Customers have needs. And we build products and services to satisfy these needs and earn their loyalty.
So, understanding these needs and clubbing together customers with similar needs in order to serve them better is a core function of marketing.
You can use Needs-based Segmentation to define product features, craft more meaningful and impactful messages and deliver higher customer satisfaction and retention.
All this by focusing on what matters the most: the customer’s needs!
Furthermore, when Needs-based Segmentation is combined with other forms of segmentation like Price Segmentation or Benefit Segmentation, you can drive higher revenue and profits without compromising on customer satisfaction.
Needs-based Segmentation: A Definition
Needs-based Segmentation is the marketing strategy where customers with similar needs are grouped together so that products and services can be built to satisfy these needs.
Let’s take the example of a fizzy soft drink company. The company caters to various consumer segments: students, middle-aged men, elderly people, etc.
Each segment would require different marketing messages and product offerings because their needs are not similar or not even comparable in some cases!
For instance, an elderly person might be more concerned about the sugar content in a fizzy drink than any other factor.
The student on the other hand might only be interested in the taste.
To fulfill the needs of each segment, the company would likely need to come up with different products and marketing messages targeting each segment. That’s needs-based segmentation.
Benefits of Needs-based Segmentation
Benefits for Marketing
Needs-based segmentation can help define and refine your understanding of the needs of each customer segment so that you can design product features and functionality to ensure product-market fit.
Segmenting your target market based on needs also makes it easier to target and position your product or service to maximize its uptake by your ideal customer.
Needs-based Segmentation also makes it easier for marketing departments to craft messages and promotional packages such that they are uniquely tuned to the needs of each segment.
Benefits for Product Development
By understanding the needs of each segment, Product Development can prioritize features for future development.
They can understand gaps in the product offering which can be bridged with new features in future versions of a product.
Benefits to building relationships with customers
Needs-based Segmentation can help build deeper relationships with customers simply by understanding the specific needs of each segment and providing solutions to satisfy these needs.
Performing Needs-based Segmentation
Needs-based Segmentation can be performed in these steps:
- Understanding who your customers are
- Capturing their needs and requirements
- Segmenting customers based on their needs
1. Understanding your customers
This can be done by conducting market research and studying your target audience. Market research can help you get to know your customers on a deeper level.
Once you have a good understanding of who your customers are, you can begin capturing their needs and requirements.
2. Capturing their needs and requirements
You can capture your customers’ needs and requirements by implementing a needs survey.
Be clear what you would like to ask your customers, and then implement a survey so that it’s easy for your customers to get you the information you need.
3. Segment customers based on their needs
Finally, create different buckets corresponding to each unique need and start putting each customer into a single bucket. Once you’re done, you have your needs-based customer segments.
Examples of Needs-based Segmentation
Vegan options in a restaurant
Most restaurants cater to customers with different needs. Some customers like meat, others prefer seafood, others are vegetarian while some others only eat vegan food.
If a restaurant understands the needs of each of these customer segments and wishes to cater to each of them, it will have menu options that satisfy the needs of each segment.
In short, the menu will offer Vegan options.
Golf clubs for left-handed people
Left-handed people need to have golf clubs that are mirror images of golf clubs used by right-handed people.
According to Golf Span, lefties also have a different orientation and posture.
All major golf equipment manufacturers make golf products to the unique needs of left-handed people. This is a classic example of Need-based Segmentation.
Summary
Needs-based segmentation is a customer-centric marketing strategy. It’s all about understanding what the customer wants and needs, and then delivering products that satisfy these needs.
This marketing approach can be extremely effective in increasing sales and market share.
It’s also a great way to build customer loyalty, as customers are more likely to return if they feel that you understand their needs and desires.