24 Aug The Importance of Market Segmentation as a Marketing Strategy in 2019
Market segmentation is one of the initial marketing strategies that ensure a smooth and actionable flow of marketing decisions in your business. This article guides you through the basics of market segmentation as well as provides tips and strategies for its successful implementation.
- What is Market Segmentation (with examples of marketing segmentation)?
- The importance of market segmentation.
- Types of market segments
- The segmentation process
- Best tips for market segmentations
What is Market Segmentation?
Market segmentation is the process of categorizing potential and actual customer base, into under various categories such as age, sex, location, preferences, income, etc. This ensures better targeting, increased ROI, lower wastage of marketing budget, and aids in broadening the product range and variations.
For example, a shampoo may be sold in sachets, tubes, or bottles, targeting different income groups. Similarly, most bigger fast food chains sell various local flavors for different countries they operate in to cater to the flavor palette of the region. Selling a product with different scents, such as deodorant, is appealing to segmented market based on their preferences.
The importance of market segmentation.
Market segmentation helps organize a businesses’ activities from production to promotions. Targeting should be the first step before starting any kind of marketing process. We have talked about this point in depth in our detailed article about targeted marketing as well as in our guide to creating and running marketing campaigns.
Market Segmentation clarifies your market’s needs. Targeting is where and how your budget should be applied based on the market segmentation. Segmentation is also greatly helpful for individual marketing campaigns, as it can guide you on how to apply various campaigning strategies on different demographics of customers.
Types of market segments
Segmentation can be made on the basis of one or more of the following:
- Demographic Segmentation.
This includes variables such as age, gender, level of education, level of income, family status, etc. This is the most popular type of segmentation as it helps businesses of all sizes and types to organize their audience into smaller and easier segments.
- Geographic and cultural Segmentation
Geographic segmentation, when done on a wider level, becomes cultural segmentation. Geographic segmentation can consist of anything from suburban to international level. For example, larger fast food companies serve local flavors of their products in each country they operate.
- Behavioral Segmentation
Behavioral Segmentation relies on learning a buyer’s existing purchasing patterns to divide them based on factors such as retailer preferences, usage occasion, purchase frequency, etc.
- Psychographic Segmentation
Psychographic Segments consists of divisions based on social or personal characteristics such as lifestyle choices, interests and opinions, personality, values, etc.
The segmentation process
- Marketing and industry research. It is important to know what your market is before deciding what part of it you need to market to and how. Conducting proper marketing and industry research with adequate research tools and strategies is the first step towards effective segmentation.
- Determine on what basis you will be dividing the market. For local businesses, smaller criteria such as demographic and psychographic data could be valuable.
- Conduct online and offline research about the actual statistical distribution of your target demographic. Next step is to gather data about your potential customer base. This can be done online or offline with marketing strategies and online tools like MyBestSegments, USA GOV statistics, or traditional questionnaires, surveys, and focus groups.
- Establish your customer base. It is best to express the number in a relative term like in percentages or a pie chart. You should focus on marketing to the segment which is most likely to purchase the products/services as initial testing.
Best tips for market segmentation 2019
- Be dynamic with trends and market needs. Segments, especially those based on behavioral and psychographic tendencies, are more likely to be dynamic in nature. It is advised that you keep updating and revising your marketing segments when necessary.
- Make sure your data is measurable and comparable. Data should be presented in relative and quantitative terms. Data from various segments should also be comparable to each other, in case the need for grouping arises. For example, if people from a different geographical location move to another place and their consumption habits are changed, the data between the two should be comparable such that now they can combined into one segment.
- Be realistic about your marketing approaches towards each customer base. It is advised to appeal to the beliefs and lifestyles of each individual segment. The customer should ideally derive a sense of belonging towards your brand, which is achieved mainly by appealing to their belief, lifestyle, and cultural choices.
- Group similar segments together. You should keep the number of segments to a number as low as possible so that the process of segmentation becomes easier and actionable. For example, suppose you have two segments with people who are interested in sports and people who are active at gyms. You can combine them under one category as people interested in physical activities.
Marketing Segmentation, when done correctly, could be the key to a long chain of successful and profitable marketing decisions and increased ROI. Not only does it help target your customer base, but helps in every aspect of decision making for your business. Therefore it often becomes important that all personal and professional efforts are put into its planning and execution.
We can help!
Symphysis believes in marketing from the ground up. With our team of dedicated experts we can help in locating your ideal market, segmentation, campaigning, search engine optimization, and creating your own successful brand. For more information call or text @+1 (425) 390-4738 for a free initial consultation