The Importance Of Market Segmentation

28th August 2018

When looking to create a successful marketing campaign, it is important to target the right audience and potential customers. Sounds obvious, right? Whilst that might be true, it doesn’t mean that all digital marketers are currently taking advantage of the benefits of market segmentation as much as they should be.

In this digital age, where an infinite amount of information is available at our fingertips, it is more important than ever to be able to filter out the masses and pinpoint exactly who your product or service should be aimed at. Mass marketing campaigns such as newspaper, radio and TV adverts and billboards are still widespread, however people are more likely to engage and connect with brands who personalise their ads with promotions that are relevant to them.

Market Segmentation Benefits

The main purpose of marketing segmentation is to increase ROI. It allows you to stop wasting money on campaigns that target uninterested customers and instead focus your efforts on campaigns designed for specific groups. These customers are far more likely to engage and convert, saving you time and money.

Market segmentation allows you to constantly learn about your customers, so you can ensure your campaigns always match their needs. This improved relationship over time should increase the likelihood of customer loyalty.

Types Of Market Segmentation

1. Geographic

Geographic segmentation is the idea of targeting groups based on regional topics and needs. Factors such as the country, city or area a person lives can have a huge impact on what type of marketing will be relevant to them. For example, a 4×4 company may want to focus their targeting on people living in more rural areas. In a lot of cases, it is not wise to rely totally on geographic segmentation, as things such as age group, interests, income and values make a huge difference to how well a campaign can work.

2. Demographic

Demographic segmentation is one of the most commonly used types and the simplest. Buying behaviour is largely influenced by these factors including age, gender, income, occupation and life stage. For example, not for profit organisations will need to aim their marketing at people whose lifestyles reflect how much they are potentially able to donate each month, or people who have may have spare time to volunteer.

Person with a book on their lap that shows a diagram with the words Non-profit in the centre, with arrows out leading to attributes that read the words friendship, kindness, inspire, hope, care and giving

3. Behavioural

Behavioral segmentation divides the target audience based on individuals’ online behaviors, such as the choices they make whilst on your website (frequency of visits, pages visited, links clicked), as well as their decision-making patterns (how often they buy from you and whether they choose carefully or more impulsively) and also whether they are new or repeat customers.

With this information, you will be able to tailor offers to ensure that your current customers remain loyal and you can persuade new or more casual customers that you care about their needs too.

4. Psychographic

Following on from behavioural segmentation, psychographic segmentation takes the process one step further and tries to determine the psychological aspects of buying behaviour, including their interests, opinions, values attitudes and general personality traits. Knowing this information about your target audience can be extremely important in helping to eliminate a feeling of disconnection from your brand.

A great example is a high-end luxury car company, who must analyse the habits of their customers. People who are passionate about environmental issues should be shown adverts about the car’s fuel efficiency or electric models, people who use their model only for special occasions should be targeted with information about the car’s design and look, whilst those who value family time can be targeted with ads focusing on the vehicle’s space and its more practical features.

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With all this information to hand about your customers, you will be able to target your marketing efforts more effectively, therefore improving results, saving you money and gaining more loyal customers who trust your brand.

Hopefully, this blog post has given you some inspiration to start your own market segmentation journey. Let us know how you get on!

If you’d like any help with segmenting your market or with any marketing campaigns, contact WillCreate today.