[MUSIC] And even more sophisticated basis for segmentation is a need base segmentation. A need base segmentation try to address what are the priorities, the barriers, to purchase the key buying factors on why a person decides to purchase this product, or hire this service instead of another one. Think of for example airlines, airlines try to segment customers on a need base. Think of business travelers that for example, maybe looking to pay high purchase items because they absolutely need to get a good night's sleep on a transatlantic flight versus coach passengers, which are just looking to simply for the most cost effective way to get from point A to point B. So airlines will segment on a need base segmentation. Finally, there is a psychographic basic for segmenting customers. This is perhaps the most sophisticated way of segmenting customers. This basis for segmentation aims to find out about the passions, the values, the attitudes, or even the appetite for risk or what detonates or triggers emotional connections with customers. For example, Nestle Purina, the leading company in the world for pet food, typically tends to segment cat owners based on psychographic profiles. They tried to determine what is the level of connection, or the meaning or the relationship between an owner and its pet. And they try to position different products at different price points and in different channels, even with different brands, to try to address those different psychographic profiles of consumers. So obviously there are trade offs between these four forms or four basis for segmentation. So let me show you what are the main trade offs. The best way to understand them has to do with ease of implementation and the depth of the insights we are getting. The insights and implementation, the easiest to implement and acquire, the data is the social demographic segmentation. And the hardest one is the psychographic as we've stated before. But the depth of the insights are much richer with the psychographics than with the demographic based segmentation and the behavior and need based segmentation lie somewhere in between. So we need to understand that what are essentially are the trade-off, what's the viability of using one type of segmentation versus another kind of segmentation. Because at the end of the day, any sort of segmentation, for it to be useful, it needs to satisfy three principles. First of all, it has to help me identify a particular and homogenous set of customers and identify how much they're worth. Because a term obviously needs to decide how much are they willing to invest in this particular set of segments. But in addition, it has to identify a specific customer needs so that you're able to design a unique value proposition to them and that the segmentation should also be able to help you design the positioning of the product for that specific customer segment group. And last, but not least, he has to provide a clue for how best to serve those customers. Any particular set of customers preferred to buy in a certain location or preferred to buy in a certain way, or preferred to pay in a certain way. So a useful segmentation has to be able to give you some clue as to how best to address a specific customer segment. [MUSIC]
