Market Segmentation? Everyone is not your Customer
Understanding the principal aspects of market segmentation can give you a visible boom in your ongoing business by 10%. Hence, when you have created your product or service, market segmentation becomes a keen part of your marketing strategy. It is one of the first steps to take before starting your marketing campaign. #TWN
Before getting into the core, let me ask you a question. We all know Nicola Tesla! Right? He was one of the renowned scientists of all time but did you know he was also one of the least fortunate scientists in the world. He spent the last few days of his prominent life in a hotel room alone. However, Thomas Edison was also a great scientist of the same era and probably the biggest rival of Tesla. Even though he was a scientist just like Tesla, he lived his life to the fullest he had managed to live a life of luxury. What did he do differently? While Tesla just focused on inventions, he was never able to sell himself, while Edison, along with being a great inventor, was also a great marketer. He not only invented things but also sold them hence the financial difference.
So you are telling me marketing is crucial, but how do I decide whom to target? Well, my friend, this is the point where the market segmentation comes into action.
Definition of Market Segmentation
Market segmentation is nothing but dividing the market as per our product. We can decide whom to approach when we are promoting our product based on several factors such as sex, geography, income, needs, psychology, etc.
Market Segmentation helps you to promote your product to your target audience.
Why Market Segmentation?
So, I have another question for you. Do you find youtube ads irritating and irrelevant? It happens because 99% of the time, we do not require the product shown in the ads. It happens because of the poor segmentation of the market by the company running the ad campaign.
To avoid this kind of mistake, a company, no matter big or small must do a proper segmentation of the market. A company enjoys around 10% growth in its profits by following a proper and specific market segmentation strategy.
Here are five benefits that you can enjoy with a proper market segment:
1. Reaching the Target Audience
Market segmentation helps us to figure out who is our actual target audience, making it a lot easier to reach them directly.
As we now know whom to target? The capital we were spending on the non-target audience is retained.
3. Provides a path for marketing
After segmentation, we can effortlessly create strategies on whom to target and how to target.
4. Increase in conversion rate
Now that we know who the consumers are, who need our product. Hence the conversion rates are bound to increase.
5. Helps in the selection of the right media
When we are clear with who to target, we can easily decide with which media we can reach them like a younger audience can be reached by social media, and a more mature audience can be reached by News channels and paper articles.
Types of Market Segmentation
We can divide market segmentation into four parts:
Let’s take a deep dive into these topics.
This segmentation is based on observable characteristics like age, sex, income, education, profession, religion, and similar aspects. This segmentation, along with other segmentations, helps us to be more specific about who is our target audience. For instance, Kinder Joy - a product specifically designed for kids. However, it was launched in the market with two categories - Kinder Joy for girls and Kinder Joy for boys.
Psychographic is somewhat similar to Demographic, but unlike demographic, it does not focus on the visible characteristics and focuses more on the mental and emotional aspects of the consumers such as their beliefs, values, attitude, personality.
Let's understand this by an example- Let us assume that you are a single male in your early 20s not living with your family. You will be a very laid-back individual buying more of your wants than your actual needs, but when the same person is in his late 20s and now married, he will be more specific about where to spend and will be spending more on his needs and will often compromise with their wants.
This segmentation is entirely based on location. That is who we want to target lives in which location? Does he live in an urban area or a rural area? If he lives in an urban area, which tier city is he living in?
We can understand this by the example of Anand Mahindra. While making SUVs, its prime focus is on people living in more urban areas, while Mahindra's focus changes when it comes to tractors which is a need of the people living in the rural areas.
This kind of segmentation is based on different kinds of behaviors that a person shows while interacting with the company. This segmentation is based on the following criteria:-
- Consumers knowledge about the product
- His attitude towards the product
- His likes and dislikes
- His response to the product
- His brand loyalty
E.g. My friend never eats any biscuits other than that of Britannia. He’ll go hungry but won’t eat any other biscuits because he trusts in the brand. It could be counted as brand loyalty.
The main focus of our article was to make the reader understand the concept of market segmentation. Making you understand the process of dividing the market according to your business goals and products was the prime focus of this article.
Segmenting a market becomes a crucial part of your marketing strategy once you are done with the product design and development. Going into the market, blindly following the trend, and investing in every aspect of the market will take you nowhere. Hence making a proper strategy for your marketing can help you with the streamlined creation of your strategy from the vision of achieving market goals.