Benefit Segmentation

Benefit Segmentation

Benefit segmentation will help you see your business through the eyes of your customers. While many business owners emphasize the features of their products or services, customers view them in terms of benefits. Your customers are always asking themselves, “What's in it for me?” People buy products or services in order to satisfy their needs and desires. When a carpenter goes shopping for a half-inch drill bit, for example, he's not really interested in the drill bit itself, he wants a half-inch hole. In other words, he's looking for the value that the product can give him.

Perceived value, that is. When a consumer goes shopping for a new Mercedes-Benz, for example, he's likely looking for something beyond transportation. He's probably looking for the perceived value of status that goes along with owning a fine automobile.

People don't typically make a purchase based on one benefit however. Often there will be a whole list of benefits associated with the purchase of a product. If you know what these benefits are, you can set your business up to satisfy as many of them as possible. With the Mercedes, for example, status may be the primary benefit, but secondary benefits of transportation, safety, reliability and service may also be important. Focus on the primary benefits, but take care of the secondary benefits as well. It's handling all of the little things that make a good business truly exceptional. Product benefits are the solutions to your customers needs and product features provide those benefits. For example, a customer wanting/needing value for their money may be looking for the benefit of a low price. In this case, they may be attracted by the feature of a $2 price tag.

The following list will help you identify the most important benefits to your Target Market.

This will help you determine the product features that best offer these benefits.

User Status (non-user, first-time user, etc.) If you sell wedding cakes, most of your customers will be first-time users and may be less certain of their needs. If you sell office supplies, your customers will likely have made a similar purchase before and may be certain of their needs.

Usage Rate How often (or quickly) will your customers consume your products and/or services?

Loyalty status Do your customers tend to stay with one supplier or do they switch easily? If price is the main benefit, for example, loyalty tends to be lower because someone with a lower price can easily draw them away.

Product features Sometimes it's easier to think in reverse. If you know the features your customers are seeking, perhaps you can discover why. Understanding the entire process makes it easier to satisfy them in the long run.

Sensitivity to Quality How important is quality to your customers?

Price How important is price to your customers?

Service How important is service to your customers?

Convenience How important is convenience to your customers?

Other What other “wants or needs” might you be able to satisfy for your customers?

Have a look at the following example, then create a list of “benefit market segments” for your Target Market(s). Begin with your customers' wants or needs, then identify the benefits that fulfill them. After that, you can identify some of the features that offer those benefits.