Market Segmentation - don't sell meat to vegans........

What is segmentation and why do we do it?

Segmenting your market enables you to divide your target market into smaller groups with similar characteristics so you can tailor your marketing strategies and messaging to best meet the needs of these people. 

For example, who is most likely to purchase your product or service and what are their habits, likes and dislikes; what is their purchasing power and when will they be most likely to make a purchase?  This information enables us to group these profiles into what we term ‘segments’. This enables us to create the correct messaging and products for the correct segment.

Having a clear understanding of our 'segments' will enable you to decide how best to engage with each segment. For example:

  • which digital channel to use 
  • which product will be most appealing to them
  • what message will resonate best with them
  • what design features will most appeal to them

So, let's begin..........

 

1. Creating your segments

If we are going to break down our market into smaller segments with similar characteristics, it is most typical that we do it along the following lines:

  1. Demographic: age, gender, education, income, occupation
  2. Geographic: country, region, neighbourhood
  3. Psychographic: lifestyle, social class, values, personalities
  4. Behavioural: buying habits, brand loyalties, usage rates

Warning: don't try to 'over-segment'!  Not only will this create confusion but it may prove expensive and time consuming. These four lines of segmentation should give you enough information to act efficiently and effectively.

2. How to implement segmentation

How do we get the information we need in order to create our segments?

  1. Conduct research - quantitative and qualitative, through surveys, polls, interviews and analysis of available data
  2. Group your data into common characteristics - from your research, identify patterns of behaviour and trends to start grouping your market
  3. Evaluate your segments - some will be bigger than others but other factors to consider are accessibility, profitability, use of service/brand.  This will help you to prioritise in terms of time and budget spent.

3. Develop your segment-specific strategies

This is where you decide how to reach your market, through what channels and with what message and product.

Remember, there's no point trying to sell a Ferarri to someone who drives into your showroom in a Ford Fiesta. Or to sell a meat-based product in Totnes.......... you get my drift.

Each segment may require:

  • Unique messaging
  • Different marketing channels for communication
  • Different products

4. Benefits and limitations of segmentation

The benefits of segmentation are huge:

  • More targeted approach to marketing
  • Increased customer satisfaction
  • Product development: enables businesses to ensure they create products that are relevant to their market
  • Cost efficiency: easier to allocate your budget more effectively for a higher ROI
  • Competitive advantage: provide a personalised experience which will build brand loyalty and repeat purchase

However, there are some limitations:

  • The cost of gathering data can be high and it can be time consuming
  • Resource intensive – it takes time to create and understand segments fully
  • Over-segmentation – can cause confusion and mixed messages
  • Potential for stereotyping – generalisation can cause offense and have a negative effect
  • Difficulties in measuring effectiveness – can any increase in ROI be attributed, solely, to segmentation?

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