Geographic segmentation can be a subset of demographic segmentation, although it can also be a type of segmentation in its own right.
It creates different target customer groups based on geographical boundaries. Because potential customers have needs, preferences, and interests that differ according to their geographies, understanding the climates and geographic regions of customer groups can help determine where to sell and advertise, as well as where to expand your business. Firmographic Segmentation is similar to demographic segmentation, except that demographics look at individuals while firmographics look at organisations.
Firmographic segmentation would consider things like company size, number of employees and would illustrate how addressing a small business would differ from addressing an enterprise corporation. Behavioural Segmentation divides markets by behaviours and decision-making patterns such as purchase, consumption, lifestyle, and usage.
For instance, younger buyers may tend to purchase bottled body wash, while older consumer groups may lean towards soap bars. Segmenting markets based on purchase behaviours enables marketers to develop a more targeted approach because you can focus on what you know they, and are therefore more likely to buy.
Psychographic segmentation considers the psychological aspects of consumer behaviour by dividing markets according to lifestyle, personality traits, values, opinions, and interests of consumers. Large markets like the fitness market use psychographic segmentation when they sort their customers into categories of people who care about healthy living and exercise. Find out how to drive product design and profits with customer segmentation.
Why should market segmentation be considered a strategy? A strategy is a considered plan that takes you from point A to point B in an effective and useful way. Market segmentation is similar, as there will be times you need to revisit your market segments, such as:. If your customers change, then your market segmentation should as well, so you can understand clearly what your new customers need and want from you.
For example, natural disasters caused by global warming may impact whether a family chooses to stay living in an area prone to more of these events. On a larger scale, if your target customer segment moves away from one of your sales regions, you may want to consider re-focussing your sales activities in more populated areas. For example, Winter has several holidays, with Christmas being a huge influence on families. Knowing this information can help you predict and prepare for this period.
For more information on how Qualtrics helps brands master market segmentation from start to finish, check out our Segmentation Research Service. Where can you use market segmentation in your business? When your business wants to enter into a new market or look for growth opportunities, market segmentation can help you understand the sales potential. It can assist in breaking down your research, by aligning your findings to your target audience groups. If you have your entire market separated into different customer segments, then you have defined them by set criteria, like demographics, needs, priorities, common interests, or behaviour preferences.
When you know a lot about your customers, you can understand where your business is connecting well with them and where there can be improvements. Market segmentation can help with customer needs research also known as habits and practices research to deliver information about customer needs, preferences, and product or service usage. This helps you identify and understand gaps in your offerings that can be scheduled for development or follow-up.
Proven Results : Discover five proven practices that will enhance your business research. Use market segmentation to understand your customers clearly , so that you can save time and money developing products and services that your customers will want to purchase. Marketing and content teams will value having detailed information on each segment, as this allows them to personalise their campaigns and strategies at scale.
This may lead to variations in messaging that they know will connect with audiences better, making their campaign results more effective. If the campaigns are combined with strong calls to action, the marketing campaigns will be a powerful tool that drives your target market segments towards your sales channels.
A good segmentation analysis should pass the following tests:. Market segmentation is not an exact science. How can you meet the expectations of your customers today? We would advise, though, to get automated from the beginning. Forget spreadsheets — choose market segmentation software to measure and streamline your marketing strategy; as you grow, the technology will scale with you.
Innovative features such as XM Directory allow you to build your own customer segments and start personalising experiences at scale based on the rich insights into your critical customer groups. If you want to get a feel for your market segmentation upfront, before taking a step towards a streamlined and integrated system, trust us to take you through the research with our Market Segmentation Research service.
This is what Starbucks does through its messaging by creating a sense of belonging. Behavioral segmentation has similar measurements to psychographic segmentation, but instead, it focuses on specific reactions and the ways customers go through their decision making and buying processes. Attitudes towards your brand, the way they use and interact with it, and their knowledge base are all examples of behavioral segmentation. Collecting this type of data is similar to the way you would find psychographic data.
Brand loyalty is an excellent example of behavioral segmentation. While reading this article, I bet that you can think of one brand that you consistently purchase and trust enough to buy its newly launched product without even reading the reviews.
This type of brand loyalty produces a consistent buying pattern which is categorized as a behavioral trait. Marketers work hard to get customers to love and stay loyal to their brand for a consistent purchase cycle. To target customers that have great brand loyalty, many companies will offer rewards programs to enhance this behavior with the hope of capturing new loyal customers as well. For example, the makeup and beauty company, Sephora, has an excellent rewards program for its loyal customers.
The more you spend at their store, the more points you rack up, which can be redeemed for generous samples. In addition to that, they offer free services, special access to sales, and more! By targeting and rewarding those who already had an affinity to their brand, Sephora was able to build an impressive community that their target market wants to be a part of.
The importance of this strategy goes far beyond placing your target market into cohesive segments. For starters, those cohesive customer segments will lead to great customer retention. Capturing customers at the beginning of a perfectly tailored customer journey will provide an excellent brand experience and increase the likelihood that they will stay loyal to your brand.
If every message and product shared with them resonates in some way, they will have a very difficult time saying no to you. Analyzing your customers in-depth will help you uncover unknown needs or problems that they face that your brand can solve.
This discovery can lead to new product lines, rebrands, or new brands, all to catapult the growth of your business by appealing to your current customers better, as well as new consumers that were previously uninterested. Gone are the days of your team spinning its wheels trying to come up with something that will stick. At the end of the day, every single person is vastly different. You cannot appeal to every aspect of every person. People change, and they can change fast.
Choose a cycle that makes sense for your business and stick to it. Market segmentation can be a laborious and complicated task, and mistakes in the beginning stages may seem inevitable. Here are five steps that lay the process out simply, plus the two strategies that are most commonly used to guide them. Before getting started, consider using marketing automation software to streamline and measure your efforts effectively.
As the name suggests, a concentrated marketing strategy is when a company chooses only one market to focus all of their time, money, and efforts on.
This strategy is usually chosen by smaller businesses or those that are just taking off and starting to make a name for themselves in the marketplace. Success is typically seen when targeting a smaller group of people since the strategy has to appeal to the entire segment. Appealing to an entire segment becomes challenging when the segment is too large.
You should be aware that when using this strategy, your growth opportunity is limited. On the other hand, a differentiated marketing strategy is when a company focuses on two or more markets. Companies that utilize this strategy market their products to many different segments, they just change their messaging to appeal to all of the differences. Although a differentiated marketing strategy requires a lot more effort, time, and money than a concentrated marketing strategy would, it typically yields more success since there are many more avenues to rake in a profit.
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