What Is Market Segmentation?
Market segmentation is the process of dividing the target audience into smaller and more defined categories. Divide customers and audiences into groups with similar characteristics, such as demographics, interests, needs, or location.
If you want to improve the effectiveness of your marketing, segmentation should always be one of your first purchases. Learn about the four most common types of market segmentation.
The four basic types of market segmentation are:
- Demographic objective
- Psychographic segmentation
- Geographical targeting
- Behavioral segmentation
- Demographic purpose
Demographic segmentation is one of the most popular and widely used forms of market segmentation. See statistics about a group of people.
Examples of demographic market segmentation
- Family situation
- Annual income
The examples above are useful for reaching B2C audiences, a company can use the following to classify a B2B audience:
- Business size
- Work function
Since demographic information is statistical and factual, it is generally relatively easy to understand what the different market research sites are using.
- Psychographic Segmentation
Psychographic segmentation classifies audiences and customers based on factors related to their personalities and characteristics.
Examples of psychographic market segmentation
- Personality traits
- Psychological influences
- Unconscious and conscious beliefs
Psychographic segmentation factors are slightly more difficult to identify than demographic factors because they are subjective. It is not data-driven and requires research to be discovered and understood.
- Behavioral targeting
While demographic and psychographic segmentation focuses on who the client is, behavioral segmentation focuses on how the client behaves.
Examples of behavioral segmentation
- Buying habits
- Consumer habits
- User status
- Interactions with the brand
Behavioral segmentation requires that you know your customer’s actions. These activities can be related to how a customer interacts with your brand or other activities that take place outside your brand.
Geographical segmentation is the simplest form of market segmentation. Classify customers based on geographic boundaries.
Examples of geographic market segmentation
- Postal Code
- Radius around a certain place
- Urban or rural
Geographical targeting can refer to a defined geographic boundary (such as a city or postal code) or an area type (such as city size or weather type).
How to make a strategy for the market segment
Now you know what market segmentation is, why it is important, and the four types of market segmentation. It is time to use this information in work.
Use the following industry process to learn about your target audience and find new marketing and product opportunities.
- Analyze your existing customers
If you have existing customers, start the market segmentation process by performing an audience analysis. Audience analysis can help you learn about your customers and begin to identify trends in your current customer base. Use these market research questions as a guide for your research.
Interview with your customers.
Go straight to the source and interview existing customers, past customers, ideal customers, potential customers, and potential customers. Ask questions to help you fill in the details for all four types of market segmentation.
Talk to your sales team.
If you have a sales team that spends a lot of time with customers, use this as a positive point. Interview them to discover similarities or trends they often see while working with their customers.
Consult your company data.
Your company probably has a lot of data that can help you get to know your customers. Use customer relationship management tools and POS systems to find trends related to behavioral segmentation. Receive data that shows how much customers spend, how often they visit your store and the types of products and services they buy.
Use the analysis of your website.
Your website also contains data that can help you get to know your audience. Use Google Analytics to find details about all four types of market segmentation. For example, you can learn more about customer behavior by observing which pages users visit, how long they stay on the site, and which referral sites bring them to your site.
Research audience geography.
Get graphical segmentation details and find out where your audience lives with the Alexa Site Overview tool. Enter your website URL and the report will show you where your visitors are in the world.
Investigate the public’s interests.
Knowing your audience’s interests can help you identify psychographic segments in your customer base. Use Alexa’s public interest tool to find topics and categories that are important to your audience. Enter your website URL to compile a report on the categories in which your audience is interested.
- Create a buyer persona for your ideal customer
After completing an audience analysis, you’ll have a good idea of who your current customers are. In the next step, take your data and use it to create a buyer persona that describes the exact type of customer you want to attract.
The buyer persona is a semi-imaginary description of your ideal customer. This allows you to see the person who is trying to attract your brand. Knowing whom you want to work with will make it easier to find the right opportunities for your industry.
- Identify industry opportunities.
As soon as you have a buyer persona that describes your ideal customer, start looking for market opportunities.
A market opportunity is a trend that can generate new tactics or marketing offers. Ask questions about your brand first to find out.
- What problems does your brand solve?
- What problems can you solve better than your competitors?
- What do you know a lot about or what you are good at?
- Whom do you want to serve for you and your team?
Use market segmentation to create better marketing campaigns
Market segmentation helps your brand to be clear about your target audience and your goals. You can get to know your audience, see how to better serve and reach them, and find new markets to grow.