What is market segmentation?
In this dictionary article, we hope to make you more aware of segmentation marketing, which is a great tool to know if you are a business owner or a marketing department.
In order to create an effective marketing strategy, you need to have a good knowledge of your target audience and how best to strategically position yourself towards them. By segmenting your target audience, you can make your marketing efforts even more personalised, more effective and therefore make more sales.
The reason for this is that the marketing effort that may work on one segment may not work on another segment and because you want to offer opportunities to both groups, you need to segment.
If this is done, you as a business owner, marketer or other have the opportunity to gain a deeper understanding of the needs of different segments, buying behaviour and more importantly, how you can target sales to each behavioural segmentation.
Market segmentation example
Segmentation marketing can be beneficial in virtually any industry. This is true whether B2C company or a B2B company.
If you have a company that sells garden chairs, for example, and you are currently running an offer on one of your display models in Aabenraa, you can either choose to send your newsletter to your entire target group, which is spread across the whole of Denmark - or you can limit yourself to the segment that belongs to the municipality of Aabenraa. The advantage of using segmentation in this example is that your newsletter recipients in the municipality of Aabenraa are much more likely to be happy to receive an email about you having a sale near them. Conversely, someone living on Zealand might be annoyed by the newsletter and feel spammed.
Another example could be that you sell sports equipment and would like to offer your customers some exclusive prices. In this case, you can choose to send "advertising" to your customers about all your offers, or you can personalize it by dividing your target audience into segments based on what they have previously bought from you. The advantage of using segmentation in this example is that a tennis player may feel it's annoying to be exposed to football boots and yoga mats when he or she actually only plays tennis.
Behavioural segmentation is about breaking down your audience's behaviour into segments that have some commonalities so that your marketing directed at them is not perceived negatively but instead has a focus that is more tailored to the individual.
How should I segment?
There are various market segmentation models that can be used to help segment marketing.
But whatever model you use, it's all about getting your audience right. Without knowing who it is you really want to sell to, it's not possible for you to divide your target audience into segments.
Next, you need to come up with some specific segmentation criteria.
Which segmentation criteria you should use in your segmentation depends on the market you operate or want to operate in, the products you sell and what information about your target group you are able to acquire. For example, for some companies it may be obvious to use geography as a segmentation criterion, while for others it may be demographics or a combination of both.
Once you know what criteria you want to segment by, it's about choosing the segments and the messages where there is the greatest financial benefit for your business.
The last note in this text on segmentation is that you must remember that the market is constantly moving. As it changes, so does your audience and your segments. Therefore, it is important that segmentation is not just a one-off exercise, but something that is continuously monitored.
