5 1 Market Segmentation and Consumer Markets Principles of Marketing

People’s race, religion and ethnicity affects their culture and beliefs, which in turn influence their view towards different things. People with high income levels, on the other hand, are not concerned about affordability, which means highlighting your low prices will not sway them. Instead, your marketing will be more effective by highlighting things they care about, such as quality. When marketing the same product to men, on the other hand, you’re more likely to achieve success by highlighting the utility or practicality of the product. When segmenting your audience by age, you can either categorize them by age group, such as seniors, adults, teenagers, babies, etc. or by their generation, such as Gen Z, millennials, baby boomers, and so on. Even when you are selling the same product, this means that different people will have different reasons and different motivations for buying the same product.

In this guide, we’ll be about discussing market segmentation types in detail along with a number of examples to help you gain a better understanding of the subject. When you look at your audience data, you might discover interests that you didn’t realize your customers had. For example, a company might make the majority of their sales in physical stores. When looking at behavioral data, they might see that many of their customers like to shop online.

Segmenting the market on the basis of location can be as small as a county or zip code or as large as a country. Segmenting a market this way can also be used to identify a new geographic location into which the business may wish to expand. To learn more about how Spherical helps marketers and media owners drive growth and revenue with actionable customer intelligence, data informed audiences, and identity powered activation, contact us today. Market segmentation can also help to inform other important business decisions regarding how you get your product to customers. As another example, a clothing company that primarily targets middle-aged women might decide to start selling kids clothing as well.

Hitesh Bhasin is the CEO of Marketing91 and has over a decade of experience in the marketing field. He is an accomplished author of thousands of insightful articles, including in-depth analyses of brands and companies. Holding an MBA in Marketing, Hitesh manages several offline ventures, where he applies all the concepts of Marketing that he writes about. Social media can provide insights into new customer behaviors, but marketers don’t know if they are viable opportunities unless those behaviors are measured.

To determine your market segments, it’s common for companies to ask themselves the following questions along their market segmentation journey. Behavioral segmentation relies heavily on market data, consumer actions, and decision-making patterns of customers. This approach groups consumers based on how they have previously interacted with markets and products. This approach assumes that consumers prior spending habits are an indicator 4 types of market segmentation of what they may buy in the future, though spending habits may change over time or in response to global events. Firmographic segmentation is the process of analyzing and classifying B2B customers based on shared company characteristics, and is similar to how D2C marketers use demographic segmentation. For example, Bank of America successfully incorporated life stage segmentation in their digital marketing strategy.

  1. Geographic, demographic, psychographic, and behavioral are the four general market segments.
  2. Gender segmentation is extensively used in clothing, cosmetics, and magazines.
  3. Apple, the tech giant behind the iPhone and iPad, has skillfully used both demographic and psychographic segmentation.
  4. First of all, you’ll want to analyze your current customers via market research.
  5. To identify new opportunities, marketers need to frequently test their target audiences for new insights and verify if customers still enjoy existing products.
  6. This involves overseeing the content creation that communicates consistently with the brand’s positioning and objectives.

Actually, 91% of marketers report that behavioral segmentation is the most effective compared to all other segmentation methods. People’s income levels have a huge influence on the kind of products they buy and why they buy them, which means you need different marketing messages to appeal to people from different income groups. Apple iPhone users, Harley Davidson bike owners, and Starbucks coffee drinkers are just a few examples of brand trust. These companies invested in their products and services to create die-hard fans of their products. Psychographic segmentation divides people into groups based on their personality, lifestyle, social status, activities, interests, opinions, and attitudes.

Geographic segmentation

Market segmentation, on the other hand, is like having a high end sniper rifle with a highly-skilled sniper behind it. By doing so, it becomes easier for you to retain customers who would have otherwise switched to your competitors because their needs were not being met. For the first group, you can have a campaign aimed at encouraging them to make a purchase, say by giving them a discount if they purchase within a certain period. It’s good to note, however, that people don’t always have the same needs and preferences just because they belong to the same generation. For instance, SnapChat is more likely to be successful marketing itself to generation Z compared to generation X. Instead, people from such areas are more likely to purchase trucks, which can handle the rough terrain, and can also be used for various farm-related activities, such as hauling farm inputs from the store.

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An example of geographic segmentation may be the luxury car company choosing to target customers who live in warm climates where vehicles don’t need to be equipped for snowy weather. The marketing platform might focus its marketing efforts around urban, city centers where its target customer is likely to work. Niche marketing is the process of identifying segments of industries and verticals that have a large audience that can be served in new ways. When you segment your target market, you can find underserved niche markets where you can develop new products and services.

Based on this information, they could then either open an online store or stat advertising their online marketplace more. In a recent survey of marketing professionals in North America, 62 percent of respondents said improving audience segmentation to enable more precisely targeted messaging was a top priority. There’s a reason improving segmentation was the most frequently reported priority in the survey. Market segmentation offers many benefits to marketers, publishers and others, including the following advantages. Dividing a market according to location is critical if you need to target an ad to people in a specific area, such as if you’re advertising a small local business.

Examples of market segmentation

This may involve gathering feedback from customers, analyzing sales data, and evaluating the success of marketing campaigns. One common and straightforward method of market segmentation is demographic segmentation. This https://1investing.in/ involves dividing the market based on customer demographics such as age, income, gender, race, education, or occupation. This strategy assumes that people with similar demographic backgrounds will have comparable needs.

As the name indicates, this kind of marketing segmentation is used to describe human characteristics of potential consumers. Psychographic segmentation plays an integral role in helping professionals come up with an effective marketing campaign. This allows marketers to be more efficient in terms of company resources, their time and of course, budget. Creating groups of similar customers allow marketing professionals to target potential consumers in the most cost-effective manner.

A company’s current market position will also influence its focus on segments. The market leader will focus on attracting potential users, while smaller companies will focus on diverting current users away from the market leader. For proper market segmentation, the marketer needs to know the bases of market segmentation.

Tips and best practices for effective market segmentation

Dividing your audience based on behaviors they display allows you to create messaging that caters to those behaviors. Many of the actions you might look at relate to how someone interacts with your product, website, app or brand. Collecting this data in a data management platform (DMP) will help you to organize it and use it to target your marketing campaigns or content personalization efforts. The following article explains everything you need to know about the four primary types of market segmentation that you can use with your company. Marketing and content teams will value having detailed information for each customer segment, as this allows them to personalize their campaigns and strategies at scale. This may lead to variations in messaging that they know will connect better with specific audiences, making their campaign results more effective.

Those tied to things like your customers’ values, hobbies, goals, and political affiliations. Segmented marketing sits neatly between mass marketing and niche on the targeted marketing spectrum. Segmentation has you split an entire market into groups, then market only to those groups you believe to be high value prospects. Even these businesses will need to do some segmenting, though, to properly define the key characteristics of their chosen niche and learn all they can about it.

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