Summary

Segmentation is a marketing method that leads to better understanding of groups of customers and their motivations by separating them into meaningful groups.

What Is Segmentation?

Segmentation is a marketing process that divides customers and prospects into groups based on factors such as age, location, interests, social grouping, and wealth.

Why do we need Segmentation?

Once upon a time, marketing was much simpler – a one size fits all approach to promotion could be effective in a market with limited competition. As competition increased, and more sophisticated consumers arose, marketers began to recognise that products sold better if the promotions targeted a specific group of potential customers – a segment, in other words – who were most likely to buy the product.

How Can You Apply Segmentation to Your Business?

If you’re an established business, you already have customers who’ve bought from you. Do you know anything about them? You can probably infer what gender they are from their name, and where they live from their shipping address. You can now segment your customers by gender or location in that case.

Who buys more of your products – men or women? Can you find out their age? A customer questionnaire could help you find out more about them. If you know which ages and gender purchase most of your product, you can alter your promotions to appeal to these historically best segments of your potential customers.

Why Bother With Segmentation?

Modern customers have individualised and sophisticated tastes. People have different priorities at different stages in their life. If you try to appeal to everybody, you might appeal to nobody.

Segmentation allows you to discover the type of person who is likely to buy from you the most, and the motivations that drive them. by applying segmentation to your business, you will begin to understand your business in a greater level as you see that all customers are not the same.

Segmentation and Targeting

Once you have performed segmentation, you can target specific segments more accurately, with text and images that appeal to people in that segment.

For example, if you were a sweet maker, you could target one promotion at kids who eat them, and another at grandparents who like to buy sweets for their grandchildren. You would promote features like taste and appearance to the kids. With the grandparents, you would promote how happy the sweet makes kids, and how much more they would love you for giving them this specific sweet.

By creating messages that are designed to appeal specifically to the different groups, you will engage them more deeply – increasing the chances they will buy from you. Successful companies understand that to sell to a customer, you must understand them and their needs. Different markets, and the different types of customer within those markets, require tailored approaches specific to each one, if they are to achieve maximum success. They spend time and money trying to find out more about their customers, through questionnaires, focus groups and data mining. This allows them to more closely meet the needs of their market, which leads to higher revenues, as more people identify with, and purchase, the product.