Why market segmentation is necessary for your small business
According to the study made by Nielsen Media Research, there are more than 500,000 brands worldwide in more than 2,000 product categories.
Therefore, businesses have to utilize the marketing tool available to promote their products and services. One of the marketing tools businesses can apply is segmenting their customers.
What is Market Segmentation?
Market segmentation is a strategy to divide the target audience into a few sub-group based on their common characteristics. Marketing segmentation comprises of four significant subsets such as demographics, behavioral, geographic, and even psychographic factors.
Segmentation allows businesses to study and analyze the behavior and interest of their target customer. Hence, companies can send the right marketing content.
Types of Market Segmentation
There are many ways an organization can segment their markets, depending on the organization’s strategy and marketing plans.
Stated below are the four cores of marketing segmentation you will need to know as a marketeer:
- Demographic
Understandably, the best way to target the audience is by using demographic segmentation. Demographic segmentation is not so complicated as the information you need about your customers are already available for you. The quantitative data collected from the customers are factual and easy to obtain.
Here are some examples of demographic factors:
- Age
- Income
- Race
- Religion
- Gender
- Family size
Say, for example, Sephora’s market segmentation is based on gender as their target audience is mainly female. All their marketing videos, images, banners, and even beauty products are targeted only for females.
2. Behavioral
Behavioral segmentation requires businesses to study the customer’s purchasing behaviors, patterns, and habits before sending and marketing messages to them.
Some of the factors of behavioral segmentation are as follows:
- The purchasing habit
- User status
- Brand interactions
- Customer’s loyalty
One of the examples of behavioral segmentation is the purchasing habit of young buyers and older consumers. You will notice that the young buyers would prefer to shop more for fancy clothing and gadgets, whereas the older consumers would purchase more of vitamins, pills, and supplements.
3. Psychographic
The psychographic factor is the hardest segmentation to analyze as the measurement is qualitative. It’s difficult to study your customer’s interests, motivation, and attitude all the time as they are subject to changes.
Your customer’s motive, interest, and personality are not fixed. It is always changing depending on what they have experienced in life. So businesses need to note that what interest the customers today, might not interest them in the future.
Here are some examples of psychographic segmentation:
- Motivation
- Personality
- Values
- Attitudes
- Lifestyle
- Interest
However, you can always interact with your customers using survey forms or phone calls to ensure that you’re up-to-date with their latest interests, preferences, or any changes in their lifestyles.
4. Geographic
The last market segmentation that businesses can apply is geographic segmentation. The geographic segmentation means splitting your customers based on their location.
Below are some of the examples of categorizing your customers based on location:
- Country
- Zip Code
- Climate
- Rural, suburban and urban
Customers in different countries will need different products and services. For example, if your company is selling winter jackets, you can only target the customers living in a country with four seasons. It will be absurd for you to target customers living in a hot climate. That will be a no-brainer!
In conclusion
Market segmentation is essential for the business to market the right content and information to the respective customers. This is also to minimize the risk of advertising and marketing costs from going to waste.
You can start creating your market segmentation with Deskera Sales today!
