Glossary

Customer segmentation

Customer segmentation means to divide the whole market of potential buyers into smaller and easier manageable parts or segments. In this way attractive customers with high potential can be divided from less attractive customers.

Following aspects should be considered when segmenting the total market:

• The similarity of customers within the segments is as high as possible.
• The dissimilarity of customers between the segments is as high as possible.
• The data to describe a segment (e.g. sales potential, net income, age) are easy to ascertain or can be easily derived from other information.
• The chosen segments can be easily located and addressed within the market for sales and communication reasons.
• The overall number of segments is manageable.

Segmentation criteria B2C
Especially important segmentation criteria are demographic characteristics like e.g. gender, age, marital status, income, property owner, education, place of residence/city or nationality.

Segmentation criteria B2B
Common B2B segmentation criteria are for example turnover, industry, number of employees or number of production plants.

Customer segments allow among others to address and contact the target group more precisely.
Example: Large companies with high turnover are supported by Sales Departments in a different way than smaller companies - namely by Key Account Managers. Because of their central Purchasing Departments they have different buying patterns compared to small companies.