Introduction to

Customer Profiling

Dr Ramesh Kumar
CEO, SSCBS Innovation and Incubation Foundation
 What is Customer Profiling?
Customer profiling is a strategic approach that involves creating detailed and
comprehensive portraits of different types of customers. It is a methodical way of
understanding and categorizing the diverse individuals who make up a customer base.
By gathering and analyzing relevant data, businesses can develop profiles or personas
that represent distinct customer segments.

Definition Psychographics Creating Personas

Personas are fictional
Customer profiling is the Psychographic data, such representations of your
process of creating a as values and ideal customers, based on
detailed description of your motivations, can provide real data. They can help
ideal customers, based on deeper insights into you empathize with your
their interests, behaviors, customer behavior than customers and tailor your
and demographics. demographics alone. marketing to their needs.
Why is Customer Profiling Important?

1 Improved Marketing
By understanding your customers' needs and preferences, you can
create more effective marketing campaigns that resonate with them.

2 Better Customer Experience

With customer profiling, you can anticipate your customers' needs
and provide personalized experiences that build loyalty and trust.

3 Competitive Advantage
Knowing your customers better than your competitors can give you
a strategic advantage in the marketplace.
Key Components of Customer Profiling

Customer Feedback
Market Research
Customer surveys and feedback can provide Market research can help you understand market
valuable insights into customer needs, trends, customer segments, and competition.
preferences, and pain points.

Social Media Analytics Demographics Data

Analytics tools can provide insights into customer

behavior on social media platforms, allowing you Demographics data can provide a basic understanding of
to tailor your messaging to their needs. your customer base, such as age, gender, and income
level.
 Methods and Tools for Customer Profiling

1 Customer Interviews
One-on-one conversations with
customers can provide valuable
Data Mining 2 insights into their needs and
Using big data techniques, you can
preferences.
extract patterns and insights from vast
amounts of customer data. 3 Customer Journeys
Mapping out the customer journey
can help you understand the pain
points and opportunities for
improvement.
Benefits of Customer Profiling

Improved Customer Satisfaction Increased Revenue

By providing personalized experiences that By tailoring your marketing to the needs of your
meet customer needs and preferences, you can ideal customers, you can generate more sales and
increase customer satisfaction and loyalty. revenue.

Reduced Churn Lower Costs

By focusing your marketing efforts on the
By addressing customer pain points and
customers who are most likely to convert, you
improving their experience, you can reduce
can reduce your overall marketing costs and
churn and retain more customers over time.
improve your return on investment.
Examples of Effective Customer Profiling
Profiling
Nike

Apple's customer profile focuses on Nike's customer profile targets

affluent, tech-savvy consumers who athletes and fitness enthusiasts who
value design and innovation. value performance and style.

Birchbox's customer profile targets young women Zara's customer profile focuses on fashion-
women who value convenience and personalized conscious consumers who value quality and
personalized experiences. affordability.
Conclusion

By understanding your customers at a deeper level, you can create

more effective marketing campaigns, provide better customer
experiences, and gain a competitive advantage. Customer profiling is
an essential tool for any business looking to succeed in today's
marketplace.
1.4.1 Know Your Customers: Basics of Segmenting the Customer and the Market
Basics of Customer Segmentation:
•Definition: Dividing customers into groups based on shared characteristics.
•Purpose: Understand diverse customer needs and preferences.
•Examples:
• Demographic: Age, gender, income.
• Geographic: Location, urban/rural.
• Psychographic: Lifestyle, values.
• Behavioral: Buying patterns, product usage.
Market Segmentation:
•Definition: Dividing the market into distinct groups.
•Purpose: Tailor marketing strategies for specific segments.
•Example: Smartphone market in India segmented by price range.

