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Marketing Segmentation – Definition, Bases & Types

What is Marketing Segmentation?

Marketing segmentation means dividing broad business markets, usually made up of prospects, leads, and already existing customers into subgroups called segments. They are grouped based on specific characteristics they have in common.

The reason why you should do marketing segmentation is because it enables you to deliver the right products, to the right persons, in the appropriate way.

Importance of marketing segmentation

Delivery the right product to the right people at the appropriate time and in the right way is essential. It will make you see a high marketing ROI, and marketing segmentation creates that base.

Because without segmenting your business database, you won’t be able to target rightly. You may end up sending the email that’s meant for existing customers to prospects, that of prospects to leads, and that of leads to existing customers. That way, things get messy because your marketing is not based on your customers.

It’s always vital to base your marketing planning and implementation on your customers. They’re the reason why you’re in business.

And the reason your marketing is to build relationships with them. But it’s obvious that you can’t form a relationship with someone you know nothing about.

The only way you can build a successful relationship with them is by knowing them.

We know how important it’s for your customers, prospects, and leads to know your business, your mission, your offer, and the benefit they stand to get for doing business with you. The same thing is also applicable to them.

You have to understand who they are, what they’re struggling with, and what their buying motivations are.

Also, you have to try to understand their life, knowing that not all buyers’ experiences are the same. And that’s where marketing segmentation comes to play.

Your business database can be segmented in groups based on the characteristics they share in common. Segmenting your business database will help you channel your marketing efforts to the most effective strategies for every segment of your database.

There’s so much you can learn about your business database, once you’ve successfully segment it. Each segment day to day activities, way of life, choices, decisions, environmental impact will help you know how to market better to them.

Marketing segmentation can profit both the customers and your business. Here are the benefits both parties can derive from it:

Business

As a business owner, marketing segmentation can help you plan your marketing campaign correctly. Because you can predict the reaction of those, you want to target from the very beginning.

It gives you a clear picture of who your ideal customer is. So that way, you’re able to develop a product that meets his needs.

It helps you focus your marketing energy on the right strategy for a particular segment. That way, you’re guaranteed high ROI.

Customer

  • it offers the customers with the best product and service choice.
  • Provides customers with great product match.

Marketing segmentation process

Identify bases for your marketing segmentation

The very first step you need to take when you decide to segment your business database is to identify the bases.  Age, location, occupation, sex, marital status, religion, income are the bases for your marketing segmentation. You can combine all of these variables or use them as a single factor to segment the market.

This first step is very important because it helps you ensure that everyone you’re putting in one group has something in common. For example, you can’t group males and females together when marketing certain products or services, because they have different needs.

Uncover the expectations of the prospects

Once you have been able to identify the bases for your marketing segmentation, it’s time to uncover what their expectations are. The product or service you intend to offer them has to meet their needs. So it’s vital to interact with your target market to find out more about their needs, goals, hope, motivation, and aspirations.

Create a profile or segment

With all the information that you’ve gathered about your target market, it’s time to create a segment. For example, General Motors decides to group its products into multiple brands- Hummer, Cadillac, Chevrolet, and Buick. These brands are made for different individuals of different socioeconomic classes.

Review the expectations your target market

In this step, you’ve got to take out some time to review each segment that you’ve created. You have to ensure the need and behaviour of those you’ve placed in one segment are the same. Also, you must ensure that people in one segment respond to the Fluctuation in the market and to a similar marketing strategy.

Name your segment

Naming your marketing segments properly is very important. It enables you to implement your marketing strategies without confusion.

Develop a marketing strategy

Yap, you’ve done a fantastic job from identifying the bases of your marketing segmentation, to uncovering the expectation of your prospects, to creating a segment, to reviewing your segment, to naming your segment. Now it’s time to develop a marketing strategy to market to each segment. Make sure that the approach is based on the characteristics of each segment.

Identify the size of your market

Now it’s time to do a little research to know the size of your market. Does it matter you, may ask? Yes, it does matter. It helps you in the planning of your marketing campaigns.

Types of marketing segmentation

Demographics marketing segmentation

One of the most marketing segmentation used by marketers is demographic segmentation. This type of segmentation has to do with the division of the target market based on age, gender, marital status, income, interest, religion, and family size. Demographic segmentation can be used across many industries.

Geographics marketing segmentation

Geography is one of those variables that affect marketing. The need of people in different geographical locations varies. For example, there may be coldness in some regions, which may increase the demand for sweaters, but at the same time, some other regions may be experiencing hot weather. Because of this the demand for sweaters will be drastically low in this region.  Geographic segmentation has to do with dividing the target market based on geography.

Also, note that people in different geographical locations may have different reasons why they may want to buy the same product. So with the help of geography segmentation, you can craft the perfect sales message for each of the locations.

Behavioural marketing segmentation

In this type of segmentation, the target market is grouped based on their behaviour, choice, decision, and preference. You can group them based on how they use your product. Here are the categories you can place your audience:

  • Prospects
  • Leads
  • First time user
  • One time user
  • Current user

You can also tag them business faithful, competitor faithful, 

Personal characteristics

Personal characteristics segmentation is a type of segmentation that divides your target market on the basis of their attitude, personal trait, and behaviour. Marketers employ this segmentation strategy on the assumption that people’s personality can trigger their buying decisions. For example, someone who has a lavish lifestyle may consider buying two cars as a necessity. While another person in that same city who lives a conservative lifestyle may find it a luxury.

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