What is Benefit Segmentation?
Benefit segmentation is the process of segmenting your market based on the perceived benefits of your product. It is a market segmentation strategy that essentially categorizes the customer base depending on the benefits they seek. The categories are then based on the perceived value they derive from your product.
Benefit segmentation is a marketing strategy that helps marketers to create user base segments and identify what benefits attract a particular segment. They can then identify the segment that derives the most benefits from the product and in turn generates the most profits. This will help teams to create a solid brand development strategy by focusing on the expectations of that customer base.
The idea of benefit segmentation is based on the fact that different customers look for different benefits in a product. So it directly serves the purpose of customer experience analysis through categorization allowing teams to create tailor-made solutions.
As mentioned above, consumers look out for a range of benefits or very specific benefits in a product. So a product or brand can have an array of different features they provide while constraining themselves to a particular market.
The customer might use the product for a specific feature deriving only partial value from the product. Customers may also choose a product in an array of different products from a brand depending on their specific needs.
How does Benefit Segmentation work?
In benefit segmentation, the customer base is divided into categories of perceived benefits like quality, specific features, customer service, etc. Teams can list down all the possible benefits and complimentary benefits that can be derived from their product. Then they can map their customers based on the benefits they seek. Customers can be mapped to more than one set of benefits.
In addition to just segmenting the benefits sought by customers, the segments can also be profiled based on other customer attributes. Here, the attributes referred to can include user demographics, customer behavior information, level of consumption, etc.
A generic example of possible benefit segments can be designed as follows.
This set of customers primarily buy your product for social proof. They view the product as a status symbol.
These buyers first thoroughly study all the products in the market and only then decide to purchase the product. Their goal is to first align their needs with the product features or to get the latest version of the product.
Once these customers are comfortable buying a brand’s product, they will continue to do so. These are the loyalists.
This set is always on the lookout for a good deal. Their primary goal is to maximize the financial incentives they receive from the purchase through discounts or special complimentary benefits.
Benefit Segmentation and Brand Positioning
The benefit segments directly contribute to the process of deciding a brand position. Once the team identifies all the core benefits and their relative popularity among the users, they can design a brand position that cohesively represents this data. This is why benefit segmentation is also considered a data-driven marketing strategy.
Teams can also decide to create additional products or features that directly address an outlier benefit that their customer seeks but the current product doesn’t focus on. This will also allow teams to invite new brand positioning in the market - an opportunity to explore untapped potential.
Examples of Benefit Segmentation
There are several different examples we can consider to understand benefit segmentation. We have explained all of them below.
1. Footwear Brands
Let’s first consider a popular footwear brand selling athletic footwear. There are a number of different attributes that customers look for in an athletic shoe based on their specific needs.
Companies can begin by first identifying the different perceived benefits of their product. For example, so of the benefits or attributes that would enable a purchase from the customer can be as follows:
- The quality of the sole
- The design of the product
- The social proof that comes with owning a shoe from a popular brand.
- The fit of the shoe
- Custom-fit feature
- Style options
- Brand loyalty
Regular feedback from the customer can also help identify any other perceived benefit that might not be apparent to the creator. Then the next step is to create segments of customers who make the purchase for a certain benefit.
For example, a professional player will expect more performance from the shoe compared to an amateur player. Also, depending on the sport, if it’s indoor or outdoor, the need for a specific material of shoe sole will change. Even by considering different sports, teams can come up with specific attributes that each sport will need.
2. Skincare Brands
Any skincare brand will mostly have a host of products in the same domain targeting each skincare need. These skincare needs may change depending on different skin types or conditions which include -
- Dry skin
- Sensitive skin
- Acne-Prone skin
- Dark circles
- Oily skin
- Pigmentation or blemishes
Depending on the customer’s skin type they would expect a certain benefit. This gives the skincare company to create an array of products in the same category targeting different needs. The scope here is endless. There is always a new skincare need that can be explored. Benefit segmentation would aim to match this data with the perceived benefits and arrange precise segments that represent each customer group.
3. Car Company
Benefit segmentation when done by a car company will again try to first define all the perceived benefits. Making a range of expectations from a car will result in a huge list of benefits. From safe family-based care to adventurous sports cars to smart electrical vehicles, there is a customer for each model.
The goal of benefit segmentation here would be to define each customer that would prefer to drive a particular car and match all the attributes that the said customer looks for.
A singular brand can focus on a particular type of car and perform benefit segmentation again to understand all the derive benefits from the said model. This information will help them reach their customers and create a brand position that best resonates with them.