Imagine that you wanted to open your business. One of the problems you might face is how to attract customers. The following are some of the questions you would needto solve before starting a marketing campaign:
- Who do I want to buy my products?
- Where can I ship my products?
- Which advertising medium (e.g., digital or traditional) would reach my customers more?
- What kind of style would attract customers?
- Why am I not attracting enough customers?
The last question seems hard to answer. If you are seeking a solution for it, it means that you don’t have an answer for the rest of the four questions too.
In this article, let us focus on a strategy that would help you answer the question of who you want to buy your products. This strategy is called market segmentation.
Before learning this strategy, if you don’t have an idea on what you can sell, here’s a list of recommendations from Youtube:
What is market segmentation?
Market segmentation is defined in a lot of ways.
Investopedia defines it as grouping together possible customers into groups that have similar needs and respond in unison towards a marketing ploy.
Meanwhile, Alexa says that it is the action of dividing a target market into smaller and detailed categories.
Qualtrics explains this as how an organization sorts its customers or “cohorts” into smaller groups based on certain characteristics.
Simply put, it is the process of sorting your customer base into smaller groups based on common characteristics.
Also read top 8 most interesting content marketing examples here.
Reasons why you should use market segmentation
I bet you’re wondering why you have to use market segmentation. There are several reasons why you should include it in your company growth strategy.
Track how effective your marketing campaigns are
Grouping your current and past customers to your business would also mean you can gain an advantage to know more about the characteristics you choose to group them as.
Your business will grow due to learning more about your groups’ taste towards your products. This, in turn, can help increase your chances of earning more to pay for your marketing and business operations at the same time.
Ensure that your marketing campaigns are effective
Each group of customers you make using this strategy can be identified by their needs too. With that in mind, you can also learn whether each group will respond to your marketing plan and how they will respond.
For example, if you wanted to create a campaign for ice cream t-shirts, you can opt to have a sponsored blog entitled “What Ice Cream T-Shirt Fits You.” Another possible blog title can be “A Guide to T-Shirts for College Students.”
Both blog titles will attract people to read it and buy shirts from your store. However, you would notice the frequency of visits, reacts, and shares in both marketing tactics.
Reveal more about what your customers want
We have learned that targeting a group of customers using a campaign can help you learn whether it is effective for that group. There is another piece of information you can learn along with it: customer preferences.
Aiming at a certain group would make it easier to figure out what kind of products your customers want. Aside from that, you can also get suggestions from your customers.
This means that applying market segmentation can help you save money, time, and effort in planning your next products to convince people to buy them.
Categories of market segmentation
Speaking of characteristics, how you apply market segmentation depends on which one you would use to classify your current and potential customers. In this section, I will enumerate which one you can use.
This type of market segmentation classifies your customers based on any of the following:
- Marital status
- Family size
Meaning, you can classify your customers based on their statistical data. It is one of the most popular and commonly used types of this method.
Unlike the previous type that looks at people’s individual characteristics, this type focuses on people within a certain organization.
Defining each organization would include the following information:
- Company size
- Number of employees
You will usually opt for this type if you want to sell your products or services towards a company. An advantage of using this type is to seek opportunities for collaborations.
This type of market segmentation focuses on the goal of being able to attribute your customer’s habits when they are buying or not.
These three traits are what you should be looking out for when grouping your customers in this way:
- Personality – this defines a set of qualities that a person has, which affects most of who they are, including habits, traits, attitude, and temperament.
- Lifestyle – how your customer lives
- Attitude – how your customer perceives things in their life treats something in their lives
For this market segmentation type, you would have to focus entirely on how the customer thinks. With that in mind, you can separate them under any of the following categories:
- Customers who know the product
- Customers who don’t know the product
- Loyal brand customers
- Brand-neutral customers
- Competitor loyal customers
- Former users
- Potential users
- Current users
- First-time users
- Heavy users
- Light user
- Medium users
Scenarios on how to apply market segmentation
After you have learned about some of the marketing segmentation types you can apply in your business, let us look at how you can apply it in your business.
Gather data from your existing customers
Before grouping your customers together, you should learn who your customers are. I will outline several ways on how you can gather their information.
Whether in-person or online surveys, you should communicate with your customers in a respectful way regarding their information. Ask for their permission to share their data to help your business grow and reward them with a small gift after.
