We will discover what market segmentation is in this post and how it enables you to successfully target the right audience with your marketing efforts to ensure the success of your company.
Targeting the right market with the right message is crucial when trying to reach customers through marketing messages or advertising campaigns. If you aim too broadly, your message may reach a small number of people who end up becoming customers, but it will also likely reach a large number of people who have no interest in your goods or services. You’ll waste a lot of money on advertising if your messaging isn’t tailored to your audience.
By using market segmentation, you can focus your advertising on the people who are most likely to become loyal clients or enthusiastic consumers of your material. You divide a market into groups that share similar traits to segment it. A segment can be based on one or more characteristics. By segmenting an audience in this way, customized content and more precise targeted marketing are made possible.
Your target audiences and ideal consumers can be defined and understood more clearly with the aid of market segmentation. Being able to identify the ideal market for your products can help marketers better target their advertising. Publishers can similarly tailor their content for various audience segments and offer more accurately targeted advertising opportunities by using market segmentation.
Market segmentation is the process of dividing a market into separate groups of consumers with varying wants, traits, and behaviors who may require different goods or marketing strategies. The business determines various market segmentation strategies and creates profiles of the resulting market segments.
The process of market segmentation divides the target market into smaller groups based on shared features like age, income, personality traits, behavior, interests, needs, or location.
These segments can be used to enhance sales, marketing, and other related activities.
Due to segmentation, brands can develop strategies for various consumer types based on how they view the overall value of different products and services. They can introduce a more customized message in this way with confidence that it will be well-received.
- Identify segmentation bases and segment the market.
- Develop profiles of resulting segments.
Bases for Segmentation
A market for a product can be segment using several bases.
- Geographic Segmentation
- Demographic Segmentation
- Psychographic Segmentation
- Behavioral Segmentation
1. Geographic Segmentation
It tries to divide markets into different geographical units.
- Regions by continents, country, state, neighborhood
- Size of area segmented according to size of population
- Population density urban, suburban or rural
A business may choose to operate in one or a few geographical locations, or it may choose to operate everywhere while taking into account geographical differences in needs and wants.
Marketer who operate globally often segment the market by continents/ country / region in the first instance and then go for segmentation on other bases.
National markets within country often segment the markets by region, state, district, urban / rural area in first instance and then go for segmentation on other bases.
2. Demographic Segmentation
Demographic Segmentation consists of dividing the market into groups based on variables such as
- Age (Infants, Child Market, Teen Market, Youth Market, Elders Market)
- Gender ( Male, Female )
- Social class ( Upper class, Middle class, Lower class )
The most common bases for segmenting consumer groups is based on demographic factors because consumer needs, wants and usage rates often vary closely with demographic variables.
Another reason is that compared to most other types of variables, demographic variables are simpler to measure.
Marketers design, package and promote products differently to meet the wants of different age groups.
McDonald’s uses many advertisements and media to reach children, teenagers, adults, and senior citizens. While the advertisements for senior residents are softer and more emotional, the advertisements for youth have dance beat music, action, and quick cuts between scenes.
Toys age-based segments.
Clothing, haircare, cosmetics, and perfumes frequently segment their audiences by gender.
For instance, most deodorant brands are used by both men and women. To counter this, Procter & Gamble created Secret as a line specifically tailored for a woman’s chemistry. The company then packaged and sold the product to further support the feminine stereotype. In contrast, Gillette’s deodorant is targeted toward men due to its association with shaving.
Consumers perceived social class influences their preferences for cars, clothes, home, furnishings, leisure activities.
Many businesses offer luxury items and convenient services to elite customers.
3. Psychographic Segmentation
It groups customers according to their social class, lifestyle and buying psychology.
Many businesses offer products based on the attitudes, beliefs and emotions of their target market.
Knowledge of lifestyle indicate whether a person is interested in outdoor, sports, shopping, culture or reading.
The desire for status enhanced appearance and more money are examples of psychographic variables. These are the factors that influence your customer’s purchasing decision.
▶ Social class
They have an impact on consumer preferences for automobiles, clothing, home décor, leisure activities, reading habits, and stores.
Many businesses create goods or services with features that appeal to particular social classes in mind.
Lifestyle choices have an impact on people’s interest in products. Conversely, the products people purchase reflect their lifestyles.
