Market Segmentation Examples, Types and Strategies

This type of data is easy to collect because they are observable or easily attainable through surveys and other customer interactions. We make things easier for the small business owner, by writing articles that help them to understand SEO and Digital Marketing. Get details for graphic segmentation and find out where your audience lives using the Ahrefs Site Explorer tool.

Similarly, publishers can use market segmentation to offer more precisely targeted advertising options and to customize their content for different audience groups. This is an exceedingly popular type of segmentation because most customers are influenced at least partly based on where they live. If a significant amount of your audience lives in the United Kingdom, you can use this information to create a website. This form of segmentation is considered to be ideal for international companies. Customers who live in different countries will have different wants and needs, which can be precisely targeted in a marketing campaign. This is considered by many companies to be the simplest form of market segmentation.

  1. Using psychographic segmentation, the agency tailors its offerings with exotic, off-the-beaten-path travel packages, perfectly aligning with this group’s deep-seated desire for exploration and cultural immersion.
  2. For instance, when marketing to an audience with low education levels, you’ll want to avoid complex language, and instead opt for layman’s language product descriptions.
  3. Travel destinations also use geographic marketing to promote hotels, activities, and restaurants in the area.
  4. People belonging to the same demographic group may have very different psychographic characteristics.

Say, for instance, you run an automotive company, and your primary market segment is middle-class families. You would likely design your car with lots of seating, leg room and space to accommodate a family with multiple kids. Behavioral data is useful because it relates directly to how someone interacts with your brand or products.

Allows Better Matching Of Customer Needs

Market segmentation can also help companies to determine the optimal strategies for the distribution of their products. Some groups of people, for instance, are more likely to shop online, while others are more likely to shop in a store. Companies can also decide which stores to pitch their products to based on where their market segment shops.

In psychographic segmentation, buyers are divided into different groups based on social class, lifestyle, or personality characteristics. People belonging to the same demographic group may have very different psychographic characteristics. Still, two demographic variables – gender and age – coupled with geographic region, are most useful in distinguishing the users of one brand from those of another. Armed with this data, you can then come up with multiple marketing campaigns targeting the three different groups. Life stage segmentation categorizes customers based on where they are in life at the moment.

The 4 Types of Market Segmentation

It considers demographic characteristics such as age, income, gender, ethnicity, profession, and level of education. It’s estimated that the average person sees an astounding 4,000–10,000 advertising messages each day.3 That’s why it’s critical to target the right market. Most marketers have limited advertising budgets, so using one marketing message to reach a broad audience may garner a few new customers, but it’s likely to come at a high advertising cost. In this case, promotional campaigns can be used to make rare buyers become frequent purchasers. Industries such as the smartphone market are likely to benefit the most out of this market segmentation. By breaking down the company’s target market into segmented groups, marketers don’t have to waste time in targeting each potential customer.

Behavioral Segmentation divides markets by behaviors 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 behaviors enables marketers to develop a more targeted approach, because you can focus on what you know they are looking for, and are therefore more likely to buy.

Combining demographic segmentation with other types can help you to narrow down your market even more. One benefit of this kind of segmentation is that the information is relatively easily accessible and low-cost to obtain. Say, for example, you’re a marketer who’s advertising 4 types of market segmentation a new brand of dog food. You could then segment that audience further based on what kind of dog they have and then show them ads for food formulated for their dog’s breed. A publisher could use this same information to show content about dogs to people who have or like dogs.

When you segment customers by their purchasing habits, you are basically categorizing them based on how they approach the buying process. When tailoring your marketing to suit the language of a specific geographic location, this goes beyond the actual language spoken. It also involves other aspects of language, such as the slang and colloquialisms used in different regions, even if they speak the same language. Language is another variable that changes from one geographic location, thus calling for a unique approach when marketing to different regions with different languages. This is a strategy that involves grouping people based on the geographic region in which they live or work.

What is Market Segmentation?

If your main geographic segment responds better to online ads than TV and print ads, this information should help you use your resources wisely. Most marketing professionals are adamant that using behavioral segmentation is among the best ways to build market segments. The benefits of using market segmentation are numerous and should help you strengthen your marketing and product development efforts at the very least.

For maximum effectiveness, most companies combine two or more demographic variables in segmenting a market. Gender segmentation involves dividing a market into different groups based on sex. Gender segmentation is extensively used in clothing, cosmetics, and magazines. A marketing strategy that is targeted at the general market is akin to using a machine gun. Sure, a machine gun can spray out hundreds of bullets in a minute, but it has poor aim, which means that many of these bullets will not strike your target. After segmenting your customers using multiple variables, you discover that there is a certain kind of shoe that is very popular among 20 – 30 year olds who have a high interest in parkour.

These attributes may not be as easy to observe as demographics, but they can give you valuable insight into your audience’s motives, preferences and needs. Understanding these aspects of your audience can help you to create content that appeals to them more effectively. Some examples of psychographic characteristics include personality traits, interests, beliefs, values, attitudes and lifestyles.

Use Market Segmentation to Build Better Marketing Campaigns

There are several different approaches that you can use to segment your audience and tailor your marketing to suit the wants and needs of each segment. If you want to effectively market your products, you have to make sure your marketing message and product positioning resonates well with all your customers. Companies spend billions of dollars on marketing and advertising when they know exactly who their audience is and what they want. Marketers now collect vast amounts of data on their target audience to ensure their marketing messages appeal to the right customer, at the right time, for the right products. Five ways to segment markets include demographic, psychographic, behavioral, geographic, and firmographic segmentation. Once marketers isolate their target audience, they must define what is different about their product?

They invited customers using their Family Life Banking program to specify their life stage circumstances when they signed up. From there, they directed customers to a microsite designed specifically for that segment. For this hypothetical organic food shop, a Pinterest campaign marketing products with sustainable ingredients would be a strategic way to appeal to potential customers. Well, not only do 9 out of 10 Pinners browse the social media platform for purchase inspiration, it’s also used by up to 80% of Millennial women and 40% of Millennial men. According to research from SALESmanago, 77% of marketing ROI comes from segmented, targeted and triggered campaigns. So, if your marketing campaigns are falling flat, do more market research to understand what makes your customers tick across each segment.

The logic behind this is that people’s occupations can have an influence on their perception of various things. Segmentation by income level can even help you to come up with a pricing strategy guide. For instance, if you are in the fashion industry, the kind of fashion that appeals to teenagers will be totally different from the kind of fashion that appeals to 30 year olds. Multi-criteria segmentations usually lead to a quantitative and objective description of the segment.

Market segmentation is a technique you can use to divide your customer base into subgroups based on shared characteristics, such as age, income, hobbies and location. The aim of segmentation is to tailor marketing efforts to your ideal customer profile (ICP), i.e. the customers most likely to buy your product or service. Your business likely has loads of data that can help you get to know your customers. Use your customer relationship management tools and point-of-sale systems to find trends related to behavioral segmentation.

Similarly, frequent or regular purchasing should not be understood as brand loyalty. Motivations underlying observed purchase patterns need to be seriously examined. For example, although early toilet soaps were used by both sexes, many companies are now featuring unisex brands. Procter & Gamble was among the first with Secret, a brand specially formulated for a woman’s chemistry, packaged and advertised to reinforce the female image. Second, demographic variables are easier to measure than most other types of variables.

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