Market Segmentation: Do you know what it is and how to start using it?
Is market segmentation the marketing strategy you’ve been missing? Let’s look at it and see what you might be missing out on.
Market segmentation is the division of your audience into subgroups that maintain commonalities. The original group is broken further into subsidiary groups that have something in common. For instance, marketers can break customer groups down into common interests, demographics, customer needs, behaviors, values, and more. Breaking down into further subsets allows your marketing effort to connect to each group individually and on a deeper level. There are plenty of behavioral and psychographic classes to narrow your original target market.
Why do we want to divide our already chosen target audience? The division into subgroups helps make each group approachable. Once you have subdivisions, you may now strategically target the audience on a deeper level. In this case, your marketing strategy no longer needs to remain broad and inclusive, diluting your message. Marketing can focus your message so that the particular subgroup is more apt to respond. Focus market research allows you to plan your messaging directly to the customer segment. The customer experience improves due to addressing specific customer needs and expectations. Forward-thinking, you’ll form customer connections, develop brand identity, and build customer loyalty.
The benefits of segmenting your markets for businesses.
First and foremost, by understanding a market segment, you’ll leverage your messages. Targeting better in the product, sales, and strategy opens up additional revenue. Secondly, marketing segmentation helps boost a current market that has plateaued. It may also provide insights into niche markets that you may not have considered otherwise. Next, businesses benefit from reaching more reliable leads that provide increased conversions and greater sales. Lastly, by presenting your company as unique from your competitors, you develop brand loyalty and strengthen your brand identity.
While a large number of executives believe that market segmentation research is crucial for growth and increasing profits, surveys by Bain & Company indicate that a small percentage of their companies use it effectively. This untapped potential means that business market segmentation is further beneficial to an intelligent marketer who takes hold and uses this information to their advantage.
Understanding marketing segmentation.
The five primary categories of segmentation.
Geographical segmentation- Categorization based on the location of an individual such as country, city, continent, or region. In a more narrow spectrum, it would include neighborhood, county, postal code, or street segments. These categories are examples of geographic locations – groups defined by a specific location.
Demographic segmentation- Categorization based on individual attributes such as age, gender, ethnicity, or income. It would include housing type, education level, Italian, or even something like what allergies they have, in a more narrow spectrum. These categories are examples of demographic data – groups defined by specific criteria they fit.
Firmographic segmentation- Categorization based on company attributes such as industry location, business size, internal revenue, or industry type. It would include segments such as specific job titles, memberships, and unions in a more narrow spectrum. These categories are all examples of firmographic data. Demographic segmentation relates to people. Similarly, firmographic segmentation refers to companies and organizations.
Psychographic segmentation- Categorization based on the party’s values, feelings, and thoughts, such as lifestyle, personal interests, values, and opinions. It would include segments such as political beliefs, awareness issues, activities, and special interests in a more narrow spectrum. To further explain, this is where you’d find customer groups such as people who like to read books. Or customer groups who seek healthy living options. Perhaps, a group containing people who believe in the humane treatment of animals. These categories are examples of firmographic data – traits exhibited from psychological criteria.
Behavioral segmentation- Categorization based on customer segmentation by behavior patterns such as product usage, solution or benefit, timing, and decision-making process. In a more narrow spectrum, it would include segments such as how often they visit a website, which features the customer uses, or what time of day/season a potential customer most often buys. These categories are examples of behavioral data – common exhibited patterns in interacting with a particular product or business.
When should segmenting be employed as part of your marketing strategy?
Market segmentation research should be explored and considered during all marketing campaign strategies. See if it’s a strategy that’s right for your business plan. Yet, a couple of the best times to implement marketing segmentation are when sales have plateaued, and you want to explore new markets to boost sales. Also, when you are seeking to reach a niche market or higher profit margins and refined traffic. Another good time is when your marketing strategist wishes to find a parallel market to your existing market. In this case, you find customers who already exhibit your existing customer base’s same traits or values.
As for tips for best practice, you should begin marketing segmentation after you have established your original target audience. Market segmentation data should be tracked for results and tweaked throughout the year. Once the market segmentation process starts, strategists will focus on the areas showing progress. It is also best to review market segmentation analysis as the environment or conditions affecting your business or industry change. Stay alert to changing conditions or customer base. The world is continually evolving, and your market will change also.
Email – no excuses. Use marketing segmentation!
One area of marketing that market segmentation should automatically come into play is email marketing. Emails blasts reach hundreds, even thousands of individuals. But, if you take the time to segment each campaign, you can individualize the target message and reach more people. Individualized messages can speak directly to the audience and impress a more significant impact on the reader. A survey by Mail Chimp revealed that segmented marketing campaigns saw a 100.95% higher click rate than non-segmented email campaigns.
Segmentation for social media marketing.
Social media platforms, such as Facebook, LinkedIn, Twitter, and Instagram, have tools for business marketing that include options for market segmentation. LinkedIn is known to cater to business. Conversely, Facebook recently focused efforts on businesses. Yet, all of these social media platforms cater to businesses on one level or another.
In business, we often learn from those who have tried and succeeded. These social media giants want to have business tools that yield results. You’ll return to do additional business with them if you see results. Therefore, if they’re helping you segment to get better results, shouldn’t you likely ask yourself, why aren’t I doing this all the time.
Social media is a vast world of millions of people, all with different interests. So, it only makes sense to target a market segment that best suits your product or service. For example, if you sell premier dog food, there’s no point in all those serious cat lovers seeing your ads. You want your ads to reach the segment that needs your product. Hence, many social media platforms now have targeting. You may select job titles like a Dog Trainer or special interests like dog lovers. Either way, your leads become far more reliable if you begin using marketing segmentation in your social media marketing effort.
