Market segmentation: what it is and how to do it
Posted: Tue Dec 03, 2024 7:02 am
Market segmentation is a key concept in modern marketing and is based on the idea that companies uk phone number list can divide the market into homogeneous groups of customers, in order to create specific marketing messages and products/services suited to their needs . According to the theories of Philip Kotler, one of the most famous marketing experts in the world, there are four types of market segmentation : geographic, demographic, psychographic and behavioral.
Types of segmentation according to Kotler
Geographic segmentation is based on the geographic location of customers and can be useful for companies trying to reach specific regions of the world, or for companies operating in markets where consumer preferences are influenced by local culture or climate.
Demographic segmentation focuses on customer demographics, such as age, gender, income, education, and marital status. This segmentation can be useful for companies that are trying to reach specific age or income groups.
Psychographic segmentation focuses on customer behaviors and attitudes, and can be useful for companies trying to reach specific groups of consumers based on things like their motivations, emotions, or political views.
Finally, behavioral segmentation focuses on customer behaviors in relation to purchasing products or services, dividing customers based on factors such as consumer loyalty level or purchase frequency.
How is market segmentation done?
To segment the market, companies must follow a few steps. First, they must identify the segmentation variables that are relevant to their product or service. These variables can be geographic, demographic, psychographic, or behavioral.
Second, companies need to collect data on each segmentation variable. For example, for demographic segmentation, companies should collect data on age, gender, income, education, and marital status. For psychographic segmentation, companies should collect data on customer behaviors and attitudes.
Third, companies must divide the market into homogeneous groups of customers based on segmentation variables. These groups of customers are known as market segments.
Fourth, companies need to develop detailed profiles for each market segment. These profiles should include information about the size of the market segment, customer needs and preferences, purchasing trends, and factors that influence purchasing.
Finally, companies need to develop specific marketing strategies for each market segment. These strategies should include personalized marketing messages, segment-specific products and services, and targeted marketing channels.
Why Segmentation is Important for Businesses
Market segmentation is a crucial concept for businesses for several reasons: First , it allows companies to identify the most promising market segments and focus their marketing resources on these segments. Second, it allows you to identify customer needs and preferences more precisely, allowing companies to develop specific products and services for each market segment, as well as create personalized marketing messages . Third, it allows you to measure the effectiveness of your marketing strategies and make adjustments in real time.
However, market segmentation can be a difficult task to implement, especially for companies that are inexperienced in the industry or operate in complex markets. In this case, quantitative market segmentation techniques can be useful. These techniques use statistical methods to identify the most promising market segments, based on data such as age, income, purchasing behavior, and other factors.
HAVE YOU EVER SEGMENTED YOUR CUSTOMERS? HERE AT DELION WE DO THAT TOO
Quantitative Market Segmentation Methods
Quantitative market segmentation methods have been developed since the 1970s, in response to the growing need for companies to better understand consumer needs and preferences. These methods have become increasingly sophisticated, using advanced data analysis and machine learning techniques.
One of the most common market segmentation techniques is cluster analysis . This technique uses statistical methods to identify groups of similar customers based on their demographic, behavioral, or psychographic characteristics. Cluster analysis is useful because it allows companies to identify the most promising market segments.
Types of segmentation according to Kotler
Geographic segmentation is based on the geographic location of customers and can be useful for companies trying to reach specific regions of the world, or for companies operating in markets where consumer preferences are influenced by local culture or climate.
Demographic segmentation focuses on customer demographics, such as age, gender, income, education, and marital status. This segmentation can be useful for companies that are trying to reach specific age or income groups.
Psychographic segmentation focuses on customer behaviors and attitudes, and can be useful for companies trying to reach specific groups of consumers based on things like their motivations, emotions, or political views.
Finally, behavioral segmentation focuses on customer behaviors in relation to purchasing products or services, dividing customers based on factors such as consumer loyalty level or purchase frequency.
How is market segmentation done?
To segment the market, companies must follow a few steps. First, they must identify the segmentation variables that are relevant to their product or service. These variables can be geographic, demographic, psychographic, or behavioral.
Second, companies need to collect data on each segmentation variable. For example, for demographic segmentation, companies should collect data on age, gender, income, education, and marital status. For psychographic segmentation, companies should collect data on customer behaviors and attitudes.
Third, companies must divide the market into homogeneous groups of customers based on segmentation variables. These groups of customers are known as market segments.
Fourth, companies need to develop detailed profiles for each market segment. These profiles should include information about the size of the market segment, customer needs and preferences, purchasing trends, and factors that influence purchasing.
Finally, companies need to develop specific marketing strategies for each market segment. These strategies should include personalized marketing messages, segment-specific products and services, and targeted marketing channels.
Why Segmentation is Important for Businesses
Market segmentation is a crucial concept for businesses for several reasons: First , it allows companies to identify the most promising market segments and focus their marketing resources on these segments. Second, it allows you to identify customer needs and preferences more precisely, allowing companies to develop specific products and services for each market segment, as well as create personalized marketing messages . Third, it allows you to measure the effectiveness of your marketing strategies and make adjustments in real time.
However, market segmentation can be a difficult task to implement, especially for companies that are inexperienced in the industry or operate in complex markets. In this case, quantitative market segmentation techniques can be useful. These techniques use statistical methods to identify the most promising market segments, based on data such as age, income, purchasing behavior, and other factors.
HAVE YOU EVER SEGMENTED YOUR CUSTOMERS? HERE AT DELION WE DO THAT TOO
Quantitative Market Segmentation Methods
Quantitative market segmentation methods have been developed since the 1970s, in response to the growing need for companies to better understand consumer needs and preferences. These methods have become increasingly sophisticated, using advanced data analysis and machine learning techniques.
One of the most common market segmentation techniques is cluster analysis . This technique uses statistical methods to identify groups of similar customers based on their demographic, behavioral, or psychographic characteristics. Cluster analysis is useful because it allows companies to identify the most promising market segments.