When a firm focuses their efforts on a specific group of consumers what type of marketing tool has been created?

Customer segmentation is the practice of dividing a customer base into groups of individuals that are similar in specific ways relevant to marketing, such as age, gender, interests and spending habits.

Companies employing customer segmentation operate under the fact that every customer is different and that their marketing efforts would be better served if they target specific, smaller groups with messages that those consumers would find relevant and lead them to buy something. Companies also hope to gain a deeper understanding of their customers' preferences and needs with the idea of discovering what each segment finds most valuable to more accurately tailor marketing materials toward that segment.

Customer segmentation relies on identifying key differentiators that divide customers into groups that can be targeted. Information such as a customers' demographics (age, race, religion, gender, family size, ethnicity, income, education level), geography (where they live and work), psychographic (social class, lifestyle and personality characteristics) and behavioral (spending, consumption, usage and desired benefits) tendencies are taken into account when determining customer segmentation practices.

Customer segmentation, also called consumer segmentation or client segmentation, procedures include:

Deciding what data will be collected and how it will be gathered
Collecting data and integrating data from various sources
Developing methods of data analysis for segmentation
Establishing effective communication among relevant business units (such as marketing and customer service) about the segmentation
Implementing applications to effectively deal with the data and respond to the information it provides

By enabling companies to target specific groups of customers, a customer segmentation model allows for the effective allocation of marketing resources and the maximization of cross- and up-selling opportunities. When a group of customers is sent personalized messages as part of a marketing mix that is designed around their needs, it's easier for companies to send those customers special offers meant to encourage them to buy more products. Customer segmentation can also improve customer service and assist in customer loyalty and retention. As a by-product of its personalized nature, marketing materials sent out using customer segmentation tend to be more valued and appreciated by the customer who receives them as opposed to impersonal brand messaging that doesn't acknowledge purchase history or any kind of customer relationship.

Other benefits of customer segmentation include staying a step ahead of competitors in specific sections of the market and identifying new products that existing or potential customers could be interested in or improving products to meet customer expectations.

Not only do companies strive to divide their customers into measurable segments according to their needs, behaviors or demographics but they also aim to determine the profit potential of each segment by analyzing its revenue and cost impacts. Value-based segmentation evaluates groups of customers in terms of the revenue they generate and the costs of establishing and maintaining relationships with them. It also helps companies determine which segments are the most and least profitable so that they can adjust their marketing budgets accordingly.

Customer segmentation can have a great effect on customer management in that, by dividing customers into different groups that share similar needs, the company can market to each group differently and focus on what each kind of customer needs at any given moment. Large or small, niche customer segments can be targeted depending on the company's resources or needs.

In B2B marketing, companies are concerned with decision-makers' job titles, the industry sector, whether the company is public or private, its size, location, buying patterns and their technology at their disposal, for example.

In B2C marketing, companies are concerned with particular customers' profiles, attitudes and lifestyles. B2C companies may also be concerned with geographic location. B2C companies who segment customers based on their geographic location can tailor offers based on regional events and preferences. B2C companies can also customize offers based on the predominant languages spoken in each region.

Approaches to B2B customer segmentation include vertical or horizontal alignments. In vertical segmentation, companies select certain industries or job titles that would likely find their products appealing and then focus marketing efforts on those segments that they feel are most ready to buy. The benefit of vertical segmentation is that companies can offer services that are fine-tuned to particular industries. The needs of the financial services industry are different from those of the healthcare industry. If each segment was offered services customized to that industry, adoption and satisfaction might increase.

In horizontal segmentation, companies simply focus on one job title across a wide range of industries and organizations. The benefit of horizontal segmentation is a stronger focus on the needs of particular job titles or job roles. For example, a focus on Chief Financial Officers (CFO) can create product collateral, website messaging and email newsletters specifically tailored to that role.

Companies can use marketing automation software to define and create customer segments. The customer segments can be based on demographic data, psychographic data and activity-based data such as actions that users took on a website. Companies use marketing automation software to configure, schedule and execute campaigns for particular customer segments.

Customer segmentation is different from market segmentation. An example of market segmentation is grouping customers by the products or services they purchase. A company may perform market segmentation based on distinct lines of business such as software, professional services and training. The company can then allocate resources to each market segment and employ separate marketing and advertising activities to each.

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There's a new C-suite role out there: customer experience officer, or CXO. This individual oversees integration of the customer view across the enterprise, works to unify customer communication across channels, integrates CRM with other in-house systems, cultivates social media interaction and gathers ongoing analytics for refining customer-centric processes.

But the CXO can't do all this single-handedly. Good CX requires a customer experience team.

This isn't just a matter of covering many bases. CX is, at its heart, a cultural shift. It requires not just an overhaul in processes and a series of integrations, but it also calls for a reshuffling of priorities and a realignment of upper management vision with boots-on-the-ground innovation.

Who can make this happen?

Apart from the CXO -- who needs to be not just a strong leader, but also a technologically competent veteran of customer relations -- there are several key roles to be filled on the customer experience team.

CX requires top-down executive leadership, but it's even more important to see to the day-to-day details. The CX manager is a juggler, keeping a number of balls in the air at once: ongoing customer analytics review, ongoing marketing campaigns, social media monitoring, perpetual upgrades to the online enterprise presence and mobile touch. And this isn't simply management of schedules and agendas; the CX manager is expected to provide the CXO with vision support, tactical recommendations and implementation initiatives.

CX isn't simply an executive-level expertise; it's a team sport.

In a multichannel marketplace, a unified customer vision means well-synchronized applications, including mobile apps, CRM field support, online landing pages and data collection. These applications must be designed and developed within a common frame to optimize customer contact and ensure a consistent, responsive and satisfying experience. Such a person must be a business process management guru to keep these on track.

Well-crafted CX derives from data more than any other source. Survey input, apps, social media monitoring and online pages all generate copious amounts of data that capture customer profile and behavior data, and it all needs to be crunched, both for new insights and maintenance of existing models. In CX, this means more than just crunching numbers; it includes a strong understanding of business requirements, with strong talents in visualization and storytelling.

CX started within CRM, which, in turn, began within sales and marketing. These are essential voices in crafting a CX strategy because marketing campaigns and the sales lifecycle are where most customer contact occurs.

With the multichannel nature of CRM, social media interaction and customer online behaviors, it's no surprise that IT puts in many hours implementing CX initiatives. Clear coordination of messaging and continuity of delivery is so important that CX technology strategy can -- and often does -- become an important priority in overall IT planning for the enterprise. Having a process-savvy, technologically competent coordinator to keep CX and IT in sync should be a priority.

CX is not only an essential component of CX thinking and strategy; it may well be the most important of all, in terms of cultivating customer loyalty. With CX now as the most important discriminator between enterprise competitors in the marketplace, customer retention is key, and a strong support experience is often a deciding factor. The customer support manager is typically head of another area rather than a dedicated customer experience team member but should nonetheless be included and listened to.

CX isn't simply an executive-level expertise; it's a team sport. Good CX requires a team -- and a strong team at that.