Market And Customer Segmentation For Strategic Marketing
In many B2B businesses, strategic marketing is an unfamiliar concept. Companies often overlook this concept and the lack of better understanding of strategic marketing hinders it from functioning effectively. May it be the lack of systematic, consistent and target-oriented market and customer segmentation – these things can be the cause of not targeting the right customers for your products and services. And not being able to target the right customers could mean less revenue for your company – every company’s worst nightmare.
Segmentation is a common ground to both strategies. And as the term segmentation implies, “segments” are to be constructed as the pillars of these marketing techniques. A segment can be based upon certain characteristics that your target market or customers possess. There is a wide range of characteristics that you can use to base your segment on – age, gender, income, ethnic group, habits and many others. Choosing characteristics may vary on the product or the services you are selling. It is crucial to choose the characteristics that you will use in your segment that you will use to define your customers.
There are segmentation strategies that you can use for your business:
1. Demographic strategy: company size, industry, company position, income level, etc.
2. Geographic strategy: includes the location of your specified market, it can be a country and can be further narrowed down to a certain neighbourhood. Can be used by both large and small businesses. This is one if the easiest market segmentation to implement as you can easily obtain customer address and location through landing pages.
3. Psychographic strategy: less “concrete” compared to geographical and demographic attributes. This refers to market principles such as lifestyle, social class, interests and personality. This strategy is more difficult to implement but is practically useful. Marketers should study customers and clearly define the ideal buyer persona for the product and services. For instance, it is awfully useless to sell baby diapers to everyone when only people with babies are interested and in need of the product.
4. Behavioural strategy: this is the strategy that divides customers according to the following attributes: frequency of usage, product loyalty, purchase behaviours and attitudes towards a product/service. It allows marketers to make more suitable efforts that will strike their target market.
You can use one or more of these strategies for your market and customer segmentation. Each strategy is uniquely beneficial and combining them can wave maximum effects. Expand the definition of your specific niche by consolidating various segmentation strategies.
Effective Segmentation How-To’s
After choosing the market and customer segmentation strategy/strategies that you have ruled compatible, helpful and profitable for your company, you also have few key things to keep in mind to make your segmentation effective and to maximize its performance.
There are four sure points to remember as a marketer and business owner. These will serve as a brief step-by-step guide to effective market and customer segmentation:
1. Understand the advantages.
Explain and develop a clearer understanding to yourself and your employees about the benefits and advantages of segmentation. Here are some benefits and advantages of market and customer segmentation:
- Better company focus – market and customer segmentation enables you to get a peek of your customers’ behaviour and attributes, therefore, focusing your business in earning these potential customers’ trust and interest on your product/services.
- Effective financial resources management – determining your target market through segmentation paves way to a more effective finance management. Segmentation helps you in redirecting financial resources on marketing and communication channels that can capture consumers on your desired market segments, helping you avoid wasting valuable finances on mass marketing that cost a fortune.
- Product development – because you are able to determine your market’s likes and product needs, you will be able to develop and tailor your products according to meet your target market’s particular needs. It can also help provide input from consumers for future products through surveys and help determine if the product or service is actually useful.
- Customer retention – selling products that appeal to a consumer’s different stages of life fortifies a company’s ability to provide products/services to consumers of varied ages.
- Better communication with the target market – segmentation provide avenues for your company to communicate with your target market easily and at a lower cost.
- Increased competitiveness – because you are effectively marketing your products, your brand will be able to compete with other companies with the advantage of increasing profits.
- New opportunities – segmentation also helps a business identify customer’s level of satisfaction to launch new product features that will further appeal to consumers.
2. Avoid the Can of Worms.
Avoid complex techniques if your business is just starting to grow. Start with the basics and grow from there. Find the products that generate more income and drop the ones that only provide marginal benefits. You can also use other basic business techniques but it should be closely monitored and scrutinized.
3. Take a measurable approach.
If no categorical measure can be drawn from segmentation, then the segment is non-existent. It is more beneficial to put attention to a large portion of potential customers than in smaller markets segment with improbable potential. Segmentation also helps you tailor your production process priorities and market segments for a more compelling sales approach.
4. Break down the system.
If applying segmentation is too strenuous, its uses may be narrow and can only be understood and used by only a few people in your company. To avoid this pitfall, from the start, break down your desired market and customer segmentation strategy and define evaluation standards for each segment. This will help your marketers and sales representatives get a better grasp of your segmentation strategies in order to effectively implement it.
Market and customer segmentation can bring numerous benefits to a business, large or small alike. It can help owners and marketers save time, money and effort in selling and marketing products and services. Segmentation increases the chances of successful and productive marketing and sales strategies.