5 Tips for Effective Marketing Segmentation

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Thanks to market segmentation, organizations can better understand their target audience, determine the potential value of the product for this market, and plan the customer journey for each segment of their audience. Market segmentation is a practice that also helps improve user experience, test new business models, and use new technologies so that you can get an advantage over your competitors. 

There is no approach to market segmentation that would work equally well for any company. Proper market segmentation is based on in-depth analysis so businesses need to perfectly understand their customers’ preferences and attitudes. As a result, they can not only tailor product offerings to the needs and preferences of their customers but also come up with a personalized communication strategy.

Why You Need Market Segmentation

Unfortunately, many marketers don’t know how to implement market segmentation when they start to develop their marketing plans. Apparently, they stick with the idea that their product is for “everyone” so everyone should buy it.

The results of such a lack of knowledge and understanding are rather sad. According to recent research, as much as 85% of product launches fail because of the marketers’ inability to properly segment their customer base.

Market segmentation gives you a competitive advantage because you can categorize a broad market and divide it into groups of consumers with similar needs. This way, it gets easier to understand your potential customers’ needs accurately because you don’t assume that they all are the same. Although mass marketing can also deliver good results for some companies, it’s less efficient and it doesn’t help align the messaging strategy and marketing efforts.

Market Segmentation Research

Obviously, segmentation should be based on a set of characteristics. These characteristics are called segment descriptors.

You can group your customers based on the area where they live, the frequency of product usage, cultural clusters, age, etc. the most common segment descriptors are geographic, psychographic, demographic, and behavioral descriptors. You can also group the customer base based on who is the decision-maker and where they prefer to purchase your products.

Once you’ve understood the key principles of market segmentation, the whole process shouldn’t be too difficult for you. It only takes some time and a lot of research. Therefore, we recommend that you prepare for your research and determine your segments.

Here are some simple rules:

  • Don’t make your segments too broad because your competitors that target the market narrowly will get an advantage.
  • Make sure to organize your business taking into account different segments of the market. Your business model must be market-focused, which means that you need market-focused teams.
  • Manage the segments of the market globally so that you won’t be surprised by global economic processes.
  • When your research is completed and you have a market segment portfolio based on analysis, don’t hesitate to attack the right segments.

As you can see, the success of marketing segmentation directly depends on your research. Proper research must give you a clear understanding of what segments you should target and set a clear direction for your company.

You need to make decisions based on the potential profitability of different market segments, which means that you need to collect a lot of information.

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Where to Get the Necessary Information?

To conduct research, you must find an effective tool that will enable you to collect information on your contacts. It will be easy to do if you choose the right CRM so that you won’t need to install lots of additional software or pay for additional services.

Nimble is one of the best CRMs on the market that allow you to understand your audience’s composition. The segmentation feature is available in the sidebar. You can group users from your network, mark them as important, add tags, set reminders, and export their information as a file.

However, the best thing about the Nimble segmentation feature is that you can take bulk actions, working with large groups. Given that this CRM integrates with social media, you can also monitor social signals from certain segments. The advanced toolkit allows you to know what your contacts are interested in, what they are saying, and what they share with others.

Nimble is a perfect tool for market segmentation because it automatically adds important information to your contacts. It uses private and public databases, adding information on the contacts’ social profiles and demographics. Basically, Nimble is a smart segmentation tool that does a lot of time-consuming work for you. It has a number of quick filters so that you can group your contacts by location, interests, education, and more.

This CRM also allows for more efficient outreach. When using Nimble, you can not only group your contacts and collect the necessary information but also send targeted messages to different groups. You can personalize your emails for different groups of contacts and save a lot of time because you can work with groups and send messages tailored to specific needs and interests, at the same time.

Tips for Effective Segmentation

Research and analysis are crucial for successful market segmentation. However, it’s a complex process so there are also many other things that you should keep in mind. Many marketers, especially beginners, may focus too much on the technical aspects of segmentation so they forget about the objectives of this process or don’t know what to do with the research insights. Therefore, we decided to provide some tips that will help you avoid common pitfalls.