| Demographic |
| Geographic |
| Psychographic |
| Behavioral |
Customer Segmentation: Market Segmentation:
1. Demographic Segmentation: 1. Product-Based Segmentation:
•Definition: Dividing customers based on demographic •Definition: Grouping products based on their features,
factors like age, gender, income, education, etc. benefits, or intended use.
•Example: A smartphone company might target urban •Example: The detergent market in India may have
Indian youth aged 18-30 with high disposable income for segments for stain removal, fragrance, and eco-friendly
its premium models. products.
2. Geographic Segmentation: 2. Price-Based Segmentation:
•Definition: Categorizing customers by their location, •Definition: Categorizing products or services based on their
such as city, state, or region. price points.
•Example: A clothing brand might promote winter wear •Example: In the smartphone market, there are segments
more in Northern Indian states where the winters are for budget, mid-range, and premium devices.
colder. 3. Distribution Channel Segmentation:
3. Psychographic Segmentation: •Definition: Segmenting markets based on how products
•Definition: Grouping customers based on lifestyle,
reach customers (e.g., retail stores, online platforms).
interests, values, and personality.
•Example: FMCG companies may choose different
•Example: A fitness brand might target health-conscious
distribution channels for rural and urban markets in India.
individuals who prefer an active lifestyle, regardless of
4. Usage-Based Segmentation:
their age or location.
•Definition: Categorizing customers based on how often
4. Behavioral Segmentation:
•Definition: Classifying customers based on their they use a product or service.
behavior, such as purchasing habits, product usage, or •Example: Telecom companies may have different plans for
brand loyalty. heavy data users and those who use their phones primarily
•Example: An e-commerce platform may send exclusive for calls and texts.
discounts to frequent shoppers to encourage repeat Importance of Segmentation:
purchases. •Customized Marketing: Allows businesses to tailor their
5. Income-Based Segmentation: marketing strategies to specific customer needs.
•Definition: Segmentation based on customers' income •Resource Optimization: Helps allocate resources more
levels. efficiently by focusing on high-potential segments.
•Example: A luxury car brand may target high-income •Enhanced Customer Satisfaction: Meeting the specific
individuals, while a budget-friendly brand may focus on needs of each segment leads to increased customer
the middle-income segment satisfaction.
 1.4.2 Identifying Customer Segmentation and Conducting Market Research
Conducting Market Research:
•Definition: Gathering information about the market.
•Methods: Surveys, interviews, observations, and data analysis.
•Example: Researching consumer preferences for a new soft drink flavor in India.
Market Research Process:
1.Define Objectives:
1. Clearly outline what information you need and why.
2. Example: A smartphone company may want to understand what features are most important to
customers in a specific price range.
2.Collect Data:
1. Use surveys, interviews, and observations to gather relevant information.
2. Example: Conducting online surveys to understand consumer preferences regarding smartphone
features.
3.Analyze Data:
1. Organize and interpret the collected data to draw meaningful insights.
2. Example: Analyzing survey responses to identify the most desired features such as camera
quality, battery life, and screen size.
4.Identify Trends:
1. Look for patterns or trends in consumer behavior.
2. Example: Discovering a growing trend of online shopping for electronics rather than traditional
retail stores.
5.Competitor Analysis:
1. Study competitors to understand their strengths and weaknesses.
2. Example: Comparing features, pricing, and customer reviews of similar smartphones from
different brands.
1.4.3 Customer Value Proposition
Definition:
•What it is: The unique value a product/service offers to customers.
•Components:
• Benefits: What the customer gains.
• Differentiation: What sets it apart.
• Relevance: How it meets customer needs.
1. Definition of CVP:
•CVP is the unique combination of benefits that a company offers to its
customers. It answers the question, "Why should the customer choose our
product or service over others?“

2. Key Elements of CVP:

•Customer Needs: Identify what the customers in India really want from a
mobile phone – like affordability, good camera, long battery life, etc.
•Unique Selling Proposition (USP): Determine what sets your mobile phone
apart – perhaps it's an advanced camera feature or a unique design.

3. Importance of CVP:
•Market Differentiation: Helps your product stand out in a crowded market.
•Customer Loyalty: Builds trust and keeps customers coming back.
4. Creating a CVP:
•Understand Customer Segments: Recognize the diverse needs of customers in India –
students, professionals, or tech enthusiasts.
•Product Benefits: Highlight how your mobile phone satisfies these needs – e.g., affordable
pricing, high-quality camera.

5. Examples from India:

•Company XIAOMI: This company in India offers budget-friendly smartphones with advanced
features like AI-powered cameras, targeting the young and tech-savvy population.
•Consistent Branding: Maintain a consistent image across all platforms to reinforce the value
proposition.

6. Monitoring and Adjusting:

•Customer Feedback: Regularly gather feedback from Indian customers to understand if
their needs are evolving.
•Market Trends: Stay updated on the latest trends in the Indian market and adjust your CVP
accordingly.

7. Continuous Improvement:
•Innovation: Keep innovating to stay ahead in the competitive Indian market.
•Adaptability: Modify your CVP based on changes in customer preferences and market
dynamics.
1.4.4 Moving Ahead with Customer Targeting
Definition:
•What it is: Selecting specific customer segments to focus marketing efforts.
•Factors Influencing Targeting:
• Segment Size: Larger segments offer more potential customers.
• Growth Potential: Assess future market trends.
• Competitive Position: Evaluate competitors in each segment.
Example:
•Product: Fitness tracking devices.
•Target Segment: Urban professionals interested in health and fitness.
•Reasoning: Growing health consciousness in urban India, high disposable income.

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| Target Segment 1 |
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| Target Segment 2 |
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| Target Segment 3 |
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