Market segmentation identifies a portion of the market with similar characteristics, needs, habits and consumer preferences. Although human behavior seems subjective and abstract, it is possible to quantify it, and it is through segmentation that this happens.
When this exercise is carried out, the company can better understand the public and direct its communication and marketing strategy in the best possible way. That’s why this is one of the most effective tools for professionals who need to understand their target audience and, based on that, develop campaigns to sell products and services.
But do you understand what market segmentation is? What does it mean in practice, and how does it work? This article will inform you about its concept, applications and other essential information on the subject. If you are interested, continue reading.
What Does Market Segmentation Mean?
Market segmentation, as the name implies, divides the various consumers of a product/service into clusters (segments). People in the same group must share similar characteristics and usually have one or more aspects in common between them.
Several criteria affect purchasing decisions:
- age range;
- buying and consumption habits;
- relationship with organizations;
- socioeconomic index;
- and others.
There are different reasons why market segmentation is a crucial practice nowadays. But one of the main ones is the creation of personalized marketing campaigns for each segment. Another use of segmentation is to develop a company’s sales cycle, to ensure that this process is more efficient.
In summary, it seeks to solve a significant problem in communication and marketing: to generate more sales conversions and develop personalized marketing campaigns and communication strategies according to the needs of the segments carried out.
Why Should I Segment The Market?
Segmenting the target audience is a practice that positively affects the use of company resources: time, money, people and others. This is because it gives margins to important information from the public interested in purchasing the product or service, which allows the creation of more personalized campaigns, thus reducing the risks of ineffective actions.
But segmentation is also essential for prioritizing target audiences. It highlights potential consumers for the purchase of a specific product; communication and marketing professionals can, at that moment, allocate their attention and resources to that product of most significant interest to consumers.
The Main Segmentation Methods
Because segmentation is based on collecting different data, companies must try to know their audience and divide it into clusters according to the specific aspects defined.
Nowadays, different methods can be adopted for this segmentation process. We separate the main ones. Check it out below.
The market research gives the company a better idea of who consumers are and how they behave and relate to brands. Because, from it, tastes are identified, how people act at the time of purchase, what criteria they use in the decision-making process of an investment and other information. Therefore, through market research, the company starts to:
- understand if your products/services are of interest to the target audience;
- be clear about what to do to advertise your products or services;
- identify changes in positioning;
- direct the entire process of building communication and marketing.
As mentioned here, people have different education, economic class and behavior. Despite this, it is possible to identify common characteristics in people who opt for a product or service when it comes to the purchase decision.
By extracting this information, the company can uniquely position its brand in the market and meet the desires and needs of the public with characteristics in common. Through this, it is still possible to work on the company’s image and thus facilitate the entire sales process.
Identification Of The Target Audience
It is difficult for a company to please everyone, so it is more accessible to direct its sales efforts to people most interested in its products or services.
For example, e-commerce of sporting goods can dedicate its campaigns to the public that is in contact with some physical activity. Still, it may also find consumers who like to wear more casual fashion daily and adhere to this style.
By identifying this, it is possible to build specific communication for each segment of people because each one demands a different type of work.
Therefore, identifying the public before putting any marketing campaign on the street is essential to find and separate consumers into interest groups and better direct the work.
How To Do Market Segmentation
To do market segmentation, the first step must be to define the objectives. That is, being clear about why you want to segment your audience, thinking about how this segmentation will be used in the future and already considering which groups will be divided.
Soon after, defining which criteria will make a difference for your company is essential. Does the consumer lifestyle matter? What level of education should be considered? Is your product or service aimed at a specific age group? List what information is relevant to gather the correct data about your audience later.