In a recent survey of marketing professionals in North America,62 percent of respondents saidimproving audience segmentation to enable more precisely targeted messaging was a top priority. Geographic segmentation, splitting up your market based on their location, is a basic but highly useful segmentation strategy. Being aware of these common downfalls will better prepare you and your team so you dont make them in the future.
The larger your audience grows, the broader their preferences, needs, and opinions become which can put your marketing message at risk of being irrelevant to the majority of people youre attempting to reach. Digital marketing is a vast field, and it continues to grow. The 4 basic types of market segmentation are:1. Behavioral. They could introduce these items and market them to their current customers, encouraging them to buy them for their kids. To target customers that have great brand loyalty, many companies will offer rewards programs to enhance this behavior with the hope of capturing new loyal customers as well. If every message and product shared with them resonates in some way, they will have a very difficult time saying no to you. Dividing your audience based on behaviors they display allows you to create messaging that caters to those behaviors. Think H&M, Old Navy, and Zara. Cut through the noise and dive deep on a specific topic with one of our curated content hubs. Other types of segmentation6. Returning visitors who had already subscribed but have not redeemed their coupon yet were reminded on their first order incentive. Some groups of people, for instance, are more likely to shop online, while others are more likely to shop in a store. If you have any questions or comments on what you're reading, click below to chat directly with the author! By determining the proper strategy for your needs and following the basic steps outlined above, you can ensure that your market segmentation strategy will be effective and successful. Understanding these aspects of your audience can help you to create content that appeals to them more effectively. There are many benefits of market segmentation, our top 10 are below. Market segmentation is a highly effective strategy for every marketing team.
This market segmentation process can help form an effective B2B marketing strategy by identifying target customers and tailoring marketing efforts to these specific customer segments. Gone are the days of your team spinning its wheels trying to come up with something that will stick.
You should get to know your target market through and through at this step.
Automotive companies often segment their audience by income and market different makes and models of cars to each segment.
When trying to reach customers with a marketing message or ad campaign, targeting the right market with the right message is essential If you aim too broadly, your message might reach a few people who end up becoming customers, but youll also reach a lot of people who arent interested in your products or services. They may also take into account their customers price sensitivity the degree to which their price affects their purchase decisions. Even if youre selling a product with broad appeal, customer segmentation can help you tailor your messaging to different groups to better engage with them. Companies may consider demographic information such as income levels. Conversely, as public spaces began to open up again purely e-commerce brands had to shift their marketing plans to maintain the levels of business they had seen over the lockdown period. Many of the actions you might look at relate to how someone interacts with your product, website, app or brand. This type of market segmentation predominantly uses 7 factors to identify customer segments. Many clothing companies cater to a variety of age groups to reach as many customers as possible. Collecting this data ina data management platform(DMP) will help you to organize it and use it to target your marketing campaigns or content personalization efforts.
You can collect this data through various sources including cookies placed on your website, the purchase data in your customer relationship management (CRM) software and third-party datasets. Looking at geographic data can also help a company decide where to set up a new store. 
This is exactly why market segmentation is such an effective growth strategy to implement.
Youve spent time and money creating the perfect marketing strategy, and you want your message to resonate well with your potential customers, right? There are several kinds of geographic segmentation. Market segmentation allows you to recognize these needs and market directly to them, without any wasted messaging. Demographic2.
Market segmentation is a business practice that brands use to divide their target market into smaller, more manageable groups of people based on common ground they share to optimize their marketing, advertising, and sales efforts. Psychographic 3. Unlike geographic segmentation and demographic segmentation, psychographic segmentation focuses on the intrinsic traits your target customer possesses.
