Why is Market Segmentation Important?
With over 7.8 billion people living on the planet earth, you will shortly come to find that marketing is not a one size fits all situation. For instance, In marketing different messages are going to have different meanings based on gender, age, values, culture, location, preferences, etc. For this reason, market segmentation is important in defining your target market.
What Does Market Segmentation Entail?
Market Segmentation is defined by Investopedia as a “marketing term that refers to aggregating prospective buyers into groups or segments with common needs and who respond similarly to a marketing action.” In other words, marketing segmentation is, breaking your target market up into groups based on location, gender, age, interests, and behaviors. There’s a lot to consider
when going through the market segmentation process. Therefore, to simplify this daunting, yet extremely important task, we’ve divided market segmentation into four areas.
Geographic segmentation divides a target market by where they live in the world. In other words, target markets can be divided geographically by country, state, city, or even suburb. Geographical segmentation is important because geographic segmentation determines most other sectors of segmentation. Where a person grows up, geographically, affects him or her culturally. Above all, culture influences everything, from what food a person consumes to what roles he or she fulfills in society.
There are many elements that make up demographic segmentation. For example, dividing a target market demographically would include dividing them by age, gender, level of education, family size, occupation, and income. All of these factors are important in segmentation because these factors influence purchase decisions. For instance, have you ever noticed how Costco shopping carts have two child seats? Or how their milk always comes in a two-pack. This is because Costco has demographically segmented its markets perfectly. Therefore, Costco knows that a large part of their target market is women in childbearing years who need to buy in large quantities to provide for their large family. Because Costco has identified the market segment, they have been able to accommodate the segment’s needs.
Psychographic segmentation differs from geographic and demographic segmentation because it focuses on intrinsic traits. According to Learning Hub, intrinsic traits include, “values, personalities, interests, attitudes, conscious and subconscious motivators, lifestyle, and opinions.” A person who lives in Hawaii and owns a surf shack is going to have a different lifestyle than a person who lives in Utah and works in a manufacturing plant.
While behavior segmentation is very similar to psychographic segmentation, behavior segmentation focuses more on reaction and the buyer’s journey. Behavior segmentation refers to how a buyer views your brand, how they use your product, and the resources they have available when making a purchasing decision. Behavioral segmentation includes brand loyalty,
readiness to buy, benefits sought, and usage. For example, A shampoo company may choose to segment its market based on the benefits their target market is seeking from shampoo products. They may have a volumizing segment, a strengthening segment, a repairing segment, the list could go on. Now that you know the different methods of market segmentation, you should be a pro, right? Well just in case you need a little more help, we’ve created a tool that will make marketing segmentation a breeze.
☀ Pro Tip: Implement more than one market segmentation to better segment our target market.
Market Segmentation Best Practices:
Market Segmentation Step 1: GEOGRAPHIC
For a good market segmentation, the first thing you should focus on is a specific geographical area. Focusing on a specific geographical location is useful to understand the cultural behaviors and demographics or what media your target market might use compared to other areas and start the segmentation from there.
Market Segmentation Step 2: DEMOGRAPHIC
After you have chosen the geographical area, you should decide what range of the population to focus on. For example, women and men have different needs and ideas. People under 30 are going to purchase different products from people over 30. When segmenting a market demographically, consider factors like age, gender, ethnicity, etc.
Market Segmentation Step 3: PSYCHOGRAPHIC
The next segmentation you should consider is psychographic segmentation. Specifically, your target market’s lifestyle, values, and attitudes. To better understand the psychographics of your target market, use focus groups, surveys, and interviews.
Market Segmentation Step 4: BEHAVIORAL
It’s important to understand what kind of behavior your target is exhibiting. Because behavior is highly impacted by all other marketing segmentations. In other words, look at the motivating factors of your target market. In addition, you can use similar research types like those for psychographic segmentation.
Want to learn more about other aspects of digital marketing? Check out our other blog posts.
To find information about marketing in general check out https://www.unsettle.org/learn-marketing/
For help on getting started download the Marketing Segmentation How to Guide
By: Alexa Wright