Customer Segmentation and Pricing Study

A digital startup focusing on travel rewards knew the general product they wanted to design, but was unsure of which market to target first. In addition, while they saw a user need for the product, they were less sure that each segment had a serious need for their product or which segment would allow them to be profitable. They hired Avenir Design to answer these questions for them.

User Interviews and Product Design

We started by talking to a number of people who could be potential users. This included travel agents, frequent travelers, and personal assistants for high mileage business flyers. These conversations allowed us to understand the customers much better.

three_segments

Because of these findings, we took our original segmentation of three categories and expanded it in to four groups to account for the two types of frequent traveler. We took these findings and told our client which features of their product each group would value the most.

Pricing and Market Sizing

We still had to determine which market would be the best to target and whether it could be profitable. We used different market sizing strategies for each user segment. For the frequent traveler category, we focused on an A/B test that would allow us to determine product adoption and pricing together.

test methods

We measured click-through rates both on Facebook and on the website. The test used click through rates on Facebook ads to approximate the percentage of users willing to download our app for free, and our click through rate on the A/B website test showed that there was one pricing structure that was significantly more favored by our audience.

Using statistical sampling techniques on our survey results in combination with market data, we extrapolated how many people might initially sign up overall and what they would pay. From this, we developed a final recommendation on which audience to target first. Finally, we combined this with information from our user research to suggest potential pitfalls and key points of advantage that they could use in their marketing to shift these numbers.

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