Aside from your customers, ask your employees about what they think about the customers. Getting their input on who your customers are and what they are like would help you get a second opinion.
After gathering this data, you can sort your customers by demographic, psychographic, and behavioral qualities.
Consult your business data
If you are using tracking software or a manual record to note down each customer transaction, take a look at them and use them for your market segmentation strategy. Doing this will help you learn more about their buying habits.
When having an online store, you can get the following information:
- What pages your customer visits
- How much your customer spends
- How often do they visit
- What products or services they buy
- How long do they stay on the site
- Which referral sites were used
- Where in the world are they visiting your site from
- Check which keywords they use when searching in your site
This tip is especially helpful if you are aiming to connect with another business (i.e., group them by their firmographic traits).
Form an image of your ideal customer
After learning who your customer is, let’s think of our ideal customer. This is also called a buyer persona, a person who you want to attract to your store. Doing this will help you gain attention from the right market segment.
Take a look at this Youtube video to get ideas on how to form their profile:
Learn about your market’s opportunities
According to Alexa, a new marketing strategy or offer can open for your business from a market segment opportunity. Finding this would involve answering the following questions:
- What does your brand present as a solution to a customer need?
- Which problem can you solve that your competitors can’t?
- What do you excel or an expert in?
- Who is the person you or your company wants to serve?
- Which market segments stand out?
- What do your customers have in common?
- What are the market segments that your company is not serving at the moment?
- What are the market segments can your company services in the future?
Analyze Where Your Potential Segments Lie
In this step, you would have to center on creating a strategy focusing on the market segments you want to serve in the future. Since we identified them in the last step, let us go through how to make a market strategy for them.
Check keywords that the potential market is interested in
For this step, you can use an SEO tool such as Ahrefs or Ubersuggest to check which keyword you want to use to attract your potential market. I have written a guide on how to perform keyword research here.
One tip I can give to you here is to aim for popular keywords that have low competition. This means that only a few sites have written articles about it.
Writing blogs about these kinds of phrases would help you reach the top of the search results easily. As a result, you can attract more to your business in return.
Learn your future competitors in your new market
Speaking of competitors, you would also have to check other businesses. Doing this will help you learn how to get a foothold in the market. You can learn what strategies they tried and how their customers reacted to it.
There are many ways where you can check your future competitors. One way is to look up their website online. Another is to use SEO tools and figure out which keywords they rank high in.
Rinse and repeat
After performing the previous steps, your next step is to start offering a few campaigns based on your research. Avoid going all-in when jumping into a new market.
Instead, opt to make smaller campaigns first to test the waters. Then, review how well it performed, make several changes, and release a follow-up campaign at the right moment. Doing this will help you find that sweet spot slowly while gaining experience at the same time.
Examples of Applying Market Segmentation
Finally, let us explore scenarios in several businesses for us to get a picture of how to apply market segmentation as a whole.
According to Google, automobile manufacturers learned that most people search for a specific type of car seat. For example, they enter search terms like “best convertible car seat” or “infant car seat” in their search engine.
Aside from that, there has been a 60% growth in mobile searches using phrases that end with “for me” in the last two years.
If you want to produce and sell a new car product, you would use this information and get your customer’s information through an online survey. You would also add a question on what kind of car seats they prefer too.
After tabulating this data, you can start creating teasers that you’re going to sell car seats in the future through sponsored blogs or social media posts. This will help you generate feedback on how they should look at what materials are needed.
During your first wave of releases for your car seats, encourage your customers to review your product. Having reviews of your product is recommended as it gets your product marketed and get feedback about it at the same time.
Korona mentioned Wall-Drug in their article about souvenir shops.
They explained how they became one of the top visited destinations in the American Midwest after they started offering free ice water to tourists. During the summer, they were one of the options they had to stop before heading to Mount Rushmore.
Learning about how parched people are due to the heat, they made a move to keep their visitors hydrated. Since then, they get at least 2 million visitors a year.
In this article, I showed you what market segmentation is and how you can apply it to your own business. We learned how organizing your customers by groups, analyzing their spending habits, and creating a targeted marketing campaign will help your business grow.
Applying this to your business will increase your chances of getting more brand recognition and customers at the same time.
Did this article help you in your online business advertising? Check out these articles to learn how to grow your business
Comment below on which business topic you would like me to talk about next!