Through market segmentation, you get to know exactly who you are targeting. Keep the segmentation as measurable and precise as possible.
Have you ever seen fur jackets being sold to people residing in Madhya Pradesh? Or school bags being sold to people in their 20s? Or meat to vegan? No right! This is because they are simply not the target audience for those products. Market segmentation is a practical way of bifurcating groups based on their attributes and prospects. Whatever product or service you sell can be valuable for one set of audience whereas noise for the other. Segmenting your market will help to focus your sales on the people who are going to buy your product or service. Here is everything you need to know about market segmentation.
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Demographic segmentation will help you to narrow down your target audience by highlighting “who are likely to purchase your product/service?”
What is market segmentation?
Market segmentation can be defined as the process of dividing people into groups based on their response to similar marketing strategies. Segmenting is a crucial initial step towards creating your marketing and sales strategies. As knowing for whom the strategies are in the first place will be the foundation and primary
When you are segmenting your market, there are a few key factors you need to consider. Below is what a perfect market segmentation looks like –
A secure segment
The market segment that you are targeting needs to be stable. A secure market is one where you know it’s not seasonal or a fad that will just vanish in a short span of time.
Keep a count
Ensure that your segmentation is measurable and quantifiable. Not having like a literal count but having an approximate number of customers will help you know exactly who your target audience is.
Precise bifurcation
When you are segmenting the overall market, know exactly who you are targeting. Keep the segmentation as measurable and precise as possible. It will help you a lot when you are planning sales and marketing strategies.
Easily accessible
Ensure your market segmentation can be easily accessed by your marketing and sales strategies. An ideal segment is the one that can be reached easily.
Types of market segmentation
Market segmentation is a game-changer that can make all the difference for companies. It is an opportunity to decide what exactly will drive your customers to buy. The four key types of market segmentation are –
Demographic segmentation
This is the most obvious and powerful type of market segmentation. Demographics are the information of the consumers that are easily identifiable. The usual components of demographics are –
Age
Ethnicity
Gender
Religion
Professional status
Income
Qualification
These demographics above will help you to narrow down your target audience so you know you are not wasting your time on those who are likely to not buy it. The market and sales strategies will be formed based on the targeted demographic. The advertisement of brands like H&M is more youthful and upbeat keeping most of the millennial audience in mind who often shop online.
Demographic segmentation will help you to narrow down your target audience by highlighting “who are likely to purchase your product/service?”
Psychographic segmentation
Psychographically bifurcating your audience is all about dividing them based on what their interests and personalities are like. It is a complex way of segmenting the market as it involves the mind. Demographic segmentation is quite direct and precise compared to psychographic segmentation.
The different ways of segmenting a market psychologically are dividing them based on –
Lifestyle
Hobbies
Personality
Goals
Values
Belief systems
Mental health
If you successfully match the psychographic demographic to its target audience, you will be able to speak to them on a personal level. Branding your product and standing out of the competition will be a piece of cake. That is why we often find advertisements of painkillers like crocin showcasing a stressful office environment that causes a headache. This is because most working professionals lead a stressful lifestyle and hence, the advertisement directly speaks to them.
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When several segments of the market are being observed and studied, many underlying and even unexpected opportunities are likely to unveil. These new marketing opportunities can prove to be a great way of figuring out the sales techniques for the future.
Geographic segmentation
Geographic segmentation is all about dividing people into groups simply based on their location. It is one of the easiest and simplest ways of segmenting the market. Geographic segmentation majorly includes –
Country
City
Postal code
Specific region
When your target audience belongs majorly to metropolitan areas, the form of advertisement you opt for will vary as compared to if your target audience was the rural population. For rural populations, usually, mass communication channels like the TV and radio are the go-to platforms. Whereas, for metropolitan audiences, several applications and websites on the Internet are a primary way to advertise. Geographic and demographic are distinct segments in nature and usually easy to figure out as compared to the behavioural and psychological ones.
Behavioural segmentation
Behavioural segmentation is all about dividing the audience based on their actions. Here you will get everything you need directly from your website itself. As your website will reflect what is the behaviour of your consumers by simply deriving the data available on it. This form of segmenting will give you –
Purchasing pattern of the consumers
Purchasing history of the consumers
The different types of content consumed on your website
Prospects who visited your website
Trending/most bought products
This segmentation will provide crucial information as it will reflect what has been working for your business. It will also help you greatly in forming upselling and cross-selling strategies to make more sales to your existing customers. One of the most common ways is offering add-on products to a customer’s current purchase. When you are buying something online and the, ‘you may also like’ tab that shows up is a result of behavioural segmentation.
Perks of market segmentation
Since market segmentation directly impacts the sales of a company and in turn profits, if done correctly, the benefits are enormous. Some of the obvious ones being –
Helps in developing marketing programmes
Knowing how market segments are responding to specific marketing programmes will give you clarity on what is working and what is not. They will help you to utilise your marketing budget effectively on fruitful projects.
Identifying market opportunities
When several segments of the market are being observed and studied, many underlying and even unexpected opportunities are likely to unveil. These new marketing opportunities can prove to be a great way of figuring out the sales techniques for the future.
Retaining customers
Segmenting and bifurcating the market will help in retaining your customers. As narrowing down will help you to create marketing and sales techniques that will establish a personal touch and direct connect with your consumers.
Optimum utilisation of resources
When you narrow down your audience, you can focus on them better. You can tailor the marketing and sales strategies based on your targeted segment. This will lead to a more efficient and optimal way of utilising the resources and hence, will produce a better output.
Boosts campaign performance
Market segmentation will aid in boosting your campaigns by targeting the right audience, at the right time, with the right message. The tailored messaging will impact your audience directly by highlighting their preferences and needs. When you have segmented your market, you will get the much-needed bird’s eye view.
Provides a competitive edge
Segmenting your audience will help you in finding whom you should focus on for selling your product/service. This in turn will boost the competitiveness of your business. When the marketing team is innovating strategy for a specific group of people, they will be able to touch the audience in an even better manner. This will help them to stand out from the competition and attract more consumers.
Increase in sales and profits
Market segmentation is an effective process that will help to target particular segments and find better opportunities. When a strategic advertising and marketing approach is being followed, you are bound to attract more customers and make more sales. The detailed focus will help you to increase profit.
Reveals possibilities of expansion
Market segmentation will unleash potential targets that you may not have been aware of! When you are researching different markets, you might find an untapped group of potential customers. If you run a bakery and are already aware of your local targeted market, taking the same bakery online, may unleash an unexpected set of consumers. It will help you to expand your primary market and also add new products and services based on your new clientele.
Offers several other insights
When you are conducting market research to figure out the segmentation, you will also find several other pieces of information that will be useful for your business. Segmentation may give you an insight regarding how consumers are reacting towards key elements like current pricing strategy, customer service and logistics.
Market segmentation is a great tool for figuring out overall what is working for your business and what isn’t. It aids in maximising sales by revealing new untapped markets or discovering strategies to make more sales to the existing consumers. The various sets of demographics mentioned above will help you to get to the bottom of whom do you want to target for your business. Once you find whom you want to sell, one of the key areas of focus becomes branding your products and business. Branding your products to your desired audience is another challenge in itself. Read our article on ‘branding’ to know more about it.
