Market penetration and Customer Profiling
Who are your customers? How can they be segmented? Are certain segments over-represented? Is your market penetration based upon the presence of these segments or quite simply an abundance of customers in general?
A good segmentation strategy may consist of up to three (3) components. First of all, if the data is available, a transaction segmentation indicates who purchases what, to what extent and how often.
Secondly, a market segmentation can be based upon socio-demographic data and thirdly, an attitudinal segmentation can be based upon your customers' aspirations, in other words, the lifestyles or stages of life that characterize them.
A three-part segmentation can provide a means for cross tabulating and identifying customer groups or prospects that should be performing better. For example, if segmenting by transactions, one would find customers who purchase once, twice or four times per month in a given grocery store. If one were to add a demographic segmentation, one would discover customers who are single, in couples and in families. Hence, customers in the cell “once a month” and “family” are now identifiable and represent people whose relationship with your company could be improved. If one now adds a third dimension regarding attitudes, one might discover that these families are very trendy, concerned about the environment or blended families, which would then enable you to adjust your message or merchandising strategies accordingly.
Meanwhile, market penetration has two components: the penetration rate and the wallet share. Penetration is calculated by dividing the number of customers in a neighbourhood by the number of households. The wallet share is calculated by dividing the sales made in a given neighbourhood by the total amount in the available market, weighted by the number of households.
Ultimately, the use of penetration and segmentation analyses will enable you to better know your customers, to know where they live and to determine your capacity to reach them and do business with them. All this will translate into better targeting your efforts to win new customers and marketing to them, as well as into building loyalty with your existing customers.
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