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Customer Segmentation & Distribution Channels - Start Something, Columbia! Show Notes

July 25, 2018

Start Something, Columbia! welcomed Ashlye Wilkerson of Wine & Design Studios (among other things) to our show on July 24th. She helped Larry Jennings of Capsure Studios hold down the Start Something, Columbia! fort while Kasie continues teaching summer school at the Darla Moore School. Here are the show notes:

 

Theme for the day:

Working with The Startup Owner’s Manual (book) we’re focusing this week on Physical Channel Sales and Marketing with some customer segments, customer markets, and customer relationships conversation, too.

 

Agenda review:

We’ll hear from the 1MC presenter for tomorrow

We’ll talk more about The Startup Owner’s Manual

We’ll learn more about Ashlye Wilkerson and Wine & Design

 

Sponsors

Start Something, Columbia! Is brought to you by the Women’s Business Center of South Carolina headquartered at Columbia College

 

 

 

Segment 1:

This week at 1 MC -- Bruges Chocolaterie and Christina Miles (she should call in at 9:08)

Ask her:

  • Why did you start Bruges Chocolaterie?

  • Who is your target market?

  • What do you hope to get out of your visit to 1MC?

I think she was a FastTrac attendee with Tom Ledbetter. You may want to ask about that, too.

 

This is also the chance to talk about Ashlye (while waiting for Tina to call or after). 

 

Segment 2:

What is a Customer Segment? 

  • Customer segments are the community of customers or businesses that you are aiming to sell your product or services to.

  • Customers can be segmented into distinct groups based on needs, behaviors and other traits that they share

  • It is critically important to match your customer segment to your value proposition in order to be successful.

An organization can categorize consumers into distinct groups if they have the following characteristics;

  1. The customer groups have a particular need which justifies the creation of a product to match this need.

  2. The group needs a separate Distribution Channel to be reached.

  3. The groups require relationships of different kinds.

  4. There is a very clear difference in the level of profitability each group represents for the organization.

  5. Each consumer group feels strongly enough to pay for a different version of the product or service, tailored to their preferences.

 

What are the types of Customer Segments?

  • Mass Market - A large majority of the population that has a common problem or need that requires fulfillment.  Products catering to the mass market to not really need to be defined into small customer segments.

    • Ex: A refrigerator company has a large market because people do not require a lot of differentiation in their refrigerators.

  • Niche Market - A customer segment with defined characteristics and specific needs.  Products are highly specialized and tailored.

    • value propositions, distribution channels ad customer relationships are closely defined according to the preferences of this particular customer segment

    • EX:  supplier-buyer relationships such as those between automobile parts manufacturers who are extremely dependent on automobile manufacturers for sale of their products

  • Segmented - very small variations in customer needs and requirements, but company still created different value propositions and distribution channels to cater to these small differences.

    • Ex: In retail banking, a bank will create a distinction between consumers whose net worth is $100, 000 and those with a net worth of $500, 000.

  • Diversified - Customer segments have very different needs and wants

    • Ex:  Amazon starting by selling books and now has a very diversified market

  • Multi Sided Platforms/Markets - Segments are related through dependency, operate together for success

    • Ex:  a credit card company, it is not just imperative that customers opt to use their credit cards but equally important for stores to accept their credit card. If either segment fails, the other will automatically follow suit.

Another Approach to Customer Segmentation:  5 Ways to Divide the Consumer Base

 

Segmenting consumers enables marketing teams to stretch budgets and make the most of marketing dollars by reaching the most ideal visitors who are likely to become leads, without wasting money on impressions that will never turn into conversions.

  1. Geographic segmentation is the practice of segmenting a campaign’s target audience based on where they are located. 

    1. extremely easy to implement, as many companies often have their customers’ addresses from landing pages, or their credit cards.

  2. Demographic segmentation is segmenting the market based on certain characteristics of the audience (i.e. race, ethnicity, age, gender, religious, education, income, marital status, and occupation)

    1. Combining various customer segmentation criteria has the potential to reach a very targeted niche market and drive sales while maximizing the value of every marketing dollar spent.

    2. Demographic segmentation can also be used in B2B markets. In this case, common demographics include: company size, industry, role, time working for the company, and more.

