Maximizing Market Segmentation: The Art of Crafting Effective Questions

Market segmentation is a very popular tool used in marketing research to the consumer base. Essentially, market segmentation seeks to combine individuals into groups based on their similarities with regards to specific variables. Distinct segments are formed that are different from each other but cohesive within a group.

The distinctiveness of the segments depends on the types of questions used in the segmentation analysis. Needs-based segmentations use only needs-based questions in the analysis. The resulting segments differ based on their needs. However, market segmentation typically uses 5 question types in the analysis so that segments differ on many facets (needs, behaviors, psychographics, personality characteristics, and demographics), not just needs. Analyzing the data using a variety of these 5 question types gives a holistic view of the consumer market. Each of the 5 types of questions are described in detail below.

1. Needs
Needs-based questions seek to understand consumers’ product needs, shopping experience needs, general life needs, pain points, or product benefits. Questions involving product attribute importance or feature importance investigate product needs. Questions regarding the importance of delivery, shopping online, payment method options, and so forth help to understand the shopping experience. Asking respondents about major life changes pinpoints consumer needs during certain times in their life. Pain points with current products uncover areas of opportunity to meet consumers’ current needs. Current product benefits reveal needs that are being met.

2. Behaviors
There are many types of questions to quantify behavior. These questions help researchers discover “what,” “when,” “where,” “why,” and “how.”

• Usage is one type of behavior important to segmentation analysis. Some of the ways researchers can investigate usage is to ask respondents how the product is used, how often it is used, what it is used for, why they bought it, and during which occasions (if any) it is used.
• Spend is another behavior to look at. What are consumers’ past 12 months spend? What is their perceived future spend in the category? What is their average category spend per shopping trip? What is their monthly subscription spend?
• Purchasing behavior is important to know as well. What are the types of products purchased in the category on the last shopping trip? How many of the product(s) did the consumer purchase? How often is the product purchased? 
• Shopping channels are more influential now than ever before. Are consumers purchasing the product in person at brick-and-mortar stores, or are they buying online? Are consumers purchasing at mass merchants or local stores?
• Payment method is an additional behavior to consider. How are consumers paying for the product? Do they use cash, credit card, debit card, rent-to-own, lease-to-own, or layaway?                               

3. Psychographics
Psychographics consist of questions regarding interests, hobbies, beliefs, attitudes, and feelings. This type of question dives deeper into the psychology of the segment; it assists researchers in understanding the why behind the why. Survey questions may ask respondents to select the activities they are interested in or the hobbies they currently have. Beliefs and attitudes can be assessed on a wide range of topics. Feelings about current events, using the product, and the political atmosphere, among other topics, are good questions to illuminate segment motivations.

4. Personality
Questions that ask about personality characteristics uncover “who” the segments are. Are they adventurous, shy, trendy, peacemakers, or assertive? Where do respondents fall on tech adoption? Are they technologically advanced or late adopters? Asking about spending habits (e.g. tends to spend money even when they don’t have it or tends to save money) can reveal segments that are more spend-thrift oriented or frugal. Political leaning also aids in revealing who the segments are.

5. Demographics
Lastly, demographics add more information as to “who” the segments are. Gender, age, ethnicity/race, household income, and religion are just a few of the demographics that can be used in segmentation analysis to further delineate the segments.

To get a holistic view of the consumer market, best practice uses a variety of questions from each of the 5 categories listed above. The questions used in the segmentation analysis will depend on both the category and researcher expertise. For example, while tech adoption is an important variable to include in automotive, lawn equipment, HVAC, wireless service, and computer software categories, it may not be useful in a CPG meat category. Similarly, researchers must ask the questions in a way that fits the category. It may not be as helpful to ask past 12 months spend in an automotive segmentation as it would be to ask for the amount spent on their last automotive purchase.

Knowing that not all questions listed here fit each category, researchers must use their best judgement to come up with suitable questions. Likewise, not all questions listed here need to be used as inputs into the segmentation. The inputs chosen for analysis should be determined by category and researcher expertise. Does it make sense to include the question in the analysis? Is it likely that groups of people will answer differently with regards to the question? These are some of the questions researchers may ask themselves to determine whether to include the question in the analysis.

Adding a variety of questions to the segmentation analysis from the 5 types listed above results in a holistic view of the consumer market. This results in rich segments that differ with respect to their needs, behaviors, interests, beliefs, attitudes, feelings, personality, and demographics.

Date: July 13, 2023

Author: Audrey Guinn

Source: Decision Analyst

Steering your business towards consumer centricity

Customer centricity is more important than ever before. Learn the skills necessary to position your company as engaging and relevant to your consumer base.

With consumer expectations on the rise, it’s more important than ever to structure your organization around creating amazing and engaging customer experiences. Godin put it best when he said: 'You don’t find customers for your products. You find products for your customers'.

Here we discuss some practical approaches to deepening the engagement between you and your brand community, and how having the right technology solutions in place helps you put your customers at the heart of everything you do.

Open the dialogue to deepen the value exchange

An important place to start is to first open up a dialogue with your customers on how they experience your brand. It’s not enough to simply send the occasional email survey, or only ask consumers to answer an automated service recovery questionnaire at the end of a customer service call.

It’s crucial that customers understand the benefit of voicing their opinions. This can be accomplished in a variety of ways: you can offer discounts, deliver premium content, or loop consumers into new product innovation discussions before they even hit the market. The latter is also a great way to beta test new product features. Whichever direction you take, it’s important that your customers feel as if their time and opinions are valued.

A customer insights platform makes it easy to facilitate a two-way conversation. The end game here is to create more engaged customers and develop a more meaningful value exchange, by giving your customers a role in co-creating their own experience with your brand.

Centralize your data

Most businesses have a range of consumer data coming from disparate sources. Your browser activity might be telling you about online purchase behaviors, your DMP tells you what ad creative performs the best, and your CRM data shows you who your most engaged buyer personas are. But all this data sits in its respective platform, accessible to only very specific stakeholders, and valuable insightis wasted by looking at only one part of the entire picture at a time.

To achieve a single customer view, it’s crucial to centralize a continuous feed of real-time customer data and insights. By putting the right structures in place, your customer data is easily visible and actionable across the entire organization.

You have now put your business in a position where you can listen, understand and respond to the evolving needs of your customers.

Empower your teams with a continuous loop of customer insight

Many organizations miss the mark when deciding when to ask for customer feedback, with the vast majority of businesses asking for feedback only at the end of the purchase, if at all. As best-practice, customer feedback engagements should be personalized, progressive, and feel organic within the existing experience.

The insights learned should empower your marketing and customer service teams to provide the best possible experience. This will ensure that you’re constantly building rich profiles of real people, who keep coming back to your business.

Because you know as well as your customers do, that there’s nothing more powerful than feeling heard.

Author: Tallulah Thompson

Source: Greenbook Blog