Here at xAmplifier, we want to help you market to your customers effectively. That’s why this week we’ll teach you about market segmentation, a strategy that will help you understand your customers better as well as highlight potential areas for new business growth.
What is Market Segmentation?
Market segmentation is a strategy used to divide a target audience into subsets of customers with common needs and priorities and implement strategies to target those subsets. Businesses often create product differentiation strategies to target these consumers, usually involving specific products based on the target segment’s attributes.
An ideal market segment meets a number of criteria. The subset must be large enough to earn profit, stable enough to persist over time, possible to measure and reach through the business’ promotion and distribution channels, and consistently responsive to a given market stimulus. The segment should also be both internally homogenous and externally heterogeneous, meaning customers in the same subset prefer the same product qualities, while those in different segments have different preferences.
Several market segmentation methods are available, including geographic, demographic, psychographic, and behavioral segmentation as well as segmentation by occasions or benefits.
Businesses can choose to segment their customer bases according to geographic data, including nations, states, regions, languages, cities, neighborhoods, or postalcodes. This approach tends to combine demographic data with geographic data to develop a more accurate profile.
This type of segmentation is usually based on variables like age, gender, occupation, and education level, often dividing target markets into various life stage groups and tailoring messages to consumers accordingly.
Sometimes called Lifestyle, psychographic segmentation divides consumers into subsets based on lifestyle, personality, values, hobbies, and social class. Mass media tends to have a strong influence on psychographic segmentation. Businesses often tailor different types of lifestyle products, like high involvement, specialty or luxury products, to various psychographic subsets.
This type of segmentation divides customers into subsets based on their knowledge of, attitude or response towards, or use of a product. This is particularly useful for market expansion and new product sets where early adopters are crucial to success.
Segmentation by Occasions or Benefits
Businesses can segment their target market based on the benefits sought by the customer or according to occasions of use. For example, a company would market differently to consumers using the product alone than those using it in a group. Likewise, they would differentiate between subsets of customers buying the product as a present and those purchasing for personal use.
Once you have your segmentations in place, you’ll have a better idea of where to use your business’s energies and produce a long-term roadmap to sustainable growth. Does it make sense to expand your product set for additional revenue from your core segment? Should you increase product and service awareness in new or untapped segment? Should you advertise in print, TV, social media, and other online venues? These questions and many more can be easily answered with a proper market segmentation model.
If you’re interested in learning more about market segmentation or xAmplifier, contact us today at email@example.com or call 866.363.6434!