Segmentation

Segmentation is the process of defining these characteristics and assigning customers into categories based on them.

Every customer is different, but customers share common characteristics that can be useful for understanding their behavior.  Segmentation is the process of defining these characteristics and assigning customers into categories based on them.  Although segmentation is an analytical exercise, it is never perfect and there is no simple rule for preferring one set of segmentation criteria over another.  

You have to make a judgment call on when it's "good enough" based on how well it fits market data and how actionable it is.  Ultimately segmentation is not an end in itself, but simply a means for explaining the market and developing a strategy.

ACTION POINT: Find the customers with common characteristics and assign them to segments.