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In today’s digitally-dominated world, reaching out to potential customers can be tricky. To break through the noise, it’s imperative to deliver a message that resonates well with the audience. That’s where an effective market segmentation strategy can help. According to Bain & Company, 81% of executives consider segmentation as an important tool for growing profits. As per research, marketers that leverage segmented campaigns have experienced a massive 760% increase in revenue. Moreover, brands like American Express and Mercedes Benz rely on segmentation for seamlessly engaging with their customers. So, what is market segmentation, and how adopting a market segmentation strategy can be fruitful for your business? Let’s find out:
A practice of dividing the target audience into smaller and precise categories (based on common interests), market segmentation makes it easy for businesses to define & understand their customers well. By segmenting customers into more approachable groups, businesses can optimize their marketing and sales efforts in no time. To keep the marketing efforts focused and effective, market segmentation has been categorized into 4 types:
Considered as a highly useful market segmentation strategy, geographic segmentation splits up the prospects based on their locations. By taking the geographic borders of customers into account, it helps to understand their needs and determine marketing strategies accordingly. It includes segmenting users on the basis of country, state, zip code, city, climate, urban/rural, etc.
Demographic segmentation is a commonly used form of market segmentation that helps to categorize the target market on the basis of variables like age, gender, ethnicity, income, education level, occupation, family size, marital status, nationality, etc. By using people-based differences to split up the audience, it empowers businesses to create products that explicitly cater to the needs of a specific demographic.
Unlike demographic and geographic market segmentation, psychographic segmentation takes into account the intrinsic traits (psychological factors) of the targeted customers. It focuses on aspects related to lifestyle, personalities, opinions, attitudes, interests, values, etc. Since two individuals with similar demographic information may have different purchasing decisions, psychographic segmentation empowers brands to create their marketing strategies accordingly.
Quite similar to psychographic segmentation, behavioral segmentation helps to segment the market on the basis of consumer behavior, i.e. how a customer interacts with a brand or uses its product or website. By focusing on spending habits and specific reactions of customers in the buying process, it enables the companies to create messaging tailored to specific customer behavior.
An effective segmentation strategy helps you target the right audience with the right messaging at the right time. By getting detailed information about customers, it lets you add more explicitness to your outreach, which helps to seamlessly convert prospects.
By delivering and communicating offerings that precisely resonate with the customers, a market segmentation strategy helps you capture the customers at the beginning of their journey. This leads to better bonding between customers and the company, thereby promoting brand affinity & customer retention.
With tailor-made & specific messaging and advertising, a market segmentation strategy makes it easy for brands to connect with their audience. When you know how to communicate with your customers, you don’t need to spin wheels for coming up with something that’ll work. In other words, adopting a market segmentation strategy streamlines your marketing efforts and helps you stand out among competitors by spending less money!
To create your market segments, you need to gather data in the first place. Ask your customers some open-ended questions to discover where your brand fits in the market. Leverage Voxco’s omnichannel platform to identify the market landscape and streamline your research.
Segment your market by choosing any of the segmentation techniques based on demographics, geography, psychographics, or behavior. You can even implement more than one segmentation method to find the ideal match for your brand.
Based on the segmentation categories you chose, start asking quantifiable questions to understand your target market thoroughly. Using surveys, polls, or focus groups can help.
Once you receive the responses, analyze them manually, or use statistical software to build customer segments that are specific to your brand. It’s important to keep a check on the buying power of your segments too!
Determine the effectiveness of your strategy by evaluating your segments accurately. If it’s not working, consider segmenting using some other criteria.
Using a market segmentation strategy paves the way for your brand’s exponential growth. By helping you understand your customer base, it lets you deliver experiences that resonate with the particular facets of their lives. Want to make the most of your market research needs? Get in touch with Voxco today!