Guide for Novices on Market Division Strategies
Market segmentation is a crucial strategy in marketing, guiding decision-making processes and helping businesses take the right steps towards their target audience. This approach involves dividing a population based on specific factors such as geography, income group, or customer thinking and attitudes.
There are several criteria for market segmentation, each offering unique insights into customer behaviour and preferences.
- Demographic Segmentation: This method divides the population based on demographic factors such as age, gender, income, education, occupation, marital status, and more.
- Psychographic Segmentation: This approach focuses on lifestyle, values, personality, interests, and attitudes. It provides a deeper understanding of customer motivations and preferences, making it useful for tailoring messages and products.
- Behavioral Segmentation: This method centres around customer behaviours like usage patterns, brand loyalty, benefits sought, buying frequency, and occasions for product use. It helps create highly relevant marketing offers and improve customer loyalty.
- Geographic Segmentation: This criteria is based on location factors such as country, region, climate, population density, or cultural differences. It allows for customising products or campaigns to local cultural or environmental factors, improving relevance.
- Needs and Benefits Segmentation: This method focuses on the specific needs or benefits that customers seek from a product or service, enabling highly targeted marketing and increasing customer satisfaction.
- Firmographic Segmentation (for B2B): This approach is based on company attributes like industry, size, location, purchasing behaviour, and buying criteria. It helps prioritise high-potential accounts, tailor solutions, reduce sales and marketing costs, and improve product development.
- Transactional/RFM Segmentation: This method is based on the recency, frequency, and monetary value of purchases to identify valuable customer segments.
Each of these segmentation criteria offers distinct advantages. For instance, demographic segmentation is easy to measure and widely used, helping identify broad target groups with shared basic characteristics. Psychographic segmentation provides deeper insights into customer motivations and preferences, while behavioural segmentation focuses on actual consumer actions, leading to highly relevant marketing offers. Geographic segmentation helps customise products or campaigns to local cultural or environmental factors, and needs/benefits segmentation enables highly targeted marketing by addressing precise customer problems or desires. Firmographic segmentation is particularly useful for B2B marketing, helping prioritise high-potential accounts and improve product development.
By understanding and targeting different customer segments, companies can improve marketing efficiency, customer engagement, and overall business performance. However, it's important to note that market segmentation also has its limitations, which are discussed in detail in the linked article "Limitations of market segmentation."
For further learning, a video by Marketing91 on Market Segmentation is available, and a complete series on Segmentation can be found in the linked article "Segmentation." Additionally, the influence of market segmentation on decision making can be found in the linked article "How market segmentation influences decision making," and the reasons for using market segmentation can be found in the linked article "Why market segmentation is needed?"
Lastly, it's worth mentioning that STP (Segmentation, Targeting, and Positioning) are the three pillars of modern marketing management. The purpose of market segmentation is to match the needs of the customers, and it plays a significant role in deciding the marketing mix, target market, and positioning.
The use of psychographic segmentation and behavioral segmentation can offer unique insights into customers' motivations and preferences, making it possible to tailor messages and products more effectively. This helps businesses increase their understanding of their target audience and improve overall performance in their financial endeavors.
Implementing firmographic segmentation strategies can be particularly beneficial for businesses targeting other businesses, as it helps prioritise high-potential accounts, streamline sales and marketing efforts, and contribute to better product development and customer satisfaction.
