“No product or service has ever, or will ever, exist, that serves everyone in equal measure. If you hear a colleague or manager say ‘our product is for everyone’, it’s time to teach them about market segmentation.”
One Size Does NOT Fit All in this webinar on market segmentation and customer persona exercise
Why Market Segmentation?
Market Segmentation allows us to understand and cater to the diverse needs of customers. As Philip Kotler, a marketing professor at the Kellogg School of Management, suggests: “Markets consist of buyers, and buyers differ in one or more ways. They may differ in their wants, resources, locations, buying attitudes, and buying practices. Thus, it makes sense to divide or segment the market into several segments.”
Understanding Market Segmentation
Market segmentation is the process of dividing a broad target market into smaller, more manageable segments based on various characteristics like demographics, behaviours, and geographic locations. It allows companies to precisely target their offerings, create more effective marketing campaigns, and maximise resource efficiency.
Types of Market Segmentation
Four main types of market segmentation include: Demographic (based on measurable statistics such as age or income), Psychographic (based on lifestyle, values, personality), Geographic (based on location), and Behavioural (based on usage, loyalty, and buying responses).
Demographic segmentation divides the market based on demographic variables like age, gender, family size, income, occupation, education, religion, and nationality. For example, a luxury car company might target high-income individuals, while a toy manufacturer might focus on families with young children.
Psychographic segmentation divides the market based on social class, lifestyle, and personality characteristics. For instance, a travel company might market adventure packages to thrill-seekers and relaxation packages to those seeking tranquility.
Geographic segmentation divides the market based on geographical units such as nations, states, regions, cities, or neighbourhoods. For example, a winter wear company may target customers in colder regions, while a sunscreen brand might focus on consumers in tropical areas.
Behavioural segmentation divides the market based on consumer knowledge, attitudes, uses, or responses to a product. For instance, a gym might offer loyalty discounts to frequent visitors, while a software company might target users experiencing certain problems.
How Far is Enough?
“Take your segmentation as deep and detailed as you can afford to service with your marketing.”
Tailoring Your Strategy
Segmentation data allows us to design targeted marketing campaigns. By understanding our audience’s unique characteristics, we can create personalised experiences that resonate with them, thereby enhancing customer experience and loyalty.
Personas Beyond Segmentation
“Understanding the humans within the segment, is critical for true personalisation and customisation in your marketing communications.”
What is your customer doing right now? What time did they go to bed last night? Where is your customer going on holiday this year? What other brands would you associate with your customer?
Drive Conversions with Segmentation
As Tali Yaacovi, Director of Product Marketing at Google, says, “Understanding your customers’ needs and addressing them with personalised communication is the key to a successful marketing strategy.” Segmentation enables us to understand these needs and design our offerings accordingly, driving conversions and ROI.
Your Segmentation Journey
To implement or refine your market segmentation and customer persona exercise, begin by identifying key characteristics of your target market. Then, divide your market into segments based on these traits. Next, develop targeted marketing strategies for each segment. Finally, monitor, measure, and adjust your strategies based on performance.