Market segmentation holds the key to generating insights that are more accurate and effective, faster and more robust. When implemented into business strategy correctly it can boost sales, open new sales channels, improve brand loyalty, advance product development, optimise marketing activity performance and gain an advantage over the competition.
If you’re keen to do more with your market segmentation this year, then investing in research is going to be key. These are our tips on how to modify your market segmentation research to produce better results from segmentation in 2022.
Refresh your knowledge and understanding of segmentation
It helps if you have a pretty clear picture of what’s available when it comes to segmentation. These are the five main types:
- Behavioural segmentation i.e.customer choices. Ideal for gaining a better understanding of customer experience.
- Psychographic segmentation i.e. inner or qualitative traits. Used for defining customer personas in terms of value, habits, hobbies etc.
- Demographic segmentation i.e. the broadest group of traits of customers (age etc) and one of the most basic segmentation options.
- Geographic segmentation i.e. splitting audiences based on location. Customers in location groups can often share similar preferences.
- Firmographic segmentation – the same as demographic segmentation for individuals but for companies and organisations i.e. the attributes of firms or businesses (B2B audience).
Create a robust market segmentation research plan
If you don’t already have a market segmentation research plan in place then it should look something like this:
- Clearly identify the objective of the market segmentation process. Be unambiguous about the appropriate customer segmentation models and variables and then define your hypothesis based on these.
- Develop your customer segments. You’ll need to collect your data here, analyse it and then use that to develop your segments. This will go some way towards proving, or disproving, the hypothesis you’ve come up with.
- Identify the most viable option in terms of potential customers and then start using this to move your product forward.
- Create a strategy for market segmentation. This is built around the target segment you’ve already identified and all the implications that has.
Avoid the most common mistakes in market segmentation research
- Make sure you have plenty of space in your segments. Any that are too small could be inaccurate and misleading and might be difficult to organise.
- Be flexible and allow your segments to change if necessary. It’s all about ROI – if the strategy that you’ve put in place isn’t delivering for your organisation then change may be the appropriate next move.
- Don’t get too attached to the segments you already have. Your customer profiles will shift and your segments will change as the market does – to ensure that you’re always working with the most current perspectives you’ll need to remain unattached.
Market segmentation research can help you to get understanding your customers down to a very specific art. Being able to approach it in the right way could mean modifying your tools and approach if you want to get more from the process this year. Find out how our market segmentation research can help you target the right people.