Marketers are progressively dividing their consumer base into several lifestyle segments.
Marketers have also employed personality traits to divide up markets and give their goods personalities that match those of their target audiences.
For products like cosmetics, cigarettes, and insurance, personality-based market segmentation tactics are effective.
4. Behavioral Segmentation
The customer can also be divided into certain segments on the basis of their knowledge, attitude, use or response to a product.
- Opinions, interest and hobbies
- Degree of loyalty
- Benefits of sought
▶ Opinions, interest and hobbies
It includes consumer’s optical opinions views on environment, sporting, recreational activities, arts and cultural issues.
▶ Degree of loyalty
Nowadays, a lot of businesses use loyalty schemes to segment their markets based on customer loyalty. They assume that some customers are truly loyal and continuously purchase the same brand.
Others are more indifferent; they favour one brand while occasionally purchasing others, or they are devoted to two or three brands of a certain product.
Others consumers still don’t display any brand loyalty. They either always purchase a brand that is on sale, or they want something different every time they shop.
Marketers typically divide consumers into groups based on how loyal they are to their goods or services, then they concentrate on the most profitable loyal customer.
This segments the product on the basis of when a product is purchased and consumed for example products consumed on marriages, festival or other occasions.
Segmenting by occasion might aid businesses in increasing product usage. The promotion of Mother’s Day and Father’s Day boosts sales of candy, flowers, cards, and other gifts.
▶ Benefits of sought
This requires marketers to identify and understand the main benefits consumers look for in a product.
Grouping customers based on the various benefits they expect from the product is a highly effective kind of segmentation.
Finding the primary benefits consumers in the product class search for, the types of consumers who look for each benefit, and the major brands that provide each benefit are necessary for benefit segmentation.
In general, businesses can use benefit segmentation to describe their brand’s key characteristics and contrast it with rival brands, as well as to explain why customers should buy their product. They might also look for fresh advantages and introduce brands that offer them.
Colgate — White teeth stops bad breath.
In some markets, there are also segments for light, medium, and heavy users. Even though they make up a small percentage of the market, heavy users frequently make up a large portion of all purchases.
Requirements for Effective Segmentation:
Measurable, accessible, substantial, differentiable, and actionable segments are necessary for effective segmentation.
A business has a better chance of long-term success and increased profitability when it has appropriately segmented its market.
Establishing the criteria for efficient market segmentation enables businesses to establish marketing strategies that are vital to their growth and development.
The five requirements for efficient market segmentation are as follows:
The extent to which a market segment’s size, purchasing power, and profits can be calculated.
How easily a market segment can be reached and served to.
The extent to which a market segment is large enough or profitable.
The degree to which effective programs can be designed or attracting and serving a given market segment.
Make sure that different target markets react differently to various marketing strategies before segmenting the market. This might not be a big deal if a company just caters to one market segment.
Benefits of Market Segmentation
The top advantages of market segmentation are as follows.
✔ Build better products
You can make products that better meet your consumers’ requirements, wants, and expectations if you have a deeper grasp of who they are.
✔ Better marketing ROI
Research indicates that segmented, targeted, and triggered campaigns account for 77% of marketing ROI.
✔ Lower customer acquisition costs
Your marketing campaigns will be more successful as a result of the knowledge you gain from developing segmented customer personas.
Both D2C and B2B brands fall under this statement.
For instance, after refining its sales process to take into account the habits and attitudes of each customer segment, the world’s largest insurance company, Metlife, set yearly savings goals of $800 million.
✔Reach out to new markets
Brands can find market gaps by segmenting their target audiences. For instance, the camera maker Canon saw an opportunity to sell cameras to kids who didn’t have smartphones and seized 40% of the low-end digital camera market.
✔Create a loyal customer base.
You may create the personalized journeys your customers want with the aid of market segmentation.
79% of consumers are more loyal to brands that employ personalization strategies, according to Accenture.
✔ Establish an omnichannel approach
You may develop an omnichannel strategy that better serves the demands of your customers with the support of the comprehensive data you gain from a solid market segmentation approach.
For instance, if a large portion of your clientele is from Generation Z, make sure your messaging is tailored to their cultural and social reference points across all channels.