Market segmentation helps your brand get clear about your audience and goals. You can get to know your audience, see how to better serve and reach them, and find new markets to grow into. Before you launch a marketing campaign for a new segment of your market, verify that it is a good option. Research to see what competition exists and if audiences are interested in your new market. A market segment opportunity is a trend that can drive new marketing tactics or offerings.
Once you’ve found several possible segments, you can research it to see what the competition provides and if your audience would be responsive to what you offer. If you’re building a marketing campaign around this data, you should think about creating several campaigns to test your ideas. If one campaign provides to be more effective than the others, this could be an effective strategy going forward. The four primary types of market segmentation that you can use with your life science startup.
Attitudinal segmentation categorizes potential customers based on their attitudes, beliefs, opinions, and values. Unlike behavioral segmentation, which is based on observable actions that consumers take, attitudinal segmentation focuses on the psychological and emotional aspects of how consumers behave. Marketers are continuously searching for new opportunities to personalize their message. This strategy is used to target ads specifically at internet users who’ve previously interacted with your site, mobile app, or online content and thus may have some level of interest in your products. A B2C example in this segment may be the luxury car brand choosing to target customers who have purchased a high-end vehicle in the past three years.
- For example, a company might make the majority of their sales in physical stores.
- A general email campaign might give you a bigger reach, but it won’t bring you closer to customers who are willing to pay for your service or product.
- 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.
- Surveys also reveal the specific demographics of a target market instead of available research data sources and uncover actionable insights.
- According to Accenture, 79% of consumers are more loyal to brands that use personalization tactics.
Urbanicity has an influence on the kind of products people buy, and their motivations for buying them. If you want your email to reach your audience at 8.30 on Monday morning, the scheduled sending time for customers in London will be different from the sending time for customers in New York. For instance, among gym users, there are those who work out to avoid health problems, and there are those who work out to achieve a sense of accomplishment. You’ll need a different approach when marketing to these two groups because of their differences in attitude. Activities, interests, and opinions have a very powerful impact on people’s buying behavior. For instance, Vans managed to make their shoes highly popular by positioning the shoes to appeal to people with an interest in skateboarding.
The company targets businesses of all sizes, recognizing that a small startup’s needs will differ from those of a large corporation. Psychographic segmentation breaks down consumer groups into segments that influence buying behaviors, such as lifestyle, personality variables, and values (see Figure 5.5). For instance, you probably already know that Blackberry was designed to cater to business professionals. The company thus used a different marketing strategy that set it apart from other smartphone brands in the market.
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This helps you design and execute better marketing strategies from top to bottom. The importance of market segmentation is that it makes it easier to focus marketing efforts and resources on reaching the most valuable audiences and achieving business goals. Demographic segmentation involves dividing the market into groups based on different variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, and nationality.
For example, some things that are culturally normal to people from one race or religion could be seen as offensive in another race or religion, so you need to avoid them when marketing to this religion. For example, when marketing a product to women, you are likely to achieve more success by appealing to the emotional satisfaction of acquiring your product. Likert scale questions show how much the respondent agrees or disagrees with a statement, like “strongly agree” to “strongly disagree,” letting marketers know how important the topic is to them. Market segmentation can help a business in many ways but can also have some negative effects. Decision-makers at startups might be having a nightmare doing payroll each month, for example. Your messaging to them would heavily focus on how much time they could save each month on payroll duties.
Your marketing message needs to vary depending on the group you are marketing to. Since they have different approaches to the buying process, you also need a different marketing approach for each of these groups. For instance, the kind of marketing that works for habitual buyers is unlikely to work 4 types of market segmentation for dissonance reducing customers. When segmenting customers by behavior, you group them based on their behavior patterns when interacting with your business or your products. When using location marketing, businesses need to tailor their marketing to identify with customers from each location.
Market Segmentation: Definition, Example, Types, Benefits
How you market your products and services will depend on the social class you are targeting. For instance, five star hotels focus majorly on luxury experiences and quality of service when marketing themselves. This is the most common type of segmentation, and is what comes to mind when most people hear the term market segmentation. According to Campaign Monitor, marketers that implement segment campaigns increase their revenue by up to 760%. According to a study conducted by Hubspot, 30% of marketers used market segmentation techniques to enhance email engagement. The study found that the campaigns that were segmented had 14.31% higher open rates and 101% more clicks compared to campaigns that were not segmented.
The four levels of targeted marketing
For example, you can learn about customer behavior by seeing what pages users visit, how long they stay on the site, and what referral sites led them to your site. Go right to the source and conduct interviews with existing customers, past customers, ideal customers, and prospects and leads. Ask questions that help you fill in the details of all four types of market segmentation. If you have existing customers, start your market segmentation process by performing an audience analysis. An audience analysis allows you to learn about your customers and begin to identify trends that exist within your current customer base.
Different technographic segments have different needs, which means that how you market to them, and even the kind of products you market to them will differ. This variable categorizes customers depending on the product features, or even the kind of products that are most important to them. In other words, you categorize them based on the problem they are trying to solve. As an example, if you tried marketing high end sports cars to people in rural areas, you’d have trouble making sales, because the rough terrain and poor roads in rural areas are not suitable for such cars.
For example, commodities like salt or generic items with many substitutes may not spend much effort segmenting their market. In the early days of marketing, companies offered products that were easy to manufacture without much concern for a customer’s need. In 1909, black paint dried https://1investing.in/ the fastest, so that was the color of the car that all buyers purchased. A company that sells luxury cars might look for customers with a certain income, age, or job. For example, they might make ads for older, wealthy people who are likely to be interested in luxury cars.
With a clearer understanding of who your customers are, you can create products that better serve their needs, desires and expectations. Generational segmentation expands on demographic segmentation by grouping customers based on their generation – Boomers, Gen Z, Millennials, etc. Alternatively, you could present customers with deals depending on what device they use to shop online. Then you can leverage this hypothesis to provide personalized recommendations that address your customers needs. For example, Spotify provides its users with curated daily mixes based on the types of genres and artists they’ve listened to previously.
Types of Market Segmentation With Real-World Examples
For example, if your product is expensive and designed for business users, you may not want to invest your budget on social media channels that appeal to teenagers. For example, the luxury car brand may choose to focus on customers who value quality and status. While the B2B enterprise marketing platform may target marketing managers who are motivated to increase productivity and show value to their executive team. Within each of these types of market segmentation, multiple sub-categories further classify audiences and customers. Firmographic segmentation is to B2B marketers what demographics is for B2C marketers.
In B2B companies, the Marketing and Sales departments are often closely linked, with Sales depending on Marketing to generate qualified leads that drive greater revenue. The department in charge of pricing products also needs market and competitive data to correctly price products, helping them maintain a competitive edge. And no manufacturing division suddenly wants to work overtime because of a sudden need for 100,000 widgets to meet increased demand, so sharing buyer trends demand keeps production on track.