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arget market segmentation helps you market better to potential customers. It's crucial to boost sales and increase the chances of long-term success. Let's take a closer look at what this term means and how you can use it to focus your marketing efforts.
What is Target Market Segmentation, and Why Does It Matter?
Target marketing segmentation is where you divide your potential customers into segments. You'll then focus on a few segments (or groups of people) that align most with your product or services. Doing so helps you tap into their needs and desires to attract new sales and increase longevity. You can also drill it down further by creating a marketing strategy for more specific groups of people - such as using different promotions and how you deliver your products or services. That way, it helps your marketing campaigns be more cost-effective, allowing you to spend time only on one focus at a time. Let's say you have a wedding and event photography business. Instead of spending thousands of dollars on print ads in random publications, you'll first see who your target customers are. Based on this information, you'll then focus your marketing campaigns by placing ads in publications where your target audience is most likely to see them. That way, it'll increase the chances you'll get a return on your investment.
How Do I Segment My Target Market?
The good news is that you can approach segmenting the market in many ways based on your company's market research. Four common ways are behavioral, demographic, geographic, and psychographic segmentation. Here's a bit more detail on the types of market segmentation:
This segment looks at how consumers interact with brands and products. For instance, you can look at which platforms your ideal customer most frequents, their social media usage, and their customer journey online.
Businesses tend to feel this is the most important criteria to identify their target market. These include age, gender, education level, income level, social class, nationality, family size, marital status, and religion. Knowing these demographics about your ideal customer can help you with how you want to create marketing campaigns (Gen Xers may not understand the slang Gen Z tends to use, for instance).
Yes, this segment has to do with details on a consumer's location or where they live. Aside from nationality, you can consider their state, county, town, or city.
Businesses can look at elements such as parts of a consumer's personality traits - like whether they lean towards being an extrovert or introvert. You can even consider a consumer's belief systems and lifestyles and consumer behavior.
How to Effectively Create Target Market Segmentation
Creating a target market analysis will help you understand the types of consumers you need to market to and will even help you break into niche markets. Don't worry; creating one isn't a difficult task, though you'll want to make sure you take the time to get it right to ensure effective marketing messages. Here are four steps you can take.
1. Gather Accurate and Current Data
Gathering details from outside sources can be incredibly valuable to help you gain better insights into your market segment, potential customers, and even your industry as a whole. Plus, if you're just starting out, you may not have enough internal data to get a good enough view of what customer groups you need to target based on customer needs. The challenge when gathering data is that there is plenty out there. Make sure what you're using is both current and accurate.
2. Divide up Market Based on Chosen Characteristics
Now's the time to wade through data and eliminate what isn't relevant to your target market. You'll want to create customer segmentations. Consumers who are most likely attracted to your brand, product, or service will share the same types of characteristics. Identifying these will ensure you're efficient when creating your messaging in your marketing campaigns. Here are some questions to help you get the ball rolling:
- What do my target customers have in common?
- How does my target customer research products and services?
- How does my target define themselves?
Once you have some shared characteristics, you can then use them to create customer profiles or personas. It will also help give you even better insight into what really matters to them, plus any trends and insights to help you develop more ideas to increase sales.
3. Gather Intel on Your Competitors
Understanding the competition in the market is critical. This will tell you exactly what your product or service is up against and what tactics you need to take on to compete. Ask questions like: How many businesses have a comparable offering to you? What's their pricing structure? What reach do they have? Who do they appeal to most? You may find that one group of people is very well served by competitors while another group has yet to be tapped into. Answering these questions will help you identify the most profitable group to target in your marketing plans, as well as identify what types of marketing communications may or may not have worked prior.
4. Use Market Segmentation As Part of Your Business Plan
Now that you've identified your target segment, it's time to use this knowledge as part of your overall business plan. Yes, you want to use the data to create better marketing plans, but this data can also help you tap into other insights. Think about how you can develop new products and services, order the right amount of stock, and even anticipate demand at certain months of the year. That is the essence of knowing your market. For instance, if you know you want to test certain products, look at how you can further segment your target market to see whether you should include this new item as part of your regular offerings. Or, if you know that sales are slow at a particular time of the year, you can look at the data to create campaigns to encourage quick sales.
Using Target Market Segmentation in Your Marketing Strategy
All in all, the goal of target market segmentation is to inform your company's overall business and marketing strategy. It'll help you easily create goals and develop ideas that are more audience-centric. Doing so means you know what they want and when they want it. This will increase brand loyalty in your customer base. Imagine how your business will benefit from this wealth of knowledge!
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