It is a concept closely related to strategic marketing of a company. The process by which a company divides market segments is called market segmentation and his function is to help marketing team with the communication targeting.
It is important to consider that companies or brands do not create segments; they only discover them. In fact, different companies can find different segments in the same market s, depending on how they perceive customers and what they need.
The value that provide market segmentation arises with the intention of adjusting as much as possible a business idea to one or more market segments.
Depending on the Marketing Segment you aim for, it is possible to offer the same product or service with slight variations in its production, distribution, or commercialization to different target audience. Also, allows you to adapt your communication to the needs of a certain segment, sometimes marking a relevant difference with respect to the competition in terms of promotion.
The reasons Segment Marketing meaning is important to your company are:
- Adapt your product or service to the specific needs of the market segments that you have selected in your strategy.
- Identification of unmet needs: For the company or brand, it allows them to offer products or services more aimed at meeting the needs that have not yet been satisfied.
- Contribute to product design efficiency: Designing or improving a product to the real needs of the potential customer will shorten the return on investment time.
- Better targeted promotions: Knowing your segment correctly will allow you to offer appropriate promotions and achieve better results in the marketing strategy
- Increase in customer satisfaction: When you provide the right product at the right time and aimed at the segment that really needs it, it will result in a greater perception of your brand and therefore their satisfaction will increase.
Types of Marketing segments
There are a few factors in which you can segment your clients. The 5 more relevant ones are:
- Demographic segmentation
This type of Marketing segment is the most important one, because it allows taking into account very specific aspects of the audience. The variables of this segment are: age, sex, marital status, profession, educational level, culture, nationality and socio-economic status.
The geographical segmentation separate different customer groups based on geographical boundaries.
The needs and interests of potential customers change according to their geographic location, climate and region, and understanding this allows you to determine where to sell and advertise a brand, as well as where to expand a business.
If we take into account the psychological peculiarities of the potential customer is also key when segmenting users. The information about their lifestyle, values, attitudes, interests, and preferences allows us to adapt the product and service so that it is aligned with the client’s expectations.
The Behavioural segmentation focuses on specific reactions, behaviour patterns and how customers go through their decision-making processes and purchasing.
The patterns that the public has towards your brand, the way they use it and their knowledge are examples of behavioural segmentation.
Different segmentation strategies
When the segments are identified, companies can choose to focus on single segment marketing or multi-segment marketing.
Single segment marketing
When the company decides to focus on serving a single market segment. This has some benefits to the marketing strategy,
- Easy to identify and satisfy a homogenous group of people. For companies, it is much easier and simpler to identify the set of consumers in their segment. By being able to focus on a set of characteristics, it allows agencies to develop more specific and attractive products for a single group.
- Only fewer competitors. The long tail theory told us that when you focus on a small target, the competence is lower. Therefore, because the segment is well-defined allows to have a better knowledge of his group and better serve it.
- Higher margin of benefits and participation while serving a single segment, it allows the company to focus in a very specialized way on the consumer, which makes it preferred among other product options. You can have a higher level of profits, and then in that way you get to have a greater market share.
Undifferentiated segmentation strategy
Also called as mass marketing, since it tries to offer the product or service to the vast majority of the market. This strategy is focused on companies that want to sell their products or services to the public, without a deep segmentation. If you are not a very generic company, it is very difficult to satisfy the needs of all potential clients.
Keys to a profitable Segmentation
In order to accomplish the marketing objectives, segmentation strategies must be accompanied by a well-structured market analysis and the correct identification of the ideal client. Some of the features your segmentation strategy should have:
A company or brand must be able to identify the customers of each segment and measure their characteristics.
To be useful, a segment must be substantial. It means that should be large enough for a company or brand to find it profitable. Even with a focus segment, must have sufficient people to justify the investment.
To achieve an impact on the segments that seek the products or services of a company or brand, it must be considered that they must be available through the communication and distribution channels used in marketing strategies.
A segment must be stable for a sufficient period of time for any marketing strategy to be successful. Long term relation are always more profitable, and is easier and cheaper to keep a costumer.
Customers in one segment must have similar needs, and these must differ from the needs of customers in other segments.
A company or brand must be able to create products and marketing programs to attract and serve customers in the identified segments. You should be able to give them a call to action, if they do not respond to your requests, that segment won’t help you to accomplish your goals.