Businesses can expect to achieve high ROI by integrating market segmentation in their branding and marketing strategies. Any business will have a certain set of targeted potential customers, but you cannot approach all of them in a same manner. 

There is no one single approach that will possibly touch the pulse of all your potential audiences. Therefore, it is of highest importance to further segment your targeted people into smaller groups. It will help you to customize your approach and engagement strategies. 

For example, the likes and preferences of young crowd will be quite different from that of people over 50s. Therefore, you will need to talk to them in different ways to attract their attention. 

By segmenting your potential customers, you get a better leverage to target the sales of your products or services. It will allow you to customize your marketing and branding content towards each of the segments, in order to get the best response rates. 

In the long run, it also helps in reducing the customer acquisition costs for your business. What it means is that you will be spending less to gain more. 

One of the biggest advantages of market segmentation is that you get critical insights about your potential customers. It helps you to design the marketing strategies to perfectly meet their needs. 

It makes lot of sense to utilize your time, money, and resources towards those groups of people, where you can achieve highest success rate, rather than focusing on a wide range of people with the hope of reaching the target audience.

You can gain better mileage by using the right kind of communication for different sets of people within your target audiences. It will also help vastly in gaining better responses on your social media marketing efforts, because people will perceive that your company knows what exactly they need, and hence can serve them the best. 

Market Segmentation - Different Types

Technically, there is no limit to the kinds of segments that you can make, in order to create the right impact on your prospective customers. However, we have broadly classified them into 5 different types. Of course, you can think of more innovative ways to segment your target audience to suit your business type. We have followed it up with market segmentation steps to give you a good idea on how to go about it.

Geographic segmentation

It is the most common kind of classification that more businesses adopt to reach out to the right people to do business. Like the name suggests, you will be focusing your marketing contents towards people from certain geographical location(s). 

What is the use of tapping the global market, when you simply cannot sell your products or services to all of them? You will need to have a more focused approach to reach out to people from the locations, where you can actually sell. You might get smaller lead lists, but the sales conversions will be significantly better.

For example, if you are marketing winter clothing collections, then you cannot expect great response from people living in hot and humid places. Of course, you might still get a few sales from people of those regions. They might be the ones who travel to colder locations, but the response rates will be significantly lower. Geographical or location based segmentation of market plays an important role in getting the best Returns on Investments.

“Geographical segmentation is a primary task that we do to help our clients attract targeted potential customers to their websites. We use it quite extensively on our Blogger outreach and Local SEO strategies, which eventually help our clients in increasing the website sales and search rankings” - Sunil Gupta from ACG Digital Marketing

Demographic segmentation

In this type of classification, the segmentation will be done according to the statistical data of individuals or groups. Some of the common demographic segmentation parameters used by businesses for targeted marketing are, sex, age, educational qualifications, occupation, social standing, type of home they live in, kind of vehicles they own, etc.

Businesses like Fine Art Shippers are able reach out successfully to their target audience with demographic segmentation. They have seen remarkable success by focusing their marketing efforts to reach out to those people who lead luxurious lifestyles, and can afford to buy expensive artworks. It is futile for such companies to market their services to people who are not in position to afford such high-end passions.

You could also use a combination of few demographic types, depending on the type of product or service you sell. These segregated databases are also adopted quite extensively for up-selling and customer retention strategies.

In some cases, you might have to approach both men and women, even if are selling only the men’s products. Here women can be great influences, who can compel their men to buy from your company. 

Another classic example is selling products for kids and teenagers. In this case, the kids can be influencers, while the actual purchase is being done by their parents or guardians. 

Therefore, you will need to have a balanced approach, while doing the demographic segmentation. You will need to focus both on influencers and buyers to maximize your sales.

Firmographic segmentation

This type is not too different from the demographic segmentation. The only difference here is you will be targeting the data of businesses are organizations, instead of that of individuals. It is a very important strategy for companies that are involved in B2B or business to business marketing. It helps them reach out to the right kind of companies to do business. 

Some of segregating parameters in this type include annual business turnovers, international presence, number of employees, company ratings, types of offices, etc. It will depend closely on the type of products or services you are selling. 

Psychographic segmentation

In this type, you will be approaching people based on their belief systems, values, life purpose, etc. Unlike the above-mentioned segmentations, this one is based on more abstract parameters, which is why you will require high level research to build a qualified database. 

It is much tougher to create this kind of segmentation, because it is based on more abstract parameters, rather than on general statistical data. However, it will allow you to create personalized marketing content, if you are able to achieve it. 

If you are able touch upon the values and belief of some people, they will want to do business with your company, even if your competitors are offering them cheaper deals. Many big companies rely on professional 3 rd party services to collect such data.

Behavioral segmentation

Here you will be creating the target database according to the actions and behaviors of your prospective customers. Some of the classification parameters used here are brand loyalty, spending habits, usage and consumption, lifestyle choices, and many others. It can also be combined with certain demographics like age and sex for accurate targeting.

“We have grown as one of the top sports betting websites with well planned market segmentation strategies. We focus our marketing strengths to reach out to people in those counties where online betting is allowed. Moreover, we further segment our leads to narrow down on people who are crazy about sports, and love to put their money to back their intuitions, guesses, calculations, and claims.” - CEO NBA lines

Steps to make market segmentation:

Below mentioned market segmentation steps will give you a broad idea on how to do it. You might however need to customize the steps as per your specific business requirements and goals.

  1. Market research - The success of your business will mainly depend on how well you know your customers, their needs, and their aspirations. You can conduct research in many different ways like social media engagements, surveys, web forms, feedback mechanisms, etc.

  1. Choose the segmentation type(s) to group your customers - You will then need to decide on what segmentation type (or combination of types) mentioned above can help you get the best results. 

  1. Develop custom marketing communication - Once you are able to segment your target market, you will need to design communication or contents that will perfectly resonate with those segments. Here you will need to add the value proposition to make it attractive for them. Let them know how you are best placed to meet their specific needs.

  1. Marketing and sales conversion strategies - Once you attract people from targeted segments to your web pages, you will need to work on sales conversions. It will involve active engagements, systematic follow-ups, reminders, discount offers, free trial, etc. You can expect better responses, because you are approaching people from your qualified database.

If you still feel that the tasks are too complex, or if you don’t have the right kind of expertise, then it is in your best business interests to hire the services of internet marketing companies or appointment setting services. 

They will have qualified professionals and teams to execute each and every step in a systematic manner. Their experts will also track and analyze the developments to see, which segments are doing good, and which ones are dragging the success.