Market segmentation is the art of finding niche markets for your products by building profiles of potential customers and breaking them down into groups. Segmenting customers with similar needs and wants into groups makes it easier to target them directly. Whether you’re a small business or a Fortune 500 company, knowing who your customers are can boost revenue and lead to sustained brand growth.
Marketers can choose from several useful tools and strategies that can help them get to know their customers and keep marketing plans up to date. Segmentation analyses of target markets over time help businesses of all sizes stay ahead of the curve. Here are the four different types of market segmentation and how you can reap the rewards of knowing your target audience.
Demographic Segmentation
The demographic market segment classifies customers by individual attributes. Examples include age, gender, disposable income, family size, marital status, and education level. All of these stats might impact demand for a product or service.
Interest levels may depend on a variety of different attributes at the same time. Some products may or may not be gender-specific A completely different approach might be needed if you plan to target baby boomers or trend-wary millennials.
B2B can focus on Firmographic segmentation – a sub-category of demographic segmentation that groups companies by size, revenue, industry, and other relevant stats.
Geographic Segmentation
Geographical boundaries can also impact buying habits. Marketers should be aware of geographic considerations like zip code, climate, and season. Purchasing decisions are often made based on where someone is, and what time of year it may be. This segment is closely tied to the demographic and psychographic segments, as cultural considerations also come into play and are commonly related to the region where a potential customer may be.
Psychographic Segmentation
This segment is concerned with who a potential customer is. Value set, lifestyle, political slant, personality traits, and aspirations can all affect consumption patterns in a big way. Certain consumers may be willing to pay a premium for products that they covet as status symbols or value as ethical or sustainable.
Behavioral Segmentation
Grouping consumers by behavior means taking a look at what they do. What did they buy in the past? What motivated the purchase, and how did they search for it? How do they interact with your brand? Do purchases increase on special occasions? Answering these questions will make it easier to target and send direct messages to your niche customer. Understanding the buyer journey of your customers will also make post-sales support that much easier.
Crafting The Right Market Segmentation Strategies
Market segments change as products or consumer preferences evolve. Holidays or external events like the COVID-19 pandemic can also impact buyer behavior and attitudes. It’s good practice to review segments periodically and make sure that products or services align with your target market’s desire. What has changed and why? What are the risks and opportunities in each segment? A simple SWOT analysis will help answer these questions.
Having clearly defined marketing strategies is essential for growing your brand and grabbing market share in an increasingly competitive market. Market segmentation is an essential part of any new marketing initiative, giving you a clearer picture of who your potential customers are, what they have in common, and what makes them unique
