Marketing segmentation - what is worth knowing about it?

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Marketing segmentation can help you define and better understand your target audience and ideal customers. Thanks to it, you can identify the right market for your products in order to even more effectively direct your marketing activities. Segmentation in marketing also allows you to adapt your content to different groups of recipients. The products or services offered by your company are only justified by the market, as long as they are able to find buyers. 

When trying to reach your customers through a marketing message or advertising campaign, targeting the right market with the right message is crucial. If you target too broadly, your message may eventually reach a few people who will eventually become your customers. At the same time, you will also reach a lot of people who are not interested. As a result, you lose a lot of money on advertising. Think what if you were optimized his message to the maximum in terms of recipients? The good news is that marketing segmentation enables you to do so.  

What is customer marketing segmentation? 

For example, suppose your business produces gluten-free dog food. In this case, the marketing segmentation of customers must first segment them on the basis of whether they have a dog at all. Then you can segment these recipients into segments according to the breed of their dog, and then, for example, the age of their four-legged friend. Having this knowledge, you can direct them to them content best suited to their needs. In this example, you can see that market segmentation allows you to target your content to the right people in the right way - instead of targeting the overall message to your entire audience. Such communication strategy and action helps increase the chances that people will interact with your message. This, in turn, works more effective campaigns and improved return on investment. 

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Market segmentation can help you with reaching the right people. The ones most likely to become satisfied customers for your business or enthusiastic consumers of your content. So what criteria should be followed when dividing the market? Do it based on similar characteristics - it can be one or more. Such grouping of recipients allows for more precise marketing and personalized content. 

To meet the most basic criteria of marketing segmentation, three characteristics must be present. First, the common needs of the segment must be homogeneous. Another very important point - there must be a distinction that makes this segment unique from other groups. Finally, the reaction of a specific group to yours marketing activities it should be predictable and the same for all its members, or at least very similar.  

Marketing segmentation - definition

Marketing segmentation - this is the division of the market into separate groups of buyers that may require different products or marketing instruments. Buyers differ not only in terms of their resources or place of residence, but also in terms of their needs, desires, attitudes and purchasing habits. These differences allow marketers to distinguish separate segments that allow them to more effectively reach a specific group of potential customers.

With marketing segmentation, an enterprise can operate more efficiently in the marketplace by tailoring its products or services, distribution channels, and communication programs only to those consumers that it can best serve and earn the most profit.

By opting for marketing segmentation, enterprises may use either mass marketing or niche marketing. For most of the 20th century, the largest producers of consumer goods were oriented towards mass-production, mass distribution and mass promotion. Nowadays, it is more and more difficult to create a product or service that will suit the needs of all people. Buyers differ from each other, which is why companies more and more often try to distinguish segments for which they adjust their offers.

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There are many ways to segment the market, but not all segmentation performed is effective. The identified segments should have the following features:

  • measurability - that is, the degree to which the size of a given segment, purchasing power and profits can be measured,
  • availability - that is, the degree to which a given market segment can be reached and served,
  • size - the degree to which a market segment is capacious or profitable,
  • the possibility of effective service - that is, the degree to which effective programs can be developed to attract and service a given market segment.

Marketing segmentation means that companies focusing on specific segments have a much better chance of delivering satisfactory value to customers and achieving maximum effect in return for paying attention to their needs.

Marketing segmentation - quotes

“Customers may come in crowds, but they feel satisfaction one at a time,” said George Schenk. Currently, marketing specialists more and more often segment the market due to customer knowledge, their attitude, the way the product is used by customers and their attitude towards it. Behavioral segmentation is, according to many marketers, the best starting point to distinguish market segments.

“Every time you see a business that is successful, it means that someone once made a bold decision,” argued Peter Drucker. The enterprise itself has to assess the attractiveness of individual segments. Then decide which and how many of them you want to serve as your target markets. To do this, it must first collect and analyze data on the current value of sales, growth forecasts and expected profit margins for individual segments.

“People think concentration is about saying yes to the thing you want to concentrate on. Meanwhile, concentration is about saying no to the hundreds of other good ideas out there, "Steve Jobs used to say. Sometimes marketing segmentation consists in eliminating markets that are not planned to be served because they generate costs that are inadequate to profits.

Henry Marchant, advised, "To be successful in business, be bold, be the first, be different." Companies are also able to create their own markets. How? Focusing on meeting the needs that so far have not been met by another company. When building your own markets, you impose your own rules, which is why, in line with the words of Jacek Kotarbiński: “Be white and blue innovative. Inspire your customers, build fantastic markets and create real value on them. You have a choice. "

Types of marketing segmentation

There is no single way to segment the market. Separate and in combination, different criteria should be used to find the best way to recognize the structure of the market. Geographical segmentation involves dividing the market into various geographic units, such as nations, countries, regions, provinces, cities, and districts. An enterprise may operate in one area, some or all of the demarcated areas, but taking into account geographic differences in the needs and expectations of buyers.

In turn, demographic segmentation is the division of the market into groups of buyers according to various variables. They are, among others age, gender, family size, family life cycle, income, occupation, education, religion, race or nationality. Demographic criteria are the most commonly used basis for segmentation. We also distinguish psychographic segmentation. This divides buyers into groups based on their belonging to a social group, lifestyle or personality traits.

