Understanding market segmentation

If you have looked at any marketing books, read articles, seen marketing video clips, one of the terms that often comes up, is segmentation. They will go on about how you must understand it to be able to both effectively target your marketing and get the maximum return the spend. How it can alter brand perception, drive customers to or away from a business, how by changing which segments you advertise too can effect you bottom line.  It’s one of the big ‘tent pole’ things that every marketing expert goes on about but more often than not actually go in to simple enough detail that anyone can understand and apply to their business. We are going to do that for you and help you understand market segmentation and how it can alter people’s perception of your business.

First things first. What is market segmentation. Simply put, it is understanding the buying habits of different groups of people, usually broken down it to simple categories to help make judgements on their relatives interest in a company’s product or service. Most big advertising companies run lots of surveys to find out people’s preferences and then analyze it based on categories like age, gender, ethnic group, income, profession,  marital status, offspring, home location, even down to the types of possessions that they own. This allows them to say that ‘Boggos Beer has 35% market share of the single male 20-35 who work in trade professions and live in a flatting situation, but only a 15% market share of males in the same age and employment group who are married or have a partner.’ It’s the act of putting quantifiable numbers to something as complex as personal taste for a large variety of the general public. By using that information the marketing company can now create targeted advertising to appeal to the markets that the client wants to expand in. Depending on the degree of detail that they have, it can dictate the whole marketing strategy for a company. It also allows them to analyze the less obvious results when they do indirect marketing through sponsorships, product placement, or making use of the growing internet influencers market.

Now that’s all fine and good for a big company that can afford to pay for all the research and marketing brain power. You might say that it’s not so relevant to you as you are a small trader or some business that doesn’t sell things.  The reality is that market segmentation is affecting your business too, and maybe to its detriment if you don’t realise what you are doing. So we are now going to have a quick rundown of how you can see how you’re segmenting potential customers and how to work with it to your advantage.

I’m sure by now you will have noticed that your business attracts a type or category of customers. Just by how you have ‘branded’ your business you will have presented yourself to a section of the market as appealing. By the choice of colours and typefaces on your logo, the types of flyers and brochures you put out, what keywords find your website online, where you put advertising both in physical and digital format all alter people’s perceptions of your business and made you appealing to one group but not to another. The question is, is that the right group of people for your business?

I’m sure that if your business has been running for a while, you will have noticed that it attracts a type or category of customers. Just by how you have ‘branded’ your business you will have presented yourself to a section of the market as appealing. By the choice of colours and typefaces on your logo, the types of flyers and brochures you put out, what keywords find your website online, where you put advertising both in physical and digital format all alter people’s perceptions of your business and made you appealing to one group but not to another. The question is, is that the right group of people for your business?

Thinking about your business and the customers you have had in the past consider the following points

• What is type of customer I get the most of, their age, gender, etc. What is the second and third most common type of customer.
  
• Which services do they use the most of. How much do they typically spend and how often. How much profit do I make from those services.
  
• Where do I currently put marketing and what type is it. Do I rely more on word of mouth and recommendations. Does the website get lots of views, or do we have people referring to flyers and business cards.
  
• Who are the types of people I don’t have as a customer. Do they have a need I could be supplying, and what could I make doing that.
  
• Why am I not reaching certain types of customers. Do I need to promote myself in new areas to get their attention. What does current branding say about my business to them.
  

After having look at who you are currently reaching, you may come to realise that you’ve been advertising to the wrong people or using the wrong methods and need to change how you do things. Or you could be advertising to the right people but you need get them to spend more. And of course everyone wants to add new people to their range of clients. This will take time and effort, and in the meantime you don’t want to lose the people who you already have. While this isn’t a easy process there are a few simple ideas you could use.

• Use different themed marketing to fit who you want to reach out to. If people want stability and professionalism then a clean simple design works well. If they are after more go getting and active feel, then you use lots of bright graphics and breathless prose. 
  
• Chose different mediums to reach out to different groups. Those of the landline generation still look at newspaper and yellow pages ads, millennials perceptions are driven by social media, most people find business by googling. Busy families will look at the flyer in their postbox, singles tend to be driven by their smartphones and web searches. 
  
• Focus your marketing to fit the values of the customer. High income people prefer to be catered to with service and exclusivity, low income are driven on price, busy families want as little effort as possible, young people want to be part of the trends. 
  
• Select incentives to fit the segment you’re targeting. This follows on from the previous point, a discount voucher is perfect for lower incomes, while for families offering a longer window to make use of the offer better their busy schedules.
  
• Look at maybe creating a sister brand that is focused on the markets you want to expand in to. A lot of smaller companies have more than one brand that covers different aspects of their business.  A cleaning company might have one brand for people needing their house cleaned, another for real estate companies to hire their services for open homes, a third that deals with construction company cleanup.
  

Given how many books are written, hours of video made, days of conferences held, about the subject I have only been able to give the briefest overview of the subject in 1300 words. From here you can do your own research on the subject, as there are plenty of article on the internet or books in the library system. If you don’t have the time or interest of getting in to the subject but still want understand who your customers are and how to get new ones, then why not give us a call. We can help you narrow down who you are selling to now, and how to market yourself to new types of customers. So give us a call or email and we can set up an appointment to get you sorted.