Market segmentation is mandatory for any business that is serious about expanding. Irrespective of the type of products or services you are offering, unless you have a distinctly different approach to various segments of the market, the promotional and advertising initiatives can turn out to be futile. The foremost benefit of market segmentation is targeted marketing. When you specifically reach out to a certain market segment, there is a certain level of customization of the marketing strategy. A standard or generic marketing approach (aka ‘shotgun marketing’) doesn’t appeal to all prospective customers. The sooner your business will embrace different strategies for different market segments, the faster your marketing dollar start getting a decent ROI.
Below are the most common market segmentation strategies.
Depending on where your business is based and what kind of products and services you are offering, there may be one or as many as five different demographics that you would target. You may have Americans, African Americans, Hispanics, Asians and various other demographics in your target area. Every demographic has its own preferences, ways of doing things. While culturally, socially and economically, the lines differentiating the various demographics may have blurred yet there are significant differences. Some advertisements would be received well by Americans while African Americans may prefer to look at same products in a different way. Understanding the sensibilities of different demographics is the primary objective of demographic segmentation. A company that doesn’t connect with the target audience cannot really drive more sales.
Whether you market in Australia, New Zealand, any Asian country or US, the consumers often make their buying decisions based on physical location. Life and life choices in upstate New York will not be the same as it is in downtown Manhattan. People from CBD Sydney will respond to a marketing message differently, comparing from a consumer from Newcastle. In the same area, there may be differences in lifestyles as well owing to differences in economic status, personal preferences of families and priorities. Your products and services would always appeal to a certain segment of people living in an area while others may not be in need of them or may not express enough interest. With geographic segmentation, a company can understand which section of the local, regional or national populace is a naturally interested customer group and which sections have to be reached out with different marketing message.
Psychographic segmentation involves profiling different people in your target market or target audience. The profiling is usually based on activity, opinion, interest, attitude, values and behavior of prospective customers. Based on what they may like, will fall in love with and what would upset them, your products can be presented in a way to appeal to people with different psychographic profiles. To illustrate this point – think about promoting your product to Harley-Davidson lovers vs. Post-stamp collectors. I’m sure you can see that different message will resonate with these two groups.
Action to take: look at your database and add above categories to it. Your next marketing campaign will yield better results if you segment and target your database of existing customers or future prospects.
Finally – likes of Facebook – allows you to precisely target the customer interests with FB Ads, the only simple thing left is – how to monetize FB ads? More on this – in one of my next posts.
Yours for marketing success,