Your Segments Should Be Distinctively Different

The size of your segments must be worth targeting them. The number of segments depends on their size and influences your strategy. On the one hand, you won’t be able to develop an effective strategy if you have too few segments. On the other hand, if you have too many segments, managing your strategies will take a lot of effort.

The key to success is to make sure that all your segments are distinctively different. This way, you will see whether or not you have the right number of segments, and it will be easier for you to work with them. You don’t want to have several segments that need the same strategy or one segment that requires further segmentation.

Focus on the Right Factors

For example, behavioral patterns are certainly an important factor. However, you shouldn’t confuse behavioral clusters with segments because they don’t provide you with enough actionable information. You may know what products some people choose and how often they purchase.

In this case, you know what they do, but you don’t know why they do it. If you want to use segmentation effectively, you should focus on what your potential customers want.

Demographics can also enable you to quickly evaluate your user base but it doesn’t provide you with information sufficient for planning. Therefore, we recommend that you consider different factors and use attitudinal segmentation.

The attitudinal approach allows you to better understand your audiences and their motivations. You should target groups of people with similar values so that you can not only understand their behavior but also influence it and provide the best experience possible.

There are four different types of market segmentation that you can use to divide your audience. These include demographic, psychographic, behavioral and geographic segmentations.

  1. Demographic segmentation focuses on the geographical location of your customers, as well as their ethnicity, age, gender, marital status, education, and income. Demographic segmentation is the very first step to defining who your target audience really is. By implementing this type of segmentation you will be able to create your consumer profile and people who are most likely to buy your products or services.
  2. Psychographic segmentation goes deeper and allows you to define the values of your customers that you can appeal to. Psychographic segmentation is all about your customers’ lifestyles, interests, attitudes, motivations, beliefs and life priorities. This data may be hard to collect, but understanding your customers’ values opens the possibility to launch targeted and effective marketing campaigns. Your customers live by their own set of values, and if your brand aligns with those, your product will seem more appealing to them.
  3. Behavioral segmentation requires the understanding of your audience’s purchasing, spending habits, their social status and possible interactions with other brands. By owning this data, you will be able to understand how much your customers are willing to pay for your products or services and upsell or cross-sell more effectively.
  4. Geographic segmentation allows you to divide your customers into groups based on their whereabouts (country of residence, city, climate, etc.)

geographical segmentation

3. Remember the Goals of Segmentation

Different segments may be interested in the same things for different reasons. For example, some customers might want to try your product because it’s new, while others might appreciate it for specific features. One product can benefit people in different ways so you must have differentiated campaigns, sending messages optimized for a particular audience.

Differentiated campaigns and strategies are the ultimate goals of segmentation, and you should never forget about it. Another goal of segmentation is to enable you to find the right direction of development for your products or services. You should take into account the segment needs to provide the best experience and customer service.

4. Segmentation Isn’t Limited to the Marketing Department

If the marketing department tries to deliver a segmentation system to other departments, the probability of success will be minimal. Everyone must be involved to embed segmentation successfully within the organization.

Given that proper segmentation influences different areas of a business, every department must clearly understand its importance and outcomes. When talking about segmentation, all parts of the organization must find a common language so that the audience can be in the center of development plans.

5. Use Data to Monitor Your Success

When analyzing data and conducting research, you get an opportunity to better understand a variety of processes thanks to an understandable segmentation system. It’s important to respond to the insights that you get and to use previous data in your ongoing research so that you can evaluate the dynamics or even come up with predictions.

The data on your market segments allows you to understand what messages are the most effective for a certain type of audience, what strategies need further improvement, and how well you satisfy the needs of your customers. In other words, proper segmentation provides you with a basis for constant improvement.

Wrapping Up

Market segmentation is a complex process that may seem too difficult at first. However, as soon as you understand its key principles and plan this process properly, you will see how segmentation gives your organization numerous opportunities for improvement.

Even if your market segmentation isn’t perfect now, the main thing is to understand what you’re doing wrong and to put some effort into changing it. Advanced software that integrates with social media can make segmentation much easier, providing you with tons of actionable insights. Thus, if you haven’t done it yet, start your market segmentation research and you’ll have everything you need for a more effective strategy.

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