Market Segmenting

‘Market segmentation’ is the predecessor to ‘target marketing’; a former buzz-word in business circles. It was a buzz when it was first realised and implemented by the big businesses, it is now a reality of marketing in any capacity, perhaps more importantly, small and medium businesses on much more limited marketing budgets.

If you are thinking about marketing more effectively and at lower cost you must segment your market.

Every brand, product and service must segment its market to expect to connect with its customers. Segmenting allows the business to understand the different types of customers that the brand attracts and use this information to market more effectively and efficiently.

Proper market segmenting and implementation of target marketing will see your business have more sales and invest its marketing budget wisely than if it had not segmented. This leads to higher profits. It’s a no-brainer.

Markets can be segmented into infinite types of segments. This is how “new markets” are found; by looking at the market differently.

You can divide your market into any pattern that you can find with your customer base, group them and create a way to appeal to their unique needs.

The most common market segment is found through demographics.

• Gender – Females – Ladies nights
• Age – Baby boomers – Senior discounts
• Income – High income earners – Exclusive events
• Family types – i.e. Large families – Family packages

Market segments can be identified geographically if you can identify unique differences in the needs of markets from different locations; countries, cities or neighbourhoods.

Psychographic market segments are based on the differing personalities, behaviours, attitudes, values and lifestyles of your customers.

Market segmentation does not have to be so complicated to the point where you analyse customer’s belief systems for most types of products. It can be as simple as gender. For example, take the sugar free soft drink market. Coke Zero is marketed at males and Diet Coke is marketed at females. You will see Coke Zero promoted at sports venues and during sporting broadcasts. You will notice Diet Coke promoted predominantly at shopping malls and in women’s magazines.

This is the purpose of segmentation, to target and reach specific markets. However, you do not have to create different products to reach different market segments.

Market segmentation will require you to market specifically to the segments that you choose to pursue. This means that you will change marketing messages to appeal to particular people. For example, an investment scheme can promote:

• “Secure, peace-of-mind investment for your retirement” to the 50-60 year old market.
• “Maximise your savings in our reliable high performance fund” to 30-40 year old investment market.

These age segments have different priorities in their finances, yet a single investment product may be suitable for both markets.

To segment markets you must research your total market and the possible segmented markets.