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New Approaches To Customer Base Segmentation For Small And Medium-Sized Enterprises

Author

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  • Meleanca Raluca-Cristina

    (The Academy of Economic Studies - Bucharest, The Institute of Doctoral Studies)

Abstract

The primary purpose of this paper is to explore current praxis and theory related to customer segmentation and to offer an approach which is best suited for small and medium sized enterprises. The proposed solution is the result of an exploratory research aiming to recognize the main variables which influence the practice of segmenting the customer base and to study the most applied alternatives available for all types of enterprises. The research has been performed by studying a large set of secondary data, scientific literature and case studies regarding smaller companies from the European Union. The result of the research consists in an original approach to customer base segmentation, which combines aspects belonging to different well spread practices and applies them to the specific needs of a small or medium company, which typically has limited marketing resources in general and targeted marketing resources in particular. The significance of the proposed customer base segmentation approach lies in the fact that, even though smaller enterprises are in most economies the greatest in number compared to large companies, most of the literature on targeting practices has focused primarily on big companies dealing with a very large clientele, while the case of the smaller companies has been to some extent unfairly neglected. Targeted marketing is becoming more and more important for all types of companies nowadays, as a result of technology advances which make targeted communication easier and less expensive than in the past and also due to the fact that broad-based media have decreased their impact over the years. For a very large proportion of smaller companies, directing their marketing budgets towards targeted campaigns is a clever initiative, as broad based approaches are in many cases less effective and much more expensive.Targeted marketing stratagems are generally related to high tech domains such as artificial intelligence, data mining and marketing analytics and presuppose the availability of sophisticated computer software and specialized personnel. The methodology proposed in this paper takes into consideration the fact that, due to financial and time-related constrains, smaller companies need a more practical and straightforward solution for segmenting their customer base. The simplicity of the solution, however, should not come at the expense of its efficiency. The original contribution of this paper resides precisely in the fact that it aims to offer the best of two worlds: the simplicity and cost-effectiveness of plain methods which can be used without the aid of specialized software and the high return on investment given by the use of artificial intelligence algorithms such as clustering.The main implications of this paper relate to the fact that it draws attention to how targeted marketing can be performed successfully by companies with restricted budgets by providing an actionable set of guidelines which can be put into practice by smaller enterprises using limited efforts and resources.

Suggested Citation

  • Meleanca Raluca-Cristina, 2012. "New Approaches To Customer Base Segmentation For Small And Medium-Sized Enterprises," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 848-854, December.
  • Handle: RePEc:ora:journl:v:1:y:2012:i:2:p:848-854
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    File URL: http://anale.steconomiceuoradea.ro/volume/2012/n2/129.pdf
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    More about this item

    Keywords

    segmentation; customer base; small and medium sized enterprises; cluster analysis; targeted marketing;
    All these keywords.

    JEL classification:

    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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