Building block $2$: Customer segments

Defines the different groups of people or organizations an enterprise aims to reach and serve. Customer

segments form the heart of the business model. A business will not survive without profitable customers.

Customer segments are formed by grouping customers into distinct segments, where the customers share

similar or everyday needs, behaviors, or other attributes.

Segmentation focusses on $($groups represent separate segments if$)$:

Needs require and justify a distinct offer

Reached through different distribution channels

Require different types of relationships

Substantially different profitability

Willing to pay for different aspects of the offer

Different types of customer segmentation:

Mass market $($no distinction exists, and the product or service is ideal for every customer in the

market$)$

Niche market $($based on specific and specialized needs and characteristics of customers$)$

Segmented $($additional segmentation within customer segment already identified. Further segment

customers on age, gender, income$)$

Diversified $($two unrelated customer segments $-$ business serves multiple customer segments$)$

Multi$-$sided platforms $($two or more independent customer segments$)$