  3. Psychographic segmentation divides the market on principles such as lifestyle, values, social class, and personality.

    1. more difficult to implement than geographic or demographic segmentation. marketers must really take the time to get to know their current and past customers by clearly defining the ideal buyer persona for the product or service and developing relationships with the customer base

  4. Behavioral segmentation is the practice of dividing consumers into groups according to any of the following attributes: usage, loyalties, awareness, occasions, knowledge, liking, and purchase patterns.

    1. Behavioral segmentation allows marketers to be more relevant and produce messaging that will resonate well with their desired target market.

Distribution Channels

 

The manner in which goods move from the manufacturer to the outlet where the consumer purchases them; in some marketplaces, it's a very complex channel, including distributors, wholesaler, jobbers and brokers. 

  • The conventional distribution model has three levels: the producer, the wholesaler and the retailer. However, each level is in the relationship to protect their best interests, resulting in detrimental effects to the entire system.

  • The primary alternative distribution channel is direct distribution. It calls for you to sell and deliver your product yourself, using your own salespeople and warehouses.

  • There are many ways to alter traditional distribution - ex. Make it two levels

  • Often, your choice of a distribution plan will be dictated--or at least strongly influenced--by various factors relating to your product, your customers and the way they'll use it. 

  • Another concern when it comes to selecting a distribution method is the way the product is purchased by consumers.

  • The characteristics of your customers may also dictate distribution

The type of distribution channel you use depends on your industry, type of products or services, and business model. There are new and evolving opportunities for you and your company. If you’re serious about growth, you’ll be serious about investigating your distribution alternatives. 

 

Here are common distribution channels used by businesses over the past decade:

 

Retail

  • Mass Merchandise

  • Discount

  • Off-price

  • Department Stores

  • Specialty Stores

  • Chain Stores

  • Direct Mail

  • Internet

  • Packaged Goods

  • Chain Grocery Stores

  • Independent Grocery Stores

  • Mass Merchandisers

  • Specialty Stores

  • Convenience Stores

  • Independent Reps

  • Internet

B2B

  • Direct Sales

  • Wholesalers

  • Distributors

  • Internet

Service

  • Company-Owned Offices

  • Franchises

  • Dealerships

  • Television Programs and Infomercials

  • Internet

A distribution channel is a chain of businesses or intermediaries through which a good or service passes until it reaches the end consumer.

  • The first distribution channel is the longest, because it includes four stages:  Producer, Wholesaler, Retailer, and End Consumer

  • In the second distribution channel, the producer sells directly to a retailer who then sells to the end consumer

  • In the third distribution channel, the producer sells directly to the end consumer

Customer Relationships

 

5 Key Tactics to awesome customer relationships

  1. Build your network--it's your sales lifeline. Contacts are potential customers waiting for you to connect with their needs

  2. Communication is a contact sport, so do it early and often. One of the biggest mistakes people make is that they come home from networking events and fail to follow up. Make the connection immediately.

  3. E-mail marketing keeps relationships strong on a shoestring budget. An easy way to communicate is with a brief e-mail newsletter that shows prospects why they should buy from you. E-mail marketing is a cost-effective and easy way to stay on customers' minds, build their confidence in your expertise, and retain them. 

  4. Reward loyal customers, and they'll reward you. According to global management consulting firm Bain and Co., a 5 percent increase in retention yields profit increases of 25 to 100 percent. And on average, repeat customers spend 67 percent more than new customers. 

  5. Loyal customers are your best salespeople.

How To Build Personal Relationships with Customers

  1. Communication:Listening is just as important as telling. If you make your customers feel involved, they feel as though they actually have a stake in your company, and feel like you care about more than just getting the sale.

  2. Rewards:Every industry has companies who do reward and customer loyalty programs differently. It is a very simple form of saying 'thank you.'

  3. Enhanced Customer Service

  4. Start Small and Emphasize Human Touch 

  5. Be Flexible:Be quick and attentive to a customer's problems or complaints

Segment 3:

Events of the week

1 Million Cups Columbia, 9 a.m. Wednesday Richland Library

 

The Women’s Business Center of SC welcomes attendees to visit with Tzima Brown at Sunrise Artisan Bath & Body in Five Points on Friday from 1 till 3 p.m. Register on Eventbrite for “On Location” with the Women’s Business Center.

 

It’s also the Five Points Sidewalk Sale so check that out if you’re in the area, it should be a chance to get great deals, learn more about those merchants, and talk to shopowners.

 

 

 

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