Understanding Market Segmentation
Picture this. Youâre having a great day out, maybe something simple like a walk along the river or an afternoon with friends. Yet you notice the ads that catch your eye are supposedly different to those that appeal to others. Market segmentation is why you see ads for those Balenciaga platforms while your friend gets reminders about their next face yoga workshop.
And no, itâs not always the result of poor ad targeting, though if you keep seeing ads for that hyper expensive puffer jacket by Moncler when youâre in no position to even think about it - it's probably time to update your search preferences. But more than ad targeting and feed curation, segmentation plays a big part in the understanding of consumers and how best to reach them. The most important thing when thinking about who you're selling to is asking yourself why they should want what you're offering.
What sets your product or service apart. And why would someone spend time and effort buying from you instead of from someone else. For example, let's say you're selling something from home - selling to someone in the same city as you might be easier because shipping times are more or less shorter, but if you were one of the few places selling this product or service, you'd also have a wider market pool to cater to.
That's segmentation at play. A final thought on market segmentation and its effectiveness lies in how much more personal our efforts get with it. Narrowing down what appeals to customers makes us more in tune with their needs and more likely to build a loyal base over time.
Demographic Targeting Techniques
Imagine walking into a skincare shop, looking for something as simple as a face wash and being met by a salesperson trying to sell you eye cream. You may have a few laugh lines but youâre not sure if itâs that deep yet. Do you really need an eye cream at your age.
Weâve all been there. More or less. When brands use outdated demographic targeting techniques (or no targeting at all), the result can be similar to the scenario described above. Demographic targeting is about identifying which of your customers belong to which demographic.
It involves using various factors like age, gender, income, education, location and occupation to categorise your customers. Using these categories, you can identify who are likely to buy from you and what their shopping patterns are like. If your products appeal to more than one segment of people, for example - say you sell everything from makeup removers to eye creams - creating different personas will help you target them better.
Researching each group thoroughly can be beneficial for segmentation as this allows brands to build ads that are more relevant to each segment. The approach needs constant reworking though because customer behaviour is always changing and it can sometimes feel like catching up with an old friend who has gone through several life changes in one year. Some ways that brands find out about demographics are through forms filled out while signing up or making purchases and tracking buyer behaviour over time.
This enables companies to track buyer behaviour over time and refine their demographic targeting strategies according to the data they gather regularly.
Psychographic Segmentation Strategies
I was at the shops today and saw a group of three friends, all around the same age. The similarities ended there, though. While one was dressed in athleisure, the other two wore cottage-core inspired looks and K-Pop band T-shirts respectively.
They were likely shopping for their individual tastes, which probably extend beyond their choice of outfits. Sort of. Psychographic segmentation is a method of identifying different types of customers based on their interests, beliefs, values, personalities, priorities, and lifestyles. While it may seem like a broad category to cover at first glance, digging deeper uncovers several segments that people across age groups fall into â from those who enjoy socialising to those who prefer to keep to themselves or prioritise their fitness over everything else.
In this scenario, knowing what your audience likes doing in their downtime gives you an insight into other parts of their lives too. Sort of. Information collected can then be used to create customer profiles and develop products or marketing strategies that appeal to them specifically. Psychographic segmentation can also help retain customers by refining loyalty strategies based on common values or interests â depending on the brandâs goals.
Psychographics are especially useful in fashion since a personâs style preferences are often closely tied to how they see themselves or want others to see them. This may sometimes differ from how they feel about themselves internally but is important nonetheless â especially when it comes to marketing strategies like ad placement or influencer-led campaigns since these customer segments often follow each other closely on social media. Customer surveys are the most effective way to collect this information but in its absence, purchase history often works just as well â with minor setbacks like missing out on audiences buying gifts for others without mentioning it during checkout.
It seems like interviewing current consumers is another efficient method but again, doesnât account for new markets or other types of buyers. Data gathered from such initiatives can be leveraged via targeted advertising on platforms like Facebook and Instagram and/or personalised email campaigns too.
Behavioral Segmentation Insights
So youâre watching telly and your Instagram starts serving up ads for the new thing that happened in the show ten minutes ago. Youâre not sure if itâs a product, or merch, or an experience but now itâs showing up in every ad. And if you make the mistake of clicking to check it out - even once - itâs over.
Behavioural segmentation is about understanding what your audience does on your website. Which products do they click on, spend time with, which ones do they add to cart and abandon. This gives you insights into where they drop off, what sort of creative content you can develop to address those hesitations, and how to reinforce their behaviour in a way that benefits you both.
I mean, you could get lost in this data for hours but thatâs where your filters come in. More or less. Knowing which behaviours matter, which platforms your customers are rather coming from, how theyâre spending time on your site, and even which regions they live in will help you target them better. You get deeper understanding of their purchase patterns and know whatâs likely to keep them coming back.
Itâs a little like being at a party and noticing people with similar interests crowding together. Maybe one group is having cocktails while another is sipping wine. If you know these tendencies before your next party, I think youâd plan ahead with more interesting cocktail recipes - maybe a wine tasting session too.
When used properly and with enough care not to cross boundaries, behavioural segmentation can be one of the most powerful tools in any brandâs kit.
Geographic Targeting Approaches
Weâve all had this moment. You walk past a group of South Asian people speaking a language you barely understand, but spot a few familiar words you think you know. Would it be easier to connect with them if you could speak their language.
Could you use these words in your next Instagram Reel, just to catch their attention and find common ground. I think the answer is a definite yes.
It seems like and the best way to leverage this approach is through location-based audience segmentation. For brands, it means that a large percentage of their target audiences can apparently be segmented based on where they live or work, or even the languages they speak in those locations. Itâs interesting to note that many communication channels today offer geographic targeting tools, including social media networks, search engines and many advertising platforms too. I find that for some brands working towards global expansion, hyper-local targeting can help them reach smaller communities around the world and have conversations with people who are primed for conversions.
Itâs like the classic âthink globally, act locallyâ approach but on steroids. The right audience located at the right place at the right time can fast-track your business growth strategy by simply removing the ambiguity from who youâre reaching out to. Instead of targeting an entire country as a market segment in itself, brands can identify which cities within that market make for more viable opportunities and allocate their resources towards those segments alone.
Measuring the Impact of Segmentation on Growth
If youâve ever wandered into a party not knowing anyone and wondered how to introduce yourself, youâd understand the reason for segmentation. You cannot just walk up to a clique of pals swapping stories about their favourite footy team and start talking about your love for Korean dramas. Sort of.
Well, not without being called a weirdo at least. Thatâs what segmentation is all about - making sure youâre making the right connections with the right people by introducing yourself as someone who gets them. More than just being able to introduce yourself, segmentation makes it easier for brands to connect with prospects more meaningfully.
Most businesses end up spending less on acquisition when they use customer data to drive decisions instead of expensive market surveys or focus groups. The question that usually stumps marketers isnât how do you do it but how do you know if it worked. Or even better - how well did it work. Measuring the impact of segmentation can be fairly complex, depending on how deep your segmentation is and what metrics youâre using to identify its success.
I mean, sure, there are reportedly industry averages, benchmarks, and other ways to check if what youâre doing works. But honestly. It takes a lot more time than most people think and involves more than looking at Google Analytics or pulling up an automated report.
It seems like segmentation is a whole new ballgame but itâs fun when you realise that connecting with customers better has always been the way brands have grown - this is just one way to get there faster and with less effort.