Knowing your target market is the first step in successfully selling your products and services, and one of the most important. A marketing segmentation strategy helps determine which customers you can build relationships with, how to group them, and what marketing actions to take to best reach your target market.
Creating a customized experience catered to customers lead to higher customer retention rates and more focused marketing campaigns. Market segmentation does the work of aggregating prospective buyers into groups with common needs that are likely to respond similarly to a marketing action.
This strategy can help determine which of your products and services are most wanted and where. Markets are typically grouped by Geography, Demographics, Psychographics, and Behavior. Determining the right marketing segmentation strategy for your business involves using one of or even a combination of these segments to reach a more targeted consumer base.
Identifying your marketing segmentation strategies ultimately involves answering these five important questions:
Each of these strategies can be used to target a different customer base.
Demographics are the most common form of segmentation. They divide customers by the structure of certain population traits:
An example of marketing segmentation using demographics is to combine age and income information to target older, wealthy retirees looking to relocate to Florida to sell beachfront property.
Another demographic strategy would be marketing fantasy or war-based video games primarily to younger individuals ages 18-30.
Regional demographics can help you sell products and services, depending on where your customers live.
Colleges looking to sell sports merchandise will sell items well within the state, but not so well outside home territory. Larger, non-collegiate conglomerates such as the NFL can expect a wider customer base in North America, but don’t need to bother merchandising as much overseas.
Psychographic or lifestyle segmentation targets customer hobbies and interests. This segmentation strategy caters to the most niche markets, where attractiveness, quality, and brand recognition are more important than price.
One example of a psychographic segmentation strategy would be to target high-end musical equipment to music enthusiasts that want to collect the best gear or equipment as a status symbol for showcase collections.
Behavioral segmentation is relatively new in the digital age and takes into consideration information a company has collected through customer data reports, surveys, or marketing trends.
Consumers want the best brands at the best prices, and their buying patterns predict items and services they are more likely to buy. Amazon.com algorithms track your purchases and know that if you buy a book on grilling, you may also like to buy seasoning or barbecue tongs.
Restaurant menus are also broken up into price levels based on behavior, featuring specials, and seasonal items.
Selling snow gear to snowboarding hobbyists in Park City, Utah, combines geographic, psychographic, and demographic marketing segments. High-quality craftsmanship is expected, and customers will pay more for quality, innovative snowboards.
By utilizing a market segmentation strategy that is tailored to your target market in your organizations go-to-market strategy, you can optimize competitive positioning and better understand your customer. Putting in the work at this stage will pay off in the long run with customer retention, brand loyalty, and increased revenue.
Need help building your go-to-market strategy? Since 1998, CMG Partners have been leading strategic marketing consultants for some of the largest media and communications brands worldwide. Contact us to help you define your brand solutions strategy and push your organization to Transform, Grow, and Thrive.