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Business Model Inspiration #2: Customer Segmentation
Instead of targeting the masses, the broad consumer or business market is divided into sub-groups, known as segments. Targeting can be done via shared characteristics, such as common needs, common interests, similar lifestyles, similar demographic profiles, etc.
The overall aim of segmentation is to identify high-yield segments, i.e., those segments that are likely to be the most profitable or offer you the biggest growth potential.
We’ve got some examples for you:
Emirates offers the same product – flying from A to B – in fine segmentation with different benefits to their customers: Economy Saver, Economy Flex, Economy Flex Plus, Business Saver, Business Flex, Business Flex Plus, First Class Flex, First Class Flex Plus.
While having an economy emphasis, the international hotel company Ibis is offering different levels, such as Ibis Style and Ibis Budget, to target different customer segments.
Target the poor
Now, instead of targeting premium or middle-class customers, you can also follow another approach to customer segmentation. This one is about targeting customers with a lower purchasing power at the bottom of the pyramid. This significant group of customers especially benefits from affordable products, while the company profits from higher sales numbers due to the target size, as opposed to a high-profit margin.
The Grameen Bank is a Nobel Peace Prize-winning microfinance organization and community development bank, which offers small loans (known as microcredit or “grameencredit”) to the poor without requiring collateral.
Unilever, one of the bottom-of-the-pyramid market leaders, is selling single-serve packages of shampoo, toothpaste, and soap. Its signature BOP product is Pureit, a countertop water purification system sold in India, Africa, and Latin America, which is saving lives while making money for shareholders.
SAB Miller is a company with a strong commitment to BOP consumers. In Mozambique, SAB Miller sells beer made from cassava, while in Uganda it sells beer brewed with sorghum. Using local crops, such as cassava and sorghum, appeals to local tastes, provides a livelihood for local farmers and keeps costs down, so that SAB Miller can compete with homemade brewers, its primary competitors in Africa.
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