Market Segmentation Analysis for a Consumer Packaged Goods Company
Due to growing ethnic diversity and broadening income disparity, consumers are becoming increasingly heterogeneous in their product preferences. This has severely impacted various market sectors, especially the consumer packaged goods (CPG) sector. With this, the need to identify subsets of a market based on demographics, needs, priorities, common interests, and other physiographic or behavioral criteria is becoming imperative for CPG companies to better communicate with their customer segments. To do so, companies are partnering with firms like Infiniti Research to leverage their expertise in offering market segmentation analysis solution. The insights obtained from Infiniti’s market segmentation analysis have helped various global giants identify the most lucrative customer segments and personalize business strategies for them to achieve maximum profits.
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Business Challenge
The client is a consumer packaged goods supplier based out of Germany. The client’s unstructured approach to marketing and promotional strategies resulted in huge customer churn. Also, as the client’s key competitors had already adopted a more focused approach by understanding the needs of their target customers, the client was losing ground to their competitors. Also, the client was not able to meet their customers’ needs and demands. This subsequently increased the customer churn rate by 13%. The client, therefore, realized the need to create small segments comprising of like-minded individuals and devise personalized business strategies to meet their needs. To do so, they approached Infiniti Research to leverage their expertise in offering market segmentation analysis solution.
With Infiniti’s market segmentation analysis solution, they also wanted to:
Better serve customers’ needs and wants – By leveraging Infiniti’s market segmentation analysis, the client wanted to categorize their customers into various segments based on their needs and requirements. By doing so, the client wanted to personalize their marketing and promotional strategies to efficiently serve their customer base.
Increase chances for up-selling and cross-selling – By understanding their customers’ purchasing patterns, the client wanted to recommend other relevant products matching their requirements and increase the chances of up-selling and cross-selling.
Differentiate product prices by segment – As managing customers’ price perception has become important for businesses, the CPG company wanted to differentiate their product’s prices by segment to sustain higher margins.
Attract additional customer groups – By employing a target market segmentation analysis approach, the client wanted to devise targeted marketing plans for different customer segments and differentiate their products according to their customers’ demands.
Focus only on target audiences – The client noted that promoting their products across wide customer segments resulted in huge losses for the company. This even increased the churn rate. The client, therefore, wanted to leverage Infiniti’s market segmentation analysis to identify their lucrative customer segments and focus on personalizing their business strategies for profitable customer segments to achieve maximum profits.
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Solutions Offered and Value Delivered
To help the client segment their customers into various groups, the experts at Infiniti Research followed a four-phased approach to customer segmentation.
- The initial step involved conducting preliminary research. As a part of preliminary research, the experts conducted customer surveys. The factors such as highest purchased consumer packaged goods, customers’ shopping patterns, and their preferred channels of purchases were analyzed.
- In the second phase, the experts segmented customers into various categories considering factors such as their age, geography, income, lifestyle, and behavior.
- The next phase involved filtering lucrative customer segments from the target market. For this, the experts conducted manual and statistical analysis.
- The final phase of the market segmentation analysis involved conducting demo marketing and promotional campaigns for the categorized customer segments to gauge the effectiveness of different segments.
The insights obtained helped the client to understand their customers more efficiently and craft compelling marketing and promotional strategies for them. This helped the client to influence their customers’ buying decisions. This targeted marketing approach even helped the client to better match their lucrative customers’ needs and attract new customers. Also, the engagement helped the client to recommend products to their customers according to their needs and demands. This increased up-selling and cross-selling and further resulted in an increase in the company’s sales rate.
By understanding the needs and demands of specific customer segments, the client was also able to create their own niche products to attract wider customer segments. This further helped the company to utilize its marketing budget on its lucrative customer segments. Also, the CPG company was able to reduce customer churn and attract new customers.
The client was also able to achieve sales growth by 19%.
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What is market segmentation analysis?
Market segmentation analysis is the process of segmenting customers into smaller groups based on their unique characteristics including age, income, requirements, behavior, and purchasing patterns. It helps marketing professionals to personalize marketing and promotional activities for each segment to gain maximum traction. This also enhances customers’ response rate for products and services.
How to do market segmentation analysis
Read the below articles to know how Infiniti’s market analysis solution has helped companies across other industries.
https://www.infinitiresearch.com/casestudy/market-segmentation-strategies
https://www.infinitiresearch.com/casestudy/market-segmentation-sporting-goods
