Which market segmentation variables are most effective to determine new business potential?

Abstract

The purpose of this study was to discover which market segmentation variables are the most effective ones when segmenting customers based on the potentiality and attractiveness for short term sales success. The idea was to rank the current customers by giving scores to them on defined variables and based on the total scores that the customers get, categorize the customer base into three segments. The customer segments are green-, yellow- and red customers. The purpose of segmenting the customers in this way was to create an approach how to easily identify the most potential customers to whom focus the sales efforts on. Simultaneously such customers that falls in to the bottom segment would be in an easy way highlighted and get the required attention in an attempt to enhance the values for such variables where they are scoring low. The purpose of the study is answered through the following research questions: Which market segmentation variables are most suitable for segmenting based on current attractiveness and how to give values for customers on the chosen market segmentation variables? To answer these re-search questions a vast amount of literature is used. The outcome is a manual which describes in detail how to segment a market through this approach.