptance Group vs. National Average
o Over factors such as Age Income Gender- Education Level- Marital
status

Cultural Segmentation

Dividing Customers by language, religion, sexual orientation, lifestyle etc...

In a Globalizing world, diversity can be targeted by marketers. (Immigrations)
Closely linked with demographic variables, but cultural segmentation is based
on more specific factors
Useful to understand why some groups behave in a specific way
Useful if our product/service is targeting specific cultural groups
Reason for Cultural Segmentation
o Are there important cultural sub segment benefitting your business?
o How can you market to the different cultural market segments?
o Use 80-20 rule to decide on cultural segmentation or not
Best Customers The 20% contributing to your 80% revenue
Light Purchasers The 80% contributing to my 20% revenue
Perform Cultural Analysis. Consider the behaviors and values of certain
cultural segments. Talk to them, Listen to them, get their opinion to
understand their behavior.
Example: Hispanics make up 20-30% of car sales manufactured by Japanese
Car Manufacturers and prefer 15% more a car from Japanese Manufacturer
when compared with other manufacturer brands. Toyota runs a separating
marketing campaign in Spanish targeting Hispanics.

Behavioral Segmentation

Dividing Customers based on how they use a product

Example: 2008 11% bought furnitures online
2013 - 22% buy furnitures online, 35% say they would consider
purchasing online in
future

Segmentation by Usage

Frequent flyers vs. Moderate flyers Vs. Infrequent flyers

Business Customers are frequent flyers / give us more profit
Types Heavy/Moderate/Light

Strategies to be followed
Reward them for their usage Heavy user
Try to build Brand loyalty Moderate user
Encourage engagement through promotions Light Users
How

to segment by usage
Segment by Profitability difficult to calculate
Segment by revenue not necessarily giving the associated profits
Segment by unit volume Number of miles flown
Segment share by wallet How much customer is capable of spending vs.
how much customer at spent for your product/service

Techniques used
Decile approach 10% category Graph Customer list/10
Pareto method

Psychographic Segmentation

Target Customers based on how they see the world

We prefer information that reaffirms our world view selective exposure
We process information to fit our world view selective comprehension
We remember information that is consistent with our world view selective
retention
Feeling regret or discomfort from having contradictory beliefs Cognitive
dissonance
Positively Reinforce Customers Purchase decision to ensure continued
customer loyalty

Researching Psychographic Profile - Purchase experience design Analysis

A well designed space perfectly targets your customers
Observe your customers
What is their pace in the store?
Price focused? Performs online research?
Will they come with their children?
Demography analysis
Which Time of day customers arrive?
Talk to your customer
Get quantitative data through surveys

Rogers Innovation Adoption Curve

Benefits Sought Segmentation

Emphasizing on benefits sought by Customer

Example: Toothpaste market (Sensitivity, Teeth Whitening, Breath Freshening,
Cavity Protection, Gum care)

Maslows Hierarchy of Needs

Sensitive Teeth Safety and security
Breath Freshness Love and Belonging
Sparkling white teeth - Esteem

Watches Demography segment analysis (Men vs. Women / Rolex vs. Titan)
Behavioral Segmentation analysis (check time vs. style statement)

Occasion Based Segmentation

Weddings/Mothers day/Valentines day brings in huge sales to the Flower shop

Opportunities to reach new markets (E.g.: Airline industry)

Increase share of wallet

o Explore additional/supplemental services
Expand to smaller segments
o Use promotions and focus on newer segments to increase growth
Entice Nonconsumers
o Advertise aggressively to attract nonconsumers

Creating a Customer Persona

Buyer personas fictional, generalized representations of your ideal customers.

Use the Customer Personas to test your Marketing Mix. Evaluate.
Everyone in your organization must know about your personas.
Train sales team using the Customer personas
Identify Customer persona,
o Roles
o Goals
o Challenges
o Demographics
o A story that brings him to Life

Persona Checklist

Do you have a description?

o Name
o Title
o Image
Do you have an idea how his day in a life will be?
What are his demographic and behavioral aspects?
What are the Characters goals? Motivations/aspirations/aims?
What are the Customers pain points?
What is his information search process?
What is his ideal purchase experience?
What are his objections to our service/product? (blockers/bottlenecks)
Does the persona tell a story?

Market research - Gain insight through interviews

Anthropologic Research - Studies the target market in action

Example: Go home and see how your customer shaves using your companys
shaving razor

Data Sources for Segmentation

Customer Database CRM system, MIS

Invoice Files
Shipping records
Zip Code analysis
Phone number area codes
Customer surveys
Talk to Customers
Census, WEF, World Bank, CIA, Asian Development bank