Subscribe to keep your fingers on the tech pulse. Demographic segmentation looks at identifiable non-character traits such as: For example. Market segmentation can also help companies to develop products that better meet the needs of their customers. Market segmentation can help you to improve the performance of your marketing campaigns by helping you to target the right people with the right messaging at the right time. We can help you improve your understanding of your audience to enable enhanced content personalization and ad targeting. Although a differentiated marketing strategy requires a lot more effort, time, and money than a concentrated marketing strategy would, it typically yields more success since there are many more avenues to rake in a profit. Learning from those who have done it right will help your brand garner that success youre looking for. As the leading independent DMP provider, we are highly agile and responsive to our clients. Companies that utilize this strategy market their products to many different segments, they just change their messaging to appeal to all of the differences. This is the biggest and most obvious benefit to well-implemented market segmentation. To appeal to this group, you could offer a vehicle with four-wheel drive and lots of cargo space. Say youre a furniture and home decor company, and you have a market segment consisting of newlyweds in their 20s and 30s with a household income above $60,000. Ready to implement your own market segmentation strategy? She graduated from the University of Missouri with a degree in Journalism. You can base a segment on one or more qualities. Identifying customers by generation allows for broad but distinct approaches depending on age. Being aware of your customers location allows for all sorts of considerations when advertising to consumers. Though the most common types of market segmentation are demographic, psychographic, geographic, and behavioral, there are other types that are also worth considering and can offer excellent opportunities in the right context. The purpose of market segmentation is to identify different groups within your target audience so that you can deliver more targeted and valuable messaging for them. It proves to your customers that you understand them by providing a tailored message that resonates with specific facets of their lives. Even media consumption differs greatly between each generation, so its important to recognize what your target age range is and which channels they use to consume information to ensure your tailored message reaches them appropriately. You could split an audience into segments based on whether they have a dog. Make sure youre asking questions that will provide quantifiable answers.
By identifying your customers by their needs, you can put out marketing that offers irresistible reasons for a return visit. When youre looking to improve the effectiveness of your marketing, segmentation should always be one of your first ports of call.
Whilst it can draw on behavioral elements, it also has a much wider scope considering the initial source of their registration with your business, how long it has been since their last order, and how many orders theyve made overall.
This practice allows you to focus your marketing efforts on individual customer segments so that you can better cater to their specific wants and needs.
You can ask your existing customers for this information using surveys. The most basic is identifying users based on their locations such as their country, state, county and zip code. While reading this article, I bet that you can think of one brand that you consistently purchase and trust enough to buy its newly launched product without even reading the reviews. If you know how to speak to your customers correctly, youre more efficient with your efforts, which means you spend less money. This is your foundation for everything that comes next in this article.
By targeting and rewarding those who already had an affinity to their brand, Sephora was able to build an impressive community that their target market wants to be a part of. So, as you can see there are different types of marketing segmentation you can choose from to find and define your target market to effectively promote your product or service. This is advantageous for companies that may have a product or service in the marketplace that boasts multiple benefits or uses for different types of customers. And what about those who dont really drink coffee, but all of their friends do and they enjoy an afternoon hang out at Starbucks? Identifying characteristics can require you to get more specific since one county could have rural, suburban and urban areas. At the end of the day, every single person is vastly different. Because of this, it can help you market more effectively to them. Market segmentation can not only help you discover new ways to reach your current customers but also help you find new markets of potential customers that you havent previously reached. Segmentation isnt just about your business reaching customers more effectively its also about those customers seeing messaging that is more relevant to them! Theres a reason improving segmentation was the most frequently reported priority in the survey.
If youre marketing sports equipment or publishing sports articles, you will want to take these different preferences into account. This is what Starbucks does through its messaging by creating a sense of belonging. Once youve capitalized on your market and are seeing great success, consider tapping into other similar markets to continue to drive growth. If you go this route, be careful to be respectful in how you ask and give customers sufficient response options so you get accurate results.
