If a bank wants to market to baby boomers, it conducts research and may find that retirement planning is the most important aspect of their financial needs. The bank can then market tax-deferred accounts to this consumer segment. Apple, the tech giant behind the iPhone and iPad, has skillfully used both demographic and psychographic segmentation. The company targets customers based on age and income — typically younger, affluent consumers — as well as social class and occupation. Market segmentation is a strategic approach that divides the total addressable market (TAM) into several smaller segments. Each segment consists of customers who share similar characteristics, such as demographics, pain points, needs, etc.
Market segments can power your product development cycles by informing how you create product offerings for different segments like men vs. women or high income vs. low income. In contrast, creating ads with a broad or generic statement can make them less likely to appeal to customers. This can be exemplified with audience segmentation, which can provide different ads to different customers, at different times. Simply put, there is no such thing as the perfect ad; it depends on your audience. Demographic segmentation uses categories such as age, education, gender, income, and household size to differentiate among markets. This form of market segmentation is the most common because demographic information is easy to obtain.
This can be demographic, psychographic, geographic, behavioral, or firmographic (if you’re a B2B company). Segmenting your audience based on their personality traits can help you craft campaigns that speak to your target customer. If you’re a clothing retailer, for example, segment the market based on people who care about sustainability. Promote your ethically sourced materials, resale program, and carbon-neutral shipping options to maximize revenue.
However, one type can usually be split into an individual segment and an organization segment. For example, Winter has several holidays, with Christmas being a huge influence on families. This holiday impacts your market segments’ buying habits, how they’ll behave (spending more than normal at this time than any other) and where they will travel too (back home for the holidays).
In the market of team collaboration tools, Slack stands out for its effective use of firmographic segmentation. The company targets businesses of all sizes, recognizing that a small startup’s needs will differ from those of a large corporation. However, this form of segmentation is gaining traction https://1investing.in/ due to the industry’s shift towards hyper-personalization. It pertains to people within a specific geographic area and takes into account their unique needs based on their location. Demographic segmentation is perhaps the most common and straightforward method of segmenting the market.
For example, if someone visits a city vacation destination on your website, it makes sense for you to show them city-based hotel advertisements on other channels that they see. Retargeting also allows you to get the right message to customers at the right time. Consider a company that markets health and beauty products to both men and women. These products, such as razors or skin care, are typically more expensive for women than they are for men. The product packaging also differs—products targeted to women having pinks and floral accents that align with gender stereotypes.
For enterprise clients, you may concentrate on lead generation, demos, and create tailored solutions to satisfy their demands. Firmographic segmentation provides you with the insights to come up with those decisions. Does this mean one organization is compatible with their firmographic segmentation and another is not?. For instance, a domestic brand may divide their leads based on location and these locations are north, south, east and west. Meanwhile, an international brand may also divide based on location, but their groups are Asia, Europe, South America, North America, Australia and so on. As your products can save the business money and time or make money, then it’s worth it.
The best part is when they use quizzes as a segmentation tool, leads don’t FEEL like they’re being segmented (nobody likes feeling segmented BTW). You ignore half of those messages and only pay attention to the ones that matter to you. A good percentage of the time, you buy because you need their product despite their poor attempts market segmentation definition and examples of selling you. In addition to increasing engagement rates, your messages hit closer to home and are in line with what your people want. A good market segment is always externally heterogeneous and internally homogeneous. Correspondingly, products for men usually won’t be relevant to women unless you offer it as a gift.
For example, grocery brands that have a higher rate of repeat customers should consider adding recurring discounts or deals for their most dedicated audience. Leaning in to the existing behaviours of audiences can help elevate their shopping experiences with your brand. As you go through the process, you may realise that segmenting based on behaviours doesn’t give you actionable segments, but behavioural segmentation does. You’ll want to iterate on your findings to ensure you’ve found the best fit for the needs of your marketing, sales and product organisations. 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.
The U.S. Census Bureau provides a great deal of demographic data, especially about metropolitan areas. For example, marketing researchers can use census data to find areas within cities that contain high concentrations of high-income consumers, singles, blue-collar workers, and so forth. Most of the market segments I’ve discussed focus on D2C brands, but firmographic segmentation is a tool B2B companies use to create more impactful marketing campaigns. This practice enables you to concentrate your marketing efforts on each customer segment so you can better satisfy their demands. Your brand can leverage this method to combat your competitors as you show your potential customers that you understand them and apprehend what they need. Commonly used in marketing strategies, market segments help companies optimize their products and services to suit the needs of a given segment.
A powerful way to do this is through retargeting, also called remarketing. This strategy is used to target ads specifically at internet users who’ve previously interacted with your site, mobile app, or online content and thus may have some level of interest in your products. Given that marketing, advertising, publicity, and promotion have begun to focus more on personalized marketing and retargeting, market segmentation is key to marketing success. Segmenting the market enables you to target customer segments with a highly personalized approach.
Victoria’s Secret deals are creating and marketing women lingerie and beauty products. They concentrated on women and “women” is the main market segment in their marketing campaign. Applying demographics segmentation, this company is also classifying their target market with product differentiation as PINK for adolescent girls.
This is the type of segmentation that tells you what people do and why they buy. Psychographic segmentation is similar to behavioral segmentation but there’s a difference. This type of segmentation is based on the lifestyle, interests, and activities of individuals that make up a customer segment. Similarly, products targeted at men usually won’t be useful for women unless you’re marketing them as the perfect gift. Even though there are many advantages of market segmentations, there are some disadvantages and limitations as well.
There should be something common among the individuals in the segment that the marketer can capitalise on. Marketers also need to check that different segments have different distinguishing features which make them unique. Marketers must also ensure that the individuals of the segment respond in a similar way to the stimulus. That is, the segment must have a similar type of reaction to the marketing activities being pitched.
A great way to get these details is with market research, such as asking your customers in surveys or conducting interviews that ask if your marketing efforts are meeting their needs. For an example of psychographic segmentation, athletic brands would consider advertisements that differentiate between brand-new athletes vs. more expert athletes. Different factors, such as the lifestyles of customers, can make a big difference in whether they find ads relevant or not. Geographic segmentation organizes audiences based on geographic characteristics. It’s another fairly simple method that helps ensure the ads or new products that reach potential customers are relevant to their localities. Of all the types of market segmentation, behavioural segmentation is likely best started with the information you have on an existing customer base.