You’ve spent time and money developing the ideal product, and now you want it to be recognized in the market. You cannot, however, cure everyone’s problem or appeal to everyone. This is precisely why you should contact your critical customers. The market segmentation jigsaw piece comes into play and here we will understand the importance of market segmentation.
Market segmentation is the process of creating separate divisions within a large, homogeneous market of potential customers. Customers are classified based on whether they meet standards or have characteristics that cause them to have similar product needs. Customers who respond similarly to marketing activities are classified as segments. They share comparable aims, desires, and requirements.
Most firms lack the resources required to target a large number of people. As a result, they must concentrate on the specific market segment that necessitates their service. They divide the market into comparable and recognisable segments through market segmentation.
One of the most basic yet efficient types of segmentation is demographic segmentation. Based on objective data, it is utilised to segment the audience and generate customer personas, such as:¬†
For example, if you segment your audience depending on their income, you may target them with products that fit within their financial limits. This is a simple segmentation if you have a small firm or are new to eCommerce.
It is the practice of categorising audiences based on shared personal values, political beliefs, goals, and psychological features.
For example, you can group customers according to their:¬†
¬†Psychographics is the most difficult-to-identify category, but it is also the most useful. Although your audience analytic tools and social media are the greatest places to get data for psychographic segmentation, you should also use surveys, interviews, and focus groups to deepen your customer understanding in this segment. You can learn a lot about your consumers’ likes, dislikes, needs, wants, and loves by using psychographic segmentation. You may then design marketing efforts that are relevant to their psychographic profile.
It is the process of categorising customers depending on where they reside and shop. People that share the same city, state, or zip code have comparable requirements, mindsets, and cultural preferences.¬†
The true benefit of geographic segmentation is that it provides insight into what your clients’ location says about a variety of geo-specific elements, such as their:¬†
You’ll need to analyse your data, like with any market segmentation strategy, to determine how each element affects your clients’ purchasing behaviour. People living in colder climates, for example, are more likely to be interested in winter clothes and home heating appliances.
The method of grouping clients based on common habits they exhibit when interacting with products/brands is known as behavioural segmentation.
For this form of segmentation, you can divide your audience into groups based on:¬†
¬†Using your website analytics, you may find trends in your consumers’ activity that can assist forecast how they will interact with your business in the future. Then you may use this hypothesis to deliver personalised recommendations that meet the demands of your customers. Spotify, for example, offers its users personalised daily mixes based on the genres and artists they’ve previously listened to.
The four pillars of market segmentation are demographic, psychographic, geographic, and behavioural, but consider adding these four additional categories to supplement your marketing efforts.
People are classified as technographic segments depending on the technology they use and how they engage with it. For example, when launching a new product, you may categorise early adopters of new technology and target them. Alternatively, you might offer customers discounts based on the device they use to shop online. You could, for example, show Apple products to Safari users.
Generational segmentation goes beyond demographic segmentation by classifying clients by generation – Boomers, Gen Z, Millennials, and so on. Customers can also be segmented based on criteria such as marital status, property ownership, and number of children. Bank of America, for example, successfully implemented life stage segmentation into their digital marketing approach. When consumers signed up for their Family Life Banking programme, they were asked to define their life stage circumstances. Customers were then led to a microsite built exclusively for that segment.
Firmographic segmentation is a tool used by B2B businesses to generate more effective marketing campaigns. It differs from other segmentation in that most of them are D2C, whereas firmographic is mostly for B2C. Firmographic segmentation, like demographic segmentation, is the process of analysing and classifying B2B consumers based on shared firm characteristics. To build firmographic consumer categories, consider the following seven factors:¬†
¬†Finally, market segmentation is critical for creating efficient marketing strategies. It allows organizations to obtain a better understanding of their customers, target their marketing efforts, boost efficiency, gain a competitive advantage, and drive product development. Businesses can produce better results, create deeper customer relationships, and ultimately enhance their bottom line by adapting their strategy to certain segments. hence Market agencies understand the importance of market segmentation.
Consider the following market segmentation scenario for a skincare company. Based on several features, they have established three separate market segments:¬†
Segment 1: Young Professionals
Segment 2: Mature Women
Segment 3: Natural and Organic Enthusiasts
The skincare company may adjust their product offers, marketing messaging, and distribution channels to effectively reach and address the individual demands of each category by segmenting the market into these three separate categories. This strategy enables them to efficiently allocate resources and develop tailored marketing campaigns that resonate with the identified consumer demographics.
Considering the above example of a skincare company, how should a consumer persona look for market segmentation is elaborated below.¬†
Name: Sarah Johnson
Goals and Motivations:
Challenges and Pain Points:
Messaging and Marketing Approach:
By creating and understanding this consumer persona, the skincare company can develop targeted marketing strategies, product offerings, and messaging that resonates with Sarah and address her specific needs and preferences. This approach enables the company to build a stronger connection with its target audience and increase the likelihood of attracting and retaining customers like Sarah