Segmentation/Targeting Model (Classification)

What you put in...	What you get out...
Customers' importance ratings for each measure of value for offerings in a product class Customer descriptors (demographic or firmographic variables)	Number, size, and profile of needs-based market segments Identification of factors that differentiate segments, both in terms of needs and descriptors Classification tool to allocate any potential customer to a segment based on customer descriptors

Segmentation/Targeting is an analytic technique that helps firms to segment customers in a market.

Segmentation is the process of classifying customers into homogenous groups (segments) such that each group of customers shares enough characteristics in common to make it viable for the firm to design specific offerings or products for selected segments. The application finds customer segments using needs-based variables called basis variables. Cluster analysis helps firms to:

• Better understand their customers.
• Identify different segments in a market.
• Choose attractive customer segments for targeting its marketing programs.