What is Market Segmentation?
Market segmentation involves breaking down a target market into smaller groups based on specific criteria like age, income, personality, lifestyle behaviour or location.
Brands can use segmentation to design strategies for distinct categories of customers, depending on how they value certain products and services. This enables organizations to create highly targeted and personalized marketing campaigns as well.
The demographics, behaviours, requirements, attitudes, and interests of these groups are all taken into consideration. As a result, it aids marketers in better comprehending subsets of their main audience. Market segmentation also allows marketers to better satisfy the needs of various segments of clients. They can now improve products, sales, brand awareness, and, most crucially, client retention with this information.
Market segmentation research can also be used to better identify disparities in product or service consumption or brand perception among different types of demographic – like male females, young and old, high income vs low income etc.
You should group your target audience according to their individual features and give them with products/services that are most suited for them if you want to sell a product and make a decent profit. There are a plethora of market research tools available which aid in conducting market segmentation studies.
Significance of Market Segmentation
With the vast ocean of information available online, customers today are very well-informed and purchasing decisions are made faster than ever before. You must maintain track of every single distinguishing feature to attract buyers closer to your goods, from what they want to how they think.
This is where market segmentation comes into the picture. Some members of your target market could find your communications impersonal, while others might find it too direct. You may build more particular, individualised messages that communicate to different people in different ways, helping to attract them all, by understanding your distinct segments.It allows you to identify what it is that appeals to the group of people you are targeting or what is it that you should refrain from. Segmenting your markets allows you to see where your competitors fell short in the viewpoint of different customers, allowing you to avoid making the same mistakes.
You might also be able to identify underdeveloped markets and discover you have clients you didn’t even know existed thanks to segmentation. You can make focused, personalized efforts to reach out to these niche customers and convert them into brand devotees by studying them.
Segmentation is a powerful tool that increases your chances of success. Also, many enterprise survey software nowadays come with in built, market research functions, making market segmentation easier and more economical to implement on a large scale.
Types of Market Segmentation
This segmentation approach focuses on geographic location, as the name implies. This might be anything from a country to a state to a city to a county to a zip code. While location is frequently used in conjunction with demographic segmentation, it can also be utilised independently. Potential customers’ demands and interests differ depending on their geographic area, climate, and region, and knowing this allows you to decide where to sell and advertise a brand, as well as build a firm.
Everything a person does, from their food choices to the car they drive, is influenced by where they reside. Their beliefs are influenced by local cultural standards, which leads consumers to prefer one product over another. Working in a huge metropolitan office versus working from home, for example, will influence what people wear and how they utilise technology. Geographic marketing is often used by travel destinations to advertise nearby hotels, activities, and restaurants.
Geographic segmentation has the advantage of being relatively straightforward to obtain data from online data sources. Marketers can also tailor their messaging to a single location’s target audience or combine it with other segmentation data.
In this type of segmentation, customers are categorised on the basis of age, gender, marital status, income, and occupation, among others. Because it is based on knowing how customers use your products and services and how much they are ready to pay for them, demographics is the most prevalent segmentation strategy.
The benefit of demographic segmentation is that it is simple to get data. For marketing strategy and corporate purposes, government sources such as the Bureau of Labor Standards give statistics on households, income, education, and health. Apps that capture more specific demographic data for contact tracking and travel patterns have also been developed by companies. In lieu of existing research data sources, surveys also show the precise demographics of a target market and offer actionable insights.
This form of segmentation divides markets based on the purchasing behaviours, loyalty, lifestyle, and other brand interactions of various consumers. Behavioral segmentation refers to how people feel about your brand is perceived by the audience. How they use it, and how conscious they are of it. This helps marketers produce more customised and individualised communications that address the different groups in unique ways by knowing the habits of various segments of a target market. This can be achieved by implementing large scale surveys using online survey software.
This segmentation aids in the classification of audiences based on their lifestyles, preferences, opinions, and activities. Psychographic segmentation allows you to connect with your clients and engage them on topics that are relevant to their interests and your offering. et. This type of market segmentation is very valuable in qualitative research since it helps marketers to identify patterns in opinions and the reasons for actions.
B2B marketers use firmographic segmentation in the same way that B2C marketers use demographics. Firmographics describe the characteristics of their target market, such as their industry, number of employees, legal status, firm size, financial position, and other business-related aspects.
A B2C target market might have thousands of clients, but a B2B target market might only have a few large commercial organisations. Marketers that wish to know about a company’s strengths and viability in their target market might use firmographics. They examine their financial performance and growth trends to determine whether the market segment is expanding or contracting.