You may have segmented a large customer base that aligns with your strategy, but if that segment doesnt have the buying power or a legitimate need for your product, then you wont have a positive ROI. Its in your brands best interest to refresh its strategy and resurvey its customers from time to time. Target users based on behaviors they've displayed off-site or to reach users on other properties., When it comes to data, understanding the differences between data providers and the segmentation they, Market-leading location platform integrated with Lotame DMP delivers additional targeting depth and contextual mobile campaigns. Here we might look at customers and define them by their: Compared to demographic segmentation, this can be a harder set to identify. When your messaging isnt optimized for your audience, youll end up with a lot of wasted advertising dollars. Just remember, your success wont last long if youre not testing your strategy constantly. This process is very similar to the way B2C marketers would use demographic segmentation. Over the last few years, ephemeral content has become a popular social media phenomenon. (she/her/hers). Think frappuccinos, lemonades, teas, and juices. If youre a marketer, this allows you toidentify the right market for your productsand then target your marketing more effectively. People who live in different countries may also have different interests. The more you spend at their store, the more points you rack up, which can be redeemed for generous samples. Generational and life stage segmentation both expand on aspects of the demographic approach. Similarly, publishers can use market segmentation to offer more precisely targeted advertising options and to customize their content for different audience groups. Demographic segmentation divides a market through variables such as age, gender, education level, family size, occupation, ethnicity, income, and more. They cater to each segments wants and needs through targeted marketing campaigns to ensure their coffee brand is inclusive to all, even if you arent a coffee drinker. For instance, Lululemon sells athletic clothing to adult men and women of all ages, but they also cater to girls between the ages of 6 and 15. Its one thing to sell products that can appeal to everyone, but its a whole new ball game when those products make every single person feel individually catered to. Market segmentation builds a subset of a market. The more specific the audience of people interested in your brand, the more beneficialtargetingcan be. Market segmentation can be a laborious and complicated task, and mistakes in the beginning stages may seem inevitable. Marketers work hard to get customers to love and stay loyal to their brand for a consistent purchase cycle. Technographic segmentation identifies and groups customers with regards to the role technology plays in their lives. Baseball is very popular in the United States, for example, while cricket is more popular in India. Think about products such as parkas and bathing suits. Decide which of the four segmentation methods youre going to use, but dont feel confined by one segmentation method. Another example of geographic segmentation is the iconic fast-food chain, McDonalds. Its common for brands to implement more than one segmentation technique and take a combination approach, so play around with each and find the perfect mix for your brand. You can also look at the way people interact with your website and see what types of content they engage with, which gives you insight into their interests and preferences. In our experience working with luxury resort business Omni Hotels & Resorts, for example, were aware that a big sector of the companys target audience was always keen to get the very best price they could. This type of brand loyalty produces a consistent buying pattern which is categorized as a behavioral trait. We offer tools such asour data management platform, which you can use to collect, organize, analyze and activate all of the data you gather. Below arethe four main methods of market segmentation. Demographic, psychographic, behavioral and geographic segmentation are considered the four main types of market segmentation, but there are also many other strategies you can use, including numerous variations on the four main types. Based on this behavioral data, we can tailor our messaging accordingly: First time visitor: Hey, learn about our latest collection!Returning visitor: Join our loyalty program and start saving! This is proven to increase customer retention, customer loyalty and lifetime value. Bathing suits, on the other hand, are sold year-round in the warmer states but typically only sold during the spring and summer in the cooler states. Marketing them to a broad audience would result in wasted ad dollars. This is exactly why segmenting your target market is crucial. Interested in engaging with the team at G2? If youve never traveled to another country and stepped foot in a McDonalds, then youre in for a surprise! When looking at behavioral data, they might see that many of their customers like to shop online. For example, Starbucks does a fantastic job of segmenting its customers based on psychographic traits. Medialogic details BoFAs Family Life Banking program that invited customers to segment themselves by clicking on a relatable tab within and email. This discovery can lead to new product lines, rebrands, or new brands, all to catapult the growth of your business by appealing to your current customers better, as well as new consumers that were previously uninterested. What Is Ephemeral Content Marketing (+Why You Need It in 2019), 7 Digital Marketing Mistakes That Cost You Conversions, Why Content Marketing Is a Must-Have for Small Businesses. This article will walk you through the four main types and real-life market segmentation examples to help you get started. There are four main customer segmentation models that should form the focus of any marketing plan. Think about the lifestyle of someone who lives in a small beach town and surfs for a living versus someone who lives in a big city working in corporate America. When up against a range of online competitors, effective communication is the best way to differentiate your business. This can be rather easy to do if youre trying to ensure that you have every last detail included. Hannah is a former content marketing associate at G2. demographic segmentation might target potential customers based on their income, so your marketing budget isnt wasted directing your messaging at people who likely cant afford your product. Fill in this form and a member of the Lotame team will be in touch. This is where it gets fun. If you find that members of a demographic segment are responding differently to your content, you might want to add in some psychographic information. We also provide a variety of other tools such asour data exchange, which gives you access to thousands of third-party audience segments, and our cross-device technology, which enables you to serve sequential messaging to users across multiple devices. It could also leave customers confused about what the brand stands for and what kind of company it represents. One of the best examples of this type of segmentation is showing new visitors a $15 incentive in exchange for joining the community. You could then segment that audience further based on what kind of dog they have and then show them ads for food formulated for their dogs breed. You can also create more niche segments within the types below.
