{"id":46388,"date":"2022-03-25T21:32:51","date_gmt":"2022-03-25T21:32:51","guid":{"rendered":"https:\/\/inmoment.com\/xi-terms\/market-segmentation\/"},"modified":"2023-04-04T19:08:32","modified_gmt":"2023-04-05T01:08:32","slug":"market-segmentation","status":"publish","type":"glossary-terms","link":"https:\/\/inmoment.com\/en-au\/xi-terms\/market-segmentation\/","title":{"rendered":"Market Segmentation"},"content":{"rendered":"\n

It\u2019s crucial that brands understand the experiences they provide and whether or not they satisfy the needs of customers, employees, and beyond. Effective market segmentation is crucial to that goal. Every business should know the ins and outs of how their marketing, advertising, and sales team measures up. Here\u2019s a brief introduction into the thinking behind market segmentation.<\/p>\n\n\n\n

What Is Market Segmentation?<\/h2>\n\n\n\n

Hopefully, your business has more than one customer. If not, that\u2019s okay because market segmentation isn\u2019t primarily concerned with how many customers you have. It\u2019s more about what type <\/em>of customers. Each customer has their own needs but oftentimes some customers align in a significant way. Market segmentation recognises this reality and is a process to capitalise on that. The main ethos is this: what if we could split our customers into distinct groups\u2014based on specific factors\u2014so we can learn how to market our products to the right people?<\/p>\n\n\n\n

In short, market segmentation is a research strategy that separates different consumers in order to study their preferences, needs, and perspectives in order to optimise business practices, products, and experiences.<\/p>\n\n\n\n

The 4 Types of Market Segmentation<\/h2>\n\n\n\n

There are four common types of strategies that businesses use to segment their customer base. Note that this list is not exhaustive and businesses have found other relevant factors that influence their customers\u2019 needs.<\/p>\n\n\n\n

  1. Geographically:<\/strong> segmenting customers based on geographic borders, such as cities, states, countries, etc.<\/li>
  2. Demographically:<\/strong> segmenting customers based on generation, education level, ethnicity, family size, etc.<\/li>
  3. Psychographically:<\/strong> segmenting customers based on lifestyle, personality, values, interests, etc.<\/li>
  4. Behaviourally:<\/strong> segmenting customers based on their habits and how they go about their decision making or buying processes.<\/li><\/ol>\n\n\n\n

    4 Examples of Market Segmentation<\/strong><\/h2>\n\n\n\n

    Here\u2019s an example of each type of segmentation to give you a better understanding.<\/p>\n\n\n\n

    Geographic:<\/strong> Imagine a retail store selling to two customers, one who lives in a cosmopolitan city and the other in a rural town. Each would have different expectations and wants for the clothes they wear. Depending on the climate, how often they\u2019re outside, or the appropriate clothing for a social setting, these two customers are unique enough to warrant a customised marketing strategy.<\/p>\n\n\n\n

    Demographic:<\/strong> Ever wonder why fast food restaurants have a totally different menu in another country? Well, it\u2019s because food preferences are hugely influenced by one\u2019s ethnic background. That\u2019s why McDonald\u2019s serves a Cheese Tsukimi burger in Japan. And it\u2019s also the reason why the items supplied in grocery stores change depending on the most common ethnicities in the surrounding local community.<\/p>\n\n\n\n

    Psychographic:<\/strong> Let\u2019s say a large portion of a brand\u2019s customers are Millennials. This generation has been widely characterised as one who cares about the ethical impact of what they purchase. From the environment to social justice movements, millennials want their experiences to mean something. So the business decides to create a policy where 10% of all proceeds go directly to a refugee charity.<\/p>\n\n\n\n

    Behavioural:<\/strong> Brands frequently provide deals that only apply when customers shop online. It usually looks something like, \u201cBuy up to $50 to get 10% off\u201d or \u201cFree shipping with a purchase of $25 or more\u201d. Businesses offer these not because they like their online customers more, but because online shoppers have different spending tendencies. There could be many factors that contribute to that case. It could be how easy it is to click so many items into one\u2019s cart or the instant gratification of purchasing online. Whatever the reason, the reality is that shoppers are more willing to buy into those deals when it\u2019s done digitally.<\/p>\n\n\n\n

    3 Benefits of Market Segmentation<\/h2>\n\n\n\n

    Market segmentation can look different depending on your business model, but at the end of the day the goal is the same: better understanding your target market. And that can lead to significant business value:<\/p>\n\n\n\n

    1. Increased Customer Retention:<\/strong> Knowing your customers well will lead to a sharpened customer journey because your brand will know how and which marketing messages will resonate with customers. And we don\u2019t have to tell you that an excellent customer experience will increase the likelihood of customers staying loyal to your business.<\/li>
    2. Differentiation from Competitors:<\/strong> As your company shapes exactly how their products and services can appeal to a variety of consumers, your branding will evolve along with that process. This allows your brand to differentiate from competitors because your target audiences aren\u2019t just a big question mark.<\/li>
    3. Opens Up Marketing Opportunities:<\/strong> Segmenting your market will open up opportunities to strategise and restrategise. Since market segmentation is an ongoing process, it informs and guides your marketing teams throughout business decisions. Customers don\u2019t stay stagnant forever, they transform as the world transforms but segmenting your market can make your brand aware of opportunities when they arise.<\/li><\/ol>\n\n\n\n

      What Does Effective Market Segmentation Look Like?<\/h2>\n\n\n\n

      One of the biggest challenges marketers face is making sure the products actually align with a customer segment. You may have market access to a large customer base but do those customers have enough buying power or will they even want the product you\u2019re offering? That\u2019s why it\u2019s more important to focus on targeting the money instead of the segment. Market segmentation doesn\u2019t necessarily mean you have to market to each and every segment you discover. Choose the ones most likely to engage with your product and that will lead to a positive return on investment (ROI). <\/p>\n\n\n\n

      Pearl-Plaza Can Perfect Market Segmentation For You<\/strong><\/h2>\n\n\n\n

      Don\u2019t know where to go from here? Pearl-Plaza can help! Pearl-Plaza is a commited to aiding businesses with our award-winning technology through the understanding that experiences involve the needs of customers, employees, and the business. And as one of the top 50 analytics and market research<\/a> (MX) brands, we\u2019re dedicated to teaching and guiding businesses on how to utilise their data when making key business decisions. Our specialised Market Experience Cloud<\/a> along with expert consultants is available to help you in garnering as much intelligence from the market as possible. Contact us today for a demo<\/a>.<\/p>\n\n\n

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      Further Reading<\/h2>\n\t\t\n\t\t
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      How to Wield Market Research Methodology and Technology to Grow Your Audience Segments<\/a><\/p>\n\t\t\t\n\t\t\t\n\t\t\t\t\t<\/div>\n\n\t\t

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      Connecting CX & Marketing: How to Create Customer-Centric Experiences That Deliver Business Results<\/a><\/p>\n\t\t\t\n\t\t\t\n\t\t\t\t\t<\/div>\n\n\t\t

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      VoC Isn\u2019t Market Research, But Here\u2019s Why Your Brand Needs Both<\/a><\/p>\n\t\t\t\n\t\t\t\n\t\t\t\t\t<\/div>\n\n\t\t

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