Market Segmentation, seemingly simple process of allocating and dividing an existent client, or prospect base into subgroups is what I like to call the secret ingredient in a successful marketing campaign.
Segmenting your customer base is essential in any business. The reason for this is simple. Your product can not appeal to all! But it will appeal to a specific group of individuals that have preset parameters in their behavior, background or demand that matches your service or product perfectly.
This, in turn, means that marketing to those individuals would yield on average 80% higher conversion rates than for individuals that do not.
Where to utilize market segmentation?
The question should be, “Where NOT to utilize?”.
From your business plan to business model, sales and marketing utilize market segmentation. If you aren’t segmenting your client base, you are doing something very wrong.
Segmentation starts from your business plan and model. You must first understand who represents the ideal persona or client for your business. After understanding this, variations are developed that would require different approaches to close a sale.
Segmentation in sales and marketing starts when an initial interest is shown through a collection of prospects or leads. Those leads are later segmented into sub-categories based on behavior patterns, background, industry and more.
What’s the Best Way To Utilize Market Segmentation?
1. Don’t be afraid of being too narrow in targeting, find your niche group. (On the contrary being too broad will increase the general competition for your brand)
2. Analyze each segment and test the market if needed, do not go in Blindsided. (This will give you an idea if the market is large enough for exploration and if it is well matched with your product)
3. Utilize segments from the business plan stage. Integrating segmentation into the business model at a later time will incur higher costs.
Best Ways to Segment
1. Demographic (age, gender, income level, language, etc.)
2. Psychographic ( status, lifestyle, personality, etc.)
3. Geographic ( area, region, country, etc.)
4. Behavioral (product usage, platform usage, etc.)
5. Position (position, title, purchase ability, etc.)
Market segmentation ties into a trend that has become an industry standard in the technological age and is part of what marketers call target marketing. If organizations do not segment the market and mass market their products they will run out of business or will simply be overrun by the competition.
This also allows organizations to provide consumers with products that they actually are in demand of and decrease the irrelevant noise in the consumer markets.