Designing your products with the needs of your customers in mind will help you to sell more and will make your customers happier. What Is Market Segmentation? Postal Service, can also provide useful information. Geographic segmentation targets customers based on a predefined geographic border. As you learn more about your audience and tailor your messaging, content and strategies to your customers and prospects needs, you can boost engagement, sales and customer satisfaction. Offering free shipping to all their customers would have been too expensive, so Yieldify targeted a specific transactional segment of their userbase offering free shipping to those with a set value of items already in their carts. Demographic segmentation is one of the most common forms. Behavioral segmentation5. Instead, it groups customers by factors including marital status, home-ownership, and whether or not they have children (and more specific still by considering the ages of their children). In this article, well cover1. The benefits of segmentation7. A brand that tries to appeal to everyone in their marketing will come off as generic and unmemorable. Geographic4. Market segmentation allows you to target your content to the right people in the right way, rather than targeting your entire audience with a generic message. Find new customers, increase customer engagement, and grow revenue with first-, second-, and third-party data. Collecting this type of data is similar to the way you would find psychographic data. Market segmentation can also help businesses to focus their efforts, which enables them to establish a brand identity and specialize in a particular type of products. Their customers may, for example, shop at luxury boutiques or bargain outlets. Brand loyalty is an excellent example of behavioral segmentation. When it comes to paid search campaigns, geographic targeting is the most important segment to get right.. These attributes may not be as easy to observe as demographics, but they can give you valuable insight into your audiences motives, preferences and needs. At Yieldify, we utilize behavioral segmentation to deliver highly relevant and targeted campaigns based on a number of behavioral patterns: For example, we can distinguish between a first-time visitor and someone whos already been on your site multiple times but havent purchased. Whilst the above marketing segmentation strategies mainly focus on B2C organizations, Firmographic segmentation can be extremely useful to those in the B2B world. Demographic2. This might mean recognizing groups of early adopters when marketing new technologies.
This targeted approach focused on purchasing habits reached a 34.02% conversion rate uplift with new and 29.24% CR uplift with returning visitors! This can greatly help with the return on investment of all your marketing activity.
Differences in interests, values, and preferences vary dramatically throughout cities, states, and countries, so its important for marketers to recognize these differences and advertise accordingly. When you look at your audience data, you might discover interests that you didnt realize your customers had. Once youve got these basics down and you have a solid foundation for your strategy, branch out, and make it uniquely your own. Now that you understand the basics of market segmentation and have seen it in practice, its time to focus on the common mistakes marketers can make when segmenting their target market for the first time.
Make sure that youre focusing on the buying power of the segments and not creating any that are too small.
Everything becomes better suited to giving your customers what they need, and as a result, your business becomes exactly the sort of business they want to be buying from. Segmenting a market according to demographics is the most basic form of segmentation. Segmentation enables you to learn more about your audience so you can better tailor your messaging to their preferences and needs. Luxury goods manufacturer Montblanc worked with Yieldify to present a selection of offers across their website. Behavioral segmentation is possibly the most useful of all for e-commerce businesses. Using Yieldifys tools, an online shoe store could show different products depending on where the visiting customer was based: wellington boots for someone in the countryside, pavement-friendly trainers for a city-dweller, strappy sandals to resort visitors, and so on! Before getting started, consider using marketing automation software to streamline and measure your efforts effectively. Lets explore what each of them means for your business. Transactional segmentation is based on previous interactions your customer has had with your brand. As with psychographic segmentation, it requires a little data to be truly effective but much of this can be gathered via your website itself. Behavioral. Now that you understand the four major types of market segmentation, youre probably wondering what the major benefits are to implementing them.