Understanding Market Segment

There is a saying that "Trying to please everyone is a recipe for mediocrity."  This quote captures the essence of market segmentation.

In a period where many companies are trying to get the attention of a similar set of customers, attempting to cater to every potential customer can dilute your company's message and weaken its brand identity. 

Therefore, you should strive to identify specific segments of the market that align with your products or services and focus on these segments.

In this article, we will explore the various market segmentation methods with examples of companies that implement these segmentation strategies.

What is Market Segmentation?

Market segmentation is a process that involves grouping your target market into smaller groups because they share similar characteristics, such as age, income, personality traits, behavior, interests, needs, or location.

Knowing and understanding your market segmentation will help you appropriately target your product, sales, and marketing efforts. 

Aside from that, it can also help your product development processes by guiding how to build product offers for various groups.

Types of Market Segmentation

There are 4 types of market segmentation:

1. Geographical segmentation 

    Customers' needs and interests usually differ based on their geographic location, climate, and region.

    So, Geographical Segmentation consists of creating different groups of customers based on geographical location and boundaries.

    For instance, a company that sells generators or solar inverters will likely succeed in a country like Nigeria where power supply is not constant. However, if that same company tries to sell in a country like America, there's a very high probability that they would be unsuccessful.

    2. Demographic segmentation

      Demographic segmentation involves grouping your potential market using criteria like age, education, household income, marital status, family size, race, gender, occupation, and nationality. 

      This type of segmentation is the simplest and most commonly used form of segmentation because most buying decisions are based on demographic factors.

      For example, a company that sells luxury items might look for older customers within a certain income bracket or job profile.

      3. Behavioural Segmentation

        Behavioural segmentation relies heavily on data, actions, and decision-making patterns of existing customers. 

        This approach groups consumers based on how they have previously interacted with a product or marketing activities.

        For instance, An e-commerce store can target customers based on their buying history and pattern, offering discounts to people who buy from them often or send personalized product suggestions based on what they have bought in the past.

        4. Psychographic segmentation

          Psychographic segmentation involves grouping the target audience based on their behaviour, lifestyle, attitudes, and interests.

          To successfully group your market using psychographic segmentation, you need to understand your target audience's interest, and this can be done via market research. 

          For example, a fitness brand might try to reach out to customers who are gym enthusiasts and fitness coaches. 

          Rounding Up

          Market segmentation is a highly effective strategy for any organization that wants to create products and marketing activities that will help them achieve their business objectives.

          With proper segmentation, you can create a more personalized experience for your customers and you can also let your customers know you care about them and understand their needs.

          If you are not sure how to get started with market segmentation, book a free discovery call with one of our growth experts today. 

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