As we discussed in the previous episode, buyer behavior and buyer personas will help you learn about your audience while creating various segments to specifically target certain products, services, or news to that audience. Both of these elements are great first steps to creating valuable, accurate market segments for your business, but there’s another element to factor in when communicating to various individuals.
That’s where market segmentation comes into play. In this week’s episode, Jailyn and Morgan talk about market segmentation, its process, and how to incorporate it into your marketing efforts.
Before we jump into the heart of the topic, we have a short pop quiz for you. Do you know the answers?
1. What marketing research element helps you learn more about your audience’s strengths and weaknesses?
Answer: SWOT Analysis. The SWOT Analysis is a chart to assess a company’s Strengths, Weaknesses, Opportunities, and Threats. Your business’ strengths and weaknesses are internal to your organization, while your Opportunities and Threats are external and refer to your industry/competitors.
2. What are the 4 primary categories of segmentation?
Answer: The four primary categories of segmentation are demographic, firmographic, psychological, and behavior. The Demographic category focuses on the business-to-consumer (B2C) sector, in which information like age, gender, education level, occupation, income, and more are all important data to collect. The Firmographic segment focuses on the descriptive attributes of business-to-business (B2B) entities. Some data to gather are industry, location, size, status or structure, and performance.
The Psychographic category focuses on the intrinsic traits the target customer has, ranging from values, personalities, interests, attitudes, conscious and subconscious motivators, lifestyles, and opinions. Lastly, the Behavioral category understands how customers’ decision-making skills and buying behaviors.
3. What is the first step to determining market segments for your business?
Answer: Research! This essential step takes place before gaining any information to help assess what you already know and don’t know.
What is Market Segmentation?
Market segmentation is ”the process of dividing a market of potential customers into groups, or segments, based on various characteristics.” It helps marketing companies and departments find out how to properly communicate with each of their audience groups. Every person is different, and that is also evident in the way you communicate with your audience.
For example, these segments can be used to target frequent buyers, remarket to visitors, but non-purchasers, and reeling in any other customers that show interest in your company.
After you develop detailed information about your audience(s), like demographics, learning their buyer behavior journeys, and built personas off of that information is when you should use this information to build your market segments. You can use this process in various marketing tactics, like email marketing,
While there are so many ways you can segment your market, here are some criteria points to focus on:
Segments should not be too specific nor too broad
Find a happy medium where there is enough information to separate the segments to make clear decisions on where audience members fall into.
Make each segment distinguishable
Each segment should be different from the others, i.e. industries or by state or city regions.
Use the four primary categories as base points of your market segmentation
- Demographic (B2C)
- Firmographic (B2B)
Understand Your Audience with TM
Understanding your audience is essential when building out market segmentation. If you’re interested in gaining more insight on your audiences, feel free to reach out to us via our Contact Us page or leave a comment below!