Let's start with a riddle. Every business needs them and there's no product or service without them. What do you think we're talking about? If you guessed, customers, you're spot on. But who exactly are your customers? Get ready to learn the difference between customers and consumers. It's a really important distinction that's often confused. We'll also talk about how to identify customer segments for your market, so that you can make sure that your product or service is addressing the right audience. Finally, we'll be looking at developing customer personas for your market and how to apply these in primary market research. It's a fantastic session so I hope you enjoy it, too. It's important to understand the difference between a customer and a consumer. Whilst these terms are often used interchangeably, there are distinct differences. These differences are important especially when undertaking primary market research or determining customer and consumer pain points. In simple terms, a customer purchases and pays for your product or service, and the consumer is the ultimate user of your product or service. Therefore, your customer may not be your consumer. Some situations where they may be a separation between the customer and consumer profile could be when an adult is purchasing a product or service for a child, a corporate purchaser buying a product for retail sale, one person is purchasing a product or service as a gift for another person, or perhaps purchasing a round of drinks at a night out. Don't know if any of those sound familiar to you. Why don't you take a second to jot down some more examples of both when a customer is not the consumer, and when a customer is also the consumer? Now, let's turn our mind to customer segments. Customer segmentation is the process of dividing a total market into groups, more commonly known as market segments. A market segment consists of individuals, groups, or organizations with one or more similar characteristics that cause them to have a relatively similar product or service need. The more specific the market segmentation is, the more specific and targeted the marketing and engagement plan can be. Generally, customer segments are broken down to a collective of variables made up of demographic, geographic, psychographic, and behavioral elements. Let's take a look at these now. Demographic segmentation is one of the most common and basic forms of market segmentation. It includes variables, such as age, gender, education, occupation, family type and size, socio-economic status, and so on. There's quite a few of them. Geographic segmentation is the process of dividing a market based on physical locations or other geographic phenomena, such as your state, climate, terrain, city, country, location, and so on. This segmentation data is relevant for both acknowledging the role that market regulations and culture norms have on customer habits. Psychographic segmentation requires a deeper understanding of customer personalities, behavior, and traits. Variables include things such as your personality, your motives, and lifestyles. So, do you like to go out or do you like to stay at home? What are the things that interest you? Behavioral segmentation relies on a good understanding of how customer or consumer knowledge and attitudes impact their buying patterns. Behavioral variables include things such as brand loyalty, price sensitivity, volume usage, and spending patterns. While some products or services rely more heavily on one form of market segmentation than others, it's seldom advisable to focus only on one market segment. Enterprises should use several different forms of segmentation in conjunction. How? By developing customer personas. A customer persona is a fictitious person that is supposed to represent a group of customers or consumers of a product or service who share the same characteristics or market variables. The persona is created so that the enterprise can better understand their customer or consumer's behaviors, motivators, and drivers. In developing a customer persona, first describe what defines the person. What are their concerns and needs? Articulate their demographic, geographic, psychographic, and behavioral segments that we've just talked about. Their persona should include a name, an avatar, some personal anecdotes to humanize this hypothetical person. Really make this person come to life. Remember, your product or service is probably relevant to more than one customer segment, so create as many personas as you need to cover these different customer segments. Similarly, it would be a good idea to develop separate personas for customers and consumers. Even if the bulk of their demographic and geographic variables is similar, their psychographic and behavioral variables are likely to be quite different. There are some great templates to help you develop a customer persona, so have a quick search online, give it a go, and see you come up with. So we've now looked at the difference between customers and consumers, how to create customer segments, and develop customer personas. You've now learned the basics. Next, we're going to look at primary market research and how all of these elements apply in a real life setting through a case study on two of Australia's largest organizations.