What is market segmentation?
In this dictionary article, we hope to shed some light on segmentation marketing, which is a great tool to know if you are a business owner or work in a marketing department.
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 dividing your target audience into segments, you have the opportunity to make your marketing efforts even more personalized, more effective and thus increase sales.
The reason for this is that marketing efforts that may work on one segment may not necessarily work on another segment and because you want to offer opportunities to both groups, you need to segment.
If you do this, you as a business owner, marketer or otherwise have the opportunity to gain a deeper understanding of the different segments' needs, buying behavior and more importantly, how you can target sales to each behavioral segmentation.
Market segmentation example
Segmentation marketing can be beneficial in virtually every industry. This applies regardless of whether it's a B2C business or a B2B business.
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 distributed throughout Denmark - or you can limit it to the segment that belongs to Aabenraa Municipality. The advantage of using segmentation in this example is that your newsletter recipients in Aabenraa Municipality are much more likely to be happy to receive an email that you have a display item on offer near them. Someone living in Zealand, on the other hand, might be annoyed by the newsletter and feel spammed.
Another example could be that you sell sports equipment and want 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 purchased from you. The benefit of using segmentation in this example is that a tennis player may find it annoying to be exposed to soccer boots and yoga mats when he or she actually only plays tennis.
Behavioral segmentation is about breaking down your target audience's behavior into segments that have some commonalities so that your marketing aimed at them is not perceived negatively but instead has a focus that is more adapted to the individual.
How should I segment?
There are different market segmentation models that can be used to help segment marketing.
But no matter which model you use, it's first and foremost about knowing your target audience. Without knowing who it is you want to sell to, it's not possible to divide the 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 can 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 based on, it's a matter of choosing the segments and messages that offer the greatest financial gain for your business.
The final note in this text on segmentation is that you need to remember that the market is constantly moving. As it changes, it means that your target audience and your segments are constantly doing the same. That's why it's important that segmentation isn't just a one-time event, but something that is continuously monitored.
