Customer Segmentation - Data Mining Techniques in CRM: Inside Customer Segmentation - page 191

A successful segmentation scheme:
• Addresses the business objective set by the organization.
• Identifies clearly differentiated segments with unique characteristics and needs.
• Accurately assigns each individual customer to a segment.
• Provides the opportunity for profit in the identified segments.
• Comprises ''identifiable'' segments with recognizable profiles and characteristics.
• Is actionable and applicable to business operations. The organization can design
effective marketing actions for the revealed segments.
SEGMENTATION TASKS AND CRITERIA
There is no magic segmentation solution that adequately covers all business situ-
ations. Different criteria and segmentation methods are appropriate for different
situations and business objectives.
Segmentation is used in strategic marketing to support multiple business tasks.
The starting point should always be the particular business situation. Business
objectives and success criteria should be clearly defined before actually starting the
analysis. The appropriate segmentation criteria and the required analytical tools
should then be selected.
Table 5.1 lists the appropriate segmentation types and the required tools and
techniques per business task.
SEGMENTATION TYPES IN CONSUMER MARKETS
There are various criteria for customer segmentation that can be used to optimize
consumer marketing. As mentioned above, different segmentation types are used
for different business situations. The following segmentation types are most widely
used:
1. Value based: In value-based segmentation customers are grouped according
to their value. This is one of the most important segmentation types since it can
be used to identify the most valuable customers and to track value and value
changes over time. It is also used to differentiate the service delivery strategies
and to optimize the allocation of resources in marketing initiatives.
2. Behavioral: This is a very efficient and useful segmentation type. It is also
widely used since it presents minimal difficulties in terms of data availability.
The required data include product ownership and utilization data which are