Basic segmentation criteria 

There are many different types of market segments, however it has been accepted that the most commonly used marketing segmentation covers the following areas: 

– demographic segmentation - Refers to dividing the audience based on demographic characteristics. It can be age, gender, marital status, family size, occupation, level of education, income, etc. The market segmentation according to demographic data is the most basic form of segmentation. When combined with other breakdown criteria, it can help you narrow the market even further. What does knowledge about demographic characteristics give you? Marketing segmentation allows you to more precisely target products directly to a specific demographic group. Take automotive companies, for example. Dealerships often segment their buyers by income and car models. After all, the same manufacturer may offer premium, middle-class and economy cars; 

Customer segmentation

– behavioral segmentation - it involves partitioning the market on the basis of consumer behavior, especially in relation to the product. Dividing recipients based on how they behave allows you to create messages that correspond to these behaviors. A lot of the activities you can look at are how someone is interacting with your product, website, app, or brand. Marketing segmentation in this regard should include consumer habits related to online shopping. It should take into account what activities they take when visiting your company's website, what needs they try to satisfy by buying your product. You will find that after using the product for a while, you can categorize your customers based on their loyalty to your brand. This will allow you to adapt your message accordingly;

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– geographic segmentation it is nothing but the division of customers by location. The most basic division of users is taking into account the place of residence - voivodship, poviat, town. You can also identify consumers based on the characteristics of the area they live in. One of the variables may be, for example, the number of people, which will make it possible to distinguish the inhabitants of towns and villages. This knowledge will be extremely useful - both if you operate as a local company and in a larger area, also (and maybe especially) international. Marketing segmentation due to geographical features enables, among others, adapting the message to the needs of customers taking into account the standards they profess, due to the prevailing customs, etc. 

– psychographic segmentation provides valuable insight into your audience's motives, preferences, and needs. If you understand them, you can create content that is more appealing to them. Your clients' expectations will be different depending on their personality traits, interests, beliefs, values, attitudes and lifestyle. Marketing segmentation in this area gives you an insight into why people decide to buy or they don't want to buy your product, they click on or ignore yours advertising, they interact with you in one way and no other. 

Segmentation in marketing and its importance in the effectiveness of activities 

In one survey of 62% marketers, respondents said improving audience segmentation was a priority. Why is it so important? Because it allows you to target your message more precisely. Well conducted marketing segmentation offers companies a number of benefits. Some of them are: 

– improves campaign performance - reaching the right people with the right message at the right time, 

– informs about product development, because market segmentation can also help companies develop products that better fit their customers' needs

– reveals areas for improvement - customer marketing segmentation can help companies identify those audience segments that they are not currently reaching with their marketing efforts, and then enter new markets, 

– improves business orientation - allows you to focus efforts on a specific area, which allows companies to establish a brand identity and specialize in a specific type of product.  

Market segmentation can also help you make other important business decisionssuch as how the product is delivered to customers. Businesses can use segmentation to set prices that maximize sales while maintaining customer satisfaction. 

Marketing segmentation requires taking control over the data held. To do this, you need the right data processing tools and the right partners, such as a PR agency, to help you with them make the most of it. Collaboration with Commplace provides both. We will help you better understand your audience and direct better content to them. By adjusting your strategy to the needs of your current and potential customers, you can increase their engagement and satisfaction, and thus increase sales. 

Effective marketing segmentation

The attractiveness of a given segment is influenced by 5 factors known as "Porter's 5 forces". These are the risks associated with:

  1. The presence of competitors. The enterprise should evaluate its current and potential competitors. A segment is less attractive if it has many strong and aggressive competitors.
  2. The presence of substitute products. A segment is the less attractive the greater the number of current and potential substitutes for a given product is available on the market. This is because substitutes lower prices and limit the potential profits from the operation of the segments.
  3. The presence of new products. The less attractive a segment is, the greater the risk of new, competitive products appearing on the market.
  4. Increase in the bargaining power of buyers. If the buyers in a given segment have a high or increasing bargaining power over the sellers, they may push prices down, demand a higher quality product or service, or antagonize competitors. All these actions cause a decrease in the profitability of the sellers' operations in a given market.
  5. Increasing the bargaining power of suppliers. A segment is less attractive for a producer when the suppliers of raw materials, equipment or various types of services operating in it have such a strong position in relation to it that they can raise prices, lower the quality or reduce the quantity of goods or services supplied. Suppliers have a stronger bargaining power the larger and more focused they are, the fewer substitutes for their offers and the more important the product they deliver to the recipient.

Worth knowing:

How does marketing segmentation help?

Thanks to marketing segmentation, we are able to properly define the right market for our products and thus better manage all marketing activities. Segmentation also helps to tailor content to different audiences in the best possible way.

What features should separate segments have?

For segmentation to be effective, individual segments should be characterized by measurability, accessibility, size and the possibility of effective service.

What are the types of marketing segmentation?

Marketing segmentation is divided depending on the criteria that are taken into account. Geographic segmentation divides the market into geographic units. Demographic segmentation, in turn, divides the market into groups of buyers, and psychographic segmentation - due to belonging to social groups.

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