Market Segmentation: VDDW Corporate Performance Management Initiatives for Results



	Initiatives: Overview Pricing Supply Chain Routing Planning & Budgeting Return On Advertising NOP–driven Negotiating NOP–driven Commission & Incentives Sku Rationalization Customer Profitability Market Segmentation Partner and Product Benchmarking Improved Category Management Staffing efficiencies Process Costing

Customer segmentation is a cornerstone for pricing strategy, the deployment of sales and marketing resources, and the R&D / product development processes, to name a few.
The process of market segmentation begins with customer profitability, since a company should pay closest attention to those customers which are profitable and, hopefully, growing.
The segmentation exercise then continues with analysis of the various distinguishing attributes of those customers – price sensitivity, purchasing frequency and volume, preferred products, intended uses of those products, perceptions of how critical / substitutable the company’s offerings are, customer’s sense of loyalty, their demand for special services, and the list could probably go on.
The VDDW is critical to the segmentation initiative. It provides customer profitability at a Net Operating level, in addition to showing what products different customers purchase, how much they purchase, and how often, against which statistical mining techniques can be applied to infer price sensitivities. Further, it exposes customer’s demand for various handling activities, illuminating which value-added services are important, and to whom.