Marketing segmentation is an essential process that can help businesses target their audience keeping in mind their preferences. American Express has used this process to its advantage, and many other businesses are following suit.
But what exactly is marketing segmentation? It is a method of dividing your consumers into various groups. This segmentation helps a business to effectively reach, advertise, and sell products to those customers.
Brands usually segment their customers based on their age, income, location, behaviors, and interests. Take the example of Mercedes-Benz, to reach millennial buyers, who want to buy fewer cars, but will use them by 2020. They launched a new A-Class Sedan. It is affordable and more advanced technology than other cars.
With segmentation, it becomes easy to target a specific part of the target audience keeping their needs in mind.
What is the importance of marketing segmentation?
Here are some reasons why marketing segmentation is important:
- It aids you in understanding your target audience better.
- It aids you to make an effective budget and strategy to reach our target audience.
- It helps you create various small size campaigns for a smaller group of consumers catering to their needs and interests.
- Also, a study by Bain & Company shows that companies who invest in strong marketing segmentation have 10% more profit.
- Segmentation helps a brand understand why a consumer buys or does not buy a certain product. With a clear understanding of this, they can make a plan to convince them to buy the product and make it better.·
- It is the essence of modern marketing as with segmentation you
- provide value to your consumer better.
- You can even segment your email marketing strategy to target specific users. Use the Canva tool to create professional emails headers using lots of free templates.
Concept of Marketing Segmentation
The concept of the marketing segment is popular within businesses because dividing markets into specific groups that you can identify is crucial. It helps the marketing team to create a custom marketing strategy for that particular group.
For instance: A cosmetic brand targeting women knows that not every woman will like or buy their products. They know that spending on advertising to the masses will only add to his expenses. So, they identified the demographics of the women interested in their product and created a marketing strategy for them. This is the concept of marketing segmentation in a nutshell.
The process of incorporating marketing segmentation
Marketing segmentation is a big task and it may seem daunting to you. But with these steps, you can easily start your journey.
Collect data related to your consumers
Many tools can help you collect consumer data like Google analytics. It will help you collect concrete information about your consumers. With the help of this tool, you can know about their interests, behaviors, and how they interacted with their previous brands. All this will help you get a more qualitative view of your consumers.
You can ask questions like:
- How did you come to know about our brand?
- What is their favorite product?
- What they would like us to do differently.
After you have this data, it will become easy for you to divide your customers into segments.
How to build a marketing segment by using the data about customers?
One of the most important things to remember while building a marketing segment is your end goals. Whether your goal is to increase revenue or acquire new clients or move consumer down the marketing funnel. Your segmentation will depend on your goals.
Based on your goals, you can build your segments around these categories.
- Lead users. Customers who are engaged with the product actively and have helped create them.
- 1:1 Community. Customers who you know by name and address.
- Connected community. People who have purchased your product and has come to your store or checked your online website.
- Active households. Consumers who made the purchase last year.
- Covered households. Consumers who made the purchase just once.
- All households. Consumers who never purchased your product.
Create unique strategies for each segment
Once you have an idea about who your target audiences are, you have the power to effectively build campaigns for them. You can create campaigns that match their interests and reach out to them on their favorite platforms.
Measure these results and optimize your strategies
Don’t think that your work will end with your first marketing segmentation. It is only the beginning. It will help you in your future endeavors. With the data you have collected, segments that you have created and the campaign you ran, you can learn a lot. It will help you learn minute details about your audience, which will help you deliver more relevant products to your customers.
Marketing segmentation is a great business strategy for all businesses. The insights from the above blog can help you your businesses grow by understanding the needs of their customers.