Customers are the centerpiece of any business. Profit generation largely depends on how successfully we target the right customers and offer them the products they need.
You might spend much time and money creating the perfect marketing strategy, but will it resonates well with customers is questionable. Targeting allows you to focus your marketing efforts to cater to individual customer segmentation categories their wants and needs.
Communication is an art, it’s incredibly simple for a message to get lost, confused, or misunderstood. As shown by research, 95% of new products fail mostly due to ineffective market segmentation. That is exactly why it’s crucial to segment your target market.
What is Market Segmentation?
Market segmentation is a business practice that brands use to divide their target market into smaller, more approachable groups of people based on common ground they share to advance their marketing, advertising, and sales efforts.
These groups of customers are created based on demographics, needs, priorities, common interests, and a list of photographic or behavioral criteria. The purpose of market segmentation is to have leverage at tailored messages that will be recognized successfully and improve products, sales, and marketing.
Market segments can power your product development by educating you on different segments of customers. It’s important to remember that as a marketer you can’t fix everyone’s problem, that’s why we find the right segments that are looking for our help.
What is customer segmentation?
While marketing segmentation is used to improve marketing and find future customers. Customer segmentation is the practice of dividing an existing customer base into groups of individuals that are related in specific ways.
By implementing this process companies hope to gain a deeper understanding of their customer’s preferences and needs, and understanding of each segment’s most valuable marketing materials.
Common market segmentation use cases
If you’re wondering where you can use market segmentation in your business, here are some use-case scenarios to help you understand how market segmentation can be built across several departments and activities:
Market and opportunity assessments
When it comes to expanding business whether it’s entering a new market or finding growth opportunities, market segmentation will acknowledge your sales potential. It will break down your research by aligning threats and opportunities to your target audience. After identifying the threats and opportunities, you’ll have insight into how a customer will respond to new ideas, products, or services.
Segmentation and targeting
A market separated into different customer segments is defined by set criteria, like demographics, needs, priorities, common interests, or behavior preferences. If this information is analyzed you can target products or services toward these market segments, making marketing messages and collateral resonate with the specific criteria.
Customer needs research
With a lot of customer analysis and insights, you get to see where your business is connecting well with them and where you can improve your strategies. Base your customer’s needs research on market segmentation and identify gaps in offerings that can be developed.
If the product or service you developed doesn’t fix the problems of your target audience, then the product/service will have trouble selling. When you know what each of your market segments cares about and needs, it’s easier to develop products/services that will enrich or fix their day-to-day lives.
The marketing and sales team value all the details they can get about each segment, as this allows them to personalize campaigns and communication. Personalization enhances your connection with an audience, making your campaign results more effective.
The main benefits of market segmentation
Countless studies suggest the numerous benefits of market segmentation. A study concluded that 81% of executives express that segmentation is directly linked to profit growth. Furthermore, the study claimed that businesses that use market segmentation have, on average, a 10% higher profit. Here are some benefits related to market segmentation:
Distinct marketing messages
Market segmentation empowers you to tailor your messages to your targeted group of people. This is because you understand their needs, wants, and expectations.
Creating generic digital adverts is no issue with market segmentation. Easily direct digital marketing efforts according to locations, ages, interests, spending patterns, and online buying patterns.
Highly effective marketing efforts
In market segmentation, you get to know your potential clients before getting in touch with them. You get the advantage of knowing what they are most responsive to and what they need.
With market segmentation, campaigns are far more effective which leads to higher revenues from ads and overcomes the cost of ads. Use free digital platforms to craft ads and reach potential customers.
Market segmentation and methodical targeting will make your customers feel understood and you are more likely to retain them, building brand loyalty.
Identify growth opportunities
Discover new niches. Analyze the segmentation and find underserved markets, new ways of serving your current customer base, and find new opportunities.
With market segmentation, you can improve your lead generation, marketing, and sales efforts, as well as investment intelligence. It is key to staying competitive, identifying new target audiences, and personalizing your campaigns, and plays a huge role in business growth.
This powerful technique allows you to improve decision-making, and marketing efforts, and boost the company’s bottom line.