What does 'customer segmentation' involve?

Customer segmentation involves dividing a customer base into distinct groups that share common characteristics or needs. This process allows businesses to tailor their marketing strategies, product offerings, and services to better meet the specific desires and behaviors of different customer segments.

By identifying and categorizing customers based on various factors such as demographics, buying behaviors, preferences, or needs, organizations can create more targeted marketing campaigns that resonate with each segment. This leads to improved customer satisfaction, loyalty, and ultimately, higher sales and profitability.

Customer segmentation is essential for understanding how to effectively reach and engage diverse groups of customers, noting that while tracking customer purchase history and preferences, assessing loyalty strategies, and analyzing competitor demographics are important practices in marketing strategy, they do not specifically describe the process of segmentation itself.