Every day, the competition in the field of marketing and digital marketing becomes more intense. Because every day more and more businesses decide to offer their products on the site and application, and as a result, use the facilities of the web space for advertising. In addition, new startups are also entering the market.

So the digital marketer’s work becomes more and more difficult. In this very busy environment, he must convey the voice of the business to his special audience/customer. Many businesses do not advertise the same product or service to the entire market. Because the whole market cannot be their customer for various reasons. Some goods and services have features that make them attractive to a segment of the market.

For example, if I’m a startup that created an app to help improve the quality of life and mental health of working mothers, it wouldn’t be logical or wise to promote this app to men or the elderly or teenagers. Users and potential customers of this application are a very specific group with specific characteristics. Or, for example, some very special and expensive perfumes have their own small and special market. The makers of these perfumes don’t come to spend money and advertise them to everyone and everywhere.

Therefore, marketing and advertising should be more targeted. That is, the marketer must first find the audience. Find out where they are and what they are doing, and then prepare a proper advertisement for them in their own language and put it in front of their eyes. It is only in this way that the marketer’s voice reaches his audience.

This is exactly what many marketers do and it has a specific name in marketing: Market Segmentation.

What is market segmentation? What are the benefits for businesses? What are its types and by what criteria can the market be divided? These are the questions that I will answer next. I will give some examples to clarify this statement.

What is market segmentation?

Segmentation or segmentation of the market is a concept and is a task that is included in the set of marketing strategy or digital marketing of businesses. Of course, it is possible to segment the market in the form of the STP marketing model and its first stage (Segmentation). However, market segmentation is used to make marketing more effective and targeted.

Market segmentation is a term in marketing that refers to grouping potential customers into groups and segments with similar needs and similar responses to marketing activities. Market segmentation seeks to identify target groups among customers in order to attract them by branding and appropriate products.

There are different types of market segmentation and it is done based on criteria. It is clear that when classification and division are to be done, there must be a basic standard. Before dealing with its types and criteria, we need to answer the question of what benefits market segmentation has for businesses, in addition to what we have said so far.

Benefits of market segmentation for businesses and digital marketers

The benefits of market segmentation can be divided into two categories: the benefits it has for businesses in general and the benefits it has for digital marketing and marketers. First, I will go to the benefits of Segmentation for businesses. Research findings published in Harvard Business Review have shown that:

81% of company managers consider segmentation necessary to increase profits.

In addition to the effect that segmentation has on business profitability and better sales:

  • It attracts the right customers to the business, those who are ready to buy and are more likely to stay loyal. This is important in building and strengthening Brand Equity.
  • The business and brand differentiates itself from competitors much more easily. And it is much easier to find and build your niche market in the market.
  • It helps the business in designing and producing products based on the main needs and demands of customers.

The advantages of market segmentation for marketing can be summarized as follows:

  • Identifying the main audience of messages and advertisements from the very beginning;
  • Identifying the place of appropriate advertisements and the tone and type of effective advertisements;
  • Reducing the costs of audience attraction and unsuccessful advertising;
  • Developing stronger and more targeted marketing strategies.

Types of market segmentation

Market segmentation is done on two levels. Segmentation starts from a general segmentation and reaches more detailed and specific segmentation or segments. First of all, the business must determine how it wants to divide the market into two large groups. For example, do I want to segment the market based on people’s common needs? That is, my market becomes a group with some common needs and the rest. For example, elderly people who lost their spouses and are alone, and others.

Or should the market be divided into two categories based on specific and distinct characteristics? For example, women and the rest of the market or working mothers and the rest. Or the same reaction to the product should be used as a criterion. For example, the group that must buy every new iPhone that comes to the market and can afford it, and the rest.

Therefore, at the first level, there are three types of macro division:

  • Homogeneous Segments that are separated from the market based on Homogeneity (common needs) and placed in a group;
  • Distinctive Segments that are separated from the market based on Distinction;
  • Segments with Similar Reaction that are separated from the market based on a similar reaction to the product.

Market segmentation criteria

Now that the business has separated a group or large groups of customers from the market, it must find more specific customers within each group based on criteria. Division at the second level or more detailed division is the same. For example, in the group of working mothers, a business may only be able to serve working mothers in a certain city or region. So, using the criterion of the place of residence, the group of working mothers is divided into two groups: working mothers who live in a specific area and the rest.

Businesses usually divide groups into smaller segments by 4 criteria (demographic, geographic, psychological and behavioral). These are very general criteria for market segmentation. A business or digital marketer may decide to use other criteria that are more specific. For example, maybe a business segments their customers based on the type of transactions and previous purchases (Transactional segmentation).

Each of these criteria actually asks a question and based on the answer that the business is looking for in the customer, it places the customer in its own section. that’s mean:

Demographic segmentation

Puts potential customers into a specific segment or group based on who they are. With this criterion, the age, gender, income, level of education, religion, occupation, etc. of the customers are asked.

Psychographic segmentation

It places potential customers into a specific segment or group based on their personality, interests, motivations, values, goals, lifestyle, etc.

Geographic segmentation

Asks about the place of residence of potential customers.

Behavioral segmentation

Customers are placed in a specific group (e.g. loyal customers) based on their buying and spending habits and patterns, interactions they had with the website or business.

Segmentation steps and an example of market segmentation

Although various examples were mentioned during the discussion, it is better to review all the stages of market segmentation with an example to clarify the issue. Consider a sports shoe manufacturer (such as Reebok). How should this business segment its market?

  • The first stage begins with the study of the market and the type of business and products it wants to market. At this stage, the business must answer the question, with what purpose does it want to segment the market? Does he want to introduce a new product to the market and he wants to design and produce it exactly according to the market’s needs, so he wants to know the customers exactly? Has he produced a new product and now needs segmentation to develop a marketing or retargeting strategy?
  • The second step is to define the market in its broadest sense. For the manufacturer of sports shoes: All those who buy and wear sports shoes.
  • The third step is to segment the macro market and choose one or two types of segmentation. A sports shoe manufacturer may only consider common needs. So the market is divided into professional athletes and those who need sports shoes for sports or daily walking.
  • The fourth stage of the research is to know each group and find the best criteria or criteria (out of those 4 criteria or any other criteria obtained as a result of the research) and to segment each group. Here too, that business may divide each group into several parts. For example, the group of professional athletes based on gender and the type of sport (shoes of soccer players, volleyball players, runners, etc.) And the group of regular customers based on age, gender and physical characteristics (children’s, women’s, men’s shoes, shoes for those with back pain or flat feet, etc.).
  • The last step is segmentation testing and evaluation. According to the purpose of segmentation, different methods may be used for evaluation at this stage.

Leave a Reply

Your email address will not be published. Required fields are marked *