The article Finding out Who Your Customers Are introduced the subject of identifying a target audience. Segmentation is a more sophisticated but extremely useful technique for doing this.
It means splitting your audience up into groups. Each of these groups should be noticeably different from each other, but the members of a group should be similar. They don’t need to be identical, just similar enough to warrant a common marketing approach. These groups can then be targeted in the manner most appropriate for them.
Segmentation in Action
Imagine a group of families aged 30 to 45 with two teenage children where both partners work and who live in a 3 or 4 bedroom home in a neighbourhood with similar families. It’s easy to picture the types of products and services they might be interested in.
Alternatively, your product may appeal more to 21 to 28 year old single females in professional occupations who live in city centre apartments.
See the difference? Splitting your customers like this would create two very different marketing approaches. A single approach may not attract sufficient sales from either group, but two carefully targeted approaches could generate substantial sales from both groups.
Segmentation Techniques
There are several potential approaches to segmentation, each of which can be applied whether you are selling to individuals or businesses.
- Demographics - these are factors like age, the area lived in (i.e. postcode or zip code), education level, income, family make-up, etc. When selling to businesses it could be turnover, number of employees, whether office or factory based, the industry they operate in or perhaps occupying a single geographical location.
- Lifestyle and attitudes – some people want adventure and excitement, the thrill of trying something new or being one of the first. Others prefer a more traditional approach and rely on safety and security messages.
- Purchase process – do you have a group of customers who prefer personal interaction and would like to see a sales person or visit a shop, perhaps as part of ‘retail therapy’? There may also be another group who don’t want to see anyone and would rather buy online in the comfort of their own home at a time that suits them.
- Benefits sought – some people buy from a supplier because they are the cheapest, others look for quality of advice. Identify what your customers would prefer and the positioning you should have.
- Usage – how do you use your computer? Is it for work or occasional surfing? The choice will determine both the computer plus the software and peripherals used. What do your customers use your product for?
Multi-level Segmentation
It’s possible to have multi-level groups. For example, people in the same age group may be further split between those wanting something more adventurous or those who prefer physical shopping rather the online environment.
Don’t try to shoehorn groups into areas where they don’t fit. Instead, accept that multiple groups can create more work and complexity but also greater returns if you tackle each one individually.
The UK’s Chartered Institute of Marketing recently published a Shape the Agenda paper on segmentation which explores this subject in more detail. Alternatively, if you want some inspiration on how to identify your most appropriate segments, read How to Conduct Market Research.
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