Customer Segmentation
Identifying the needs of different customer groups and targeting them with tailored offerings is a hallmark of successful businesses. This practice is called customer segmentation.
It divides customers into categories based on shared needs or characteristics to serve them more effectively. It is a useful way to understand the needs and desires of potential customers.
Understanding customer needs is the first step in developing a successful strategy that matches the right product with the right customer. When done right, customer segmentation will keep customers loyal for longer, thereby increasing customer lifetime value.
Segmentation in the food industry can be based on Demographic categories or food-related lifestyles. Demographic categories include age, education, income level, etc. Food-related lifestyle covers aspects like price consciousness, attitude towards environmental control, health or body consciousness, and so on.
The food-related lifestyle approach is considered a more appropriate customer segmentation method in the industry. It presents a comprehensive way to understand and predict consumer behaviour regarding food choices.
For instance, some factors known to influence a customer's choice of a food stand vendor include:
- Stand appeal
- Brand value of the food stand
- Food and service quality
- Dietary considerations
- Reputation
In our simulation, the city has nine customer segments grouped into the following food-related lifestyle categories:
- Health-conscious
- Price-oriented
- Taste-oriented
- Quality-oriented
Each customer segment can be targeted by Recipe, Price, and Locality.
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