IEvery business owner knows the importance of market segmentation: getting the most out of every marketing dollar depends on identifying and addressing the core needs of customers
Market Segmentation and Your Business
Although a consumer's previous purchasing history is one of the most important factors affecting your market segmentation, certain demographics and even the customer's location can also impact your ability to turn leads into conversions.
Ultimately, market segmentation works best when your talents can be linked up with consumer preferences. As an example, if you're a company that focuses on providing affordable products to a broad range of customers, then a marketing strategy that focuses on reaching the largest number of value shoppers (e.g., a broad email marketing campaign) is your best bet.
Since market segmentation relies on breaking up a target market into customers who share common purchase histories or needs, the way to really streamline your marketing is to find out the most important factors driving sales and market accordingly. It's even better when the assets of your company are geared towards consumer preferences.
Factors Driving Market Segmentation
Two of the more popular market segmentation factors are the location and the demographics of your consumers.
In other words, one part of the country might be more open to your line of products than another, and the demographic breakdown (e.g., age and income) in those locations will impact your ability to make informed marketing decisions.
Location-based Market Segmentation
Breaking up markets based on consumers' location makes a lot of sense for international companies and, ironically, small businesses as well.
Although any business can benefit from marketing to parts of the country with particularly receptive consumer, location-based market segmentation works especially well for companies selling to an international audience.
Consumers in one country can have completely different preferences and needs than consumers in another country, so businesses that market the same way in these markedly different markets are essentially shortchanging themselves and depriving consumers of more relevant services.
The same principles of location-based market segmentation work for small businesses - yet for a slightly different reason.
Many small businesses have razor-thin margins and need to market intelligently to remain profitable. Small businesses can essentially wring the most from their marketing efforts by prioritizing markets in receptive areas of the country.
Consumer Demographics
If you've even tuned into a golf tournament or daytime soap and noticed that the kinds of commercials shown at each are tailored to the perceived age-gender characteristics of the audience, then you've seen demographic market segmentation in action.
Demographic market segmentation extends beyond age and gender, though. You can market more efficiently by homing in on your customers' incomes, family size and even level of education.
You'll be spending your marketing dollar more wisely by targeting audiences that are willing and able to endorse your product.
It makes sense, for instance, to get the word out about your graduate program to people who've already completed college. Likewise, a health food store with high-quality products and relatively high margins would benefit from targeting and marketing to prospects with higher incomes.
Behavioral Market Segmentation
This type of segmentation separates consumers based on their shopping tendencies and purchase histories.
With behavioral market segmentation, online shoppers are differentiated from consumers who prefer to browse around in your store or check out your mail catalogue. Consumers can also be differentiated based on whether they're impulse buyers or more calculated shoppers.
All of these behavioral tendencies can be combined and analyzed to determine the best marketing strategy for your business.
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