More Resources
Why is this market segmentation necessary? Simply put, your marketing messages will land better when they’re tailored for different audiences. When you segment your customer base you’ll have the foundation for creating highly targeted marketing campaigns that will resonate with different groupings.
In this article, we’ll give you an overview of why market segmentation is important and discuss 5 crucial bases of market segmentation that you’ll need to think about when segmenting your market.
But first, let's dig a little deeper into the importance of conducting market segmentation. The goal of market segmentation is to develop detailed profiles of different categories of consumers. Once you’ve done that, you’ll be able to realize a wealth of benefits that could make a direct contribution to your bottom line:
Market segmentation is the key to business success is to get to know your customers at a deep level. Only then will you know what they really desire and what needs are currently unmet—putting you in an excellent position to be able to satisfy them.
Through the use of market segmentation, you can develop new products and enhance existing ones in a way that is cost effective and has the potential to maximize returns. Distilling your market into different segments and identifying their specific needs will help your product development team to create products that satisfy different segments’ pain points.
Often, businesses that undertake market segmentation find entirely new markets to serve. For instance, after low-carb diets became popular, manufacturers of ketone strips—test strips designed to alert people with diabetes to medical issues—soon found they had an entirely new segment to serve. Conducting market segmentation research will help you recognize new opportunities and untapped markets.
Insights gleaned from market segmentation research can help you to develop highly effective marketing campaigns that have impact. In this way, you can optimize media spend, and improve the cost-effectiveness of your marketing campaigns.
These are just a few of the advantages of market segmentation. For a deeper dive, take a look at one of our recent articles about how to reach your target market.
There are many different ways to segment markets. Let’s look in more detail at five of the most common bases of segmentation.
Psychographic segmentation divides people into groups based on unobservable aspects of their psychology, such as their personalities, lifestyle, social status, activities, interests, opinions and attitudes. In other words, it’s a way of categorizing customers on the basis of how they think, how they consider themselves, and what they aspire their life to be like. These aspects are important because they have a major influence on buying behaviors and consumption habits.
Let's take a look at some examples of psychographic traits, and why they might be of value for your segmentation activities.
Examples of psychographic segmentation include:
Are you an ISTJ, an ESFP or an ENFJ? Knowing your customers’ Myers-Briggs types could actually be surprisingly useful information. Of course, Myers-Briggs isn’t the only way to understand different personality types. The point is that different personalities have different approaches to shopping and consumption. For instance, if you’re marketing vegetarian foods, it would be worthwhile to know how many customers consider themselves to be idealistic and values-driven, and how many would describe themselves as pragmatic and flexible.
These two categories of customers are likely buying vegetarian food for very different reasons: the former are probably very loyal customers, while the latter might be occasional buyers.
Even where customers share personality types, they might have very different attitudes towards things. For example, some vegetarians might have a strong belief in the importance of shopping locally, while others don’t have a strong opinion about it. Understanding attitudes can help you to craft products, services and marketing messages that are right for that audience.
Gathering data about your customers’ interests, hobbies and the types of activities they tend to get involved in will tell you a lot about your customers. Asking customers about their preferred sports teams, how they keep themselves entertained or what they tend to do at the weekends will give you crucial insight that will help you in executing successful advertising and customer acquisition campaigns.
Social status is the position that people hold, or aspire to hold in society. For instance, many female consumers in lower socioeconomic categories will own at least one luxury purse, which reflects an aspirational psychological state.