“Marketing segmentation is a natural result of the vast differences among people.”
As the director of The Design Lab at the University of California, Donald Norman states that marketing segmentation is one of the key points if you want to create a difference with your business. Overall, customer segmentation and targeting allow you to create unique marketing strategies for your customers based on their preferences. This process leads to the best Return-on-Investment (ROI) outcomes.
Thus, if we want to plan a good customer segmentation and targeting strategy, we need to focus on 4 types of market segmentation.
So, what are these 4 basic concepts? Overall, you can see below how we differentiated these four market segmentations from broad to narrow segmentation.
Now, let’s take a closer look.
1. Geographic Segmentation
This basically helps you to segment your customers based on their location. At this moment, we need to think about one question, “How does the location of a customer affect his/her purchase decision?”
For example, let’s say you aim to target large English speaking companies. So, you would prefer targeting companies in the United States.
Therefore, instead of spending your time and money on targeting people in Asia, you are better off spending your time and money searching for companies that are in the US.
At this moment, you can create any filter according to your data. E.g. it’s also possible to filter on ‘region’. However, using DESelect, we created a filter that’s called ‘country’ for this example. As you can see below, all you need to do is drag and drop the filter in the column and write the name of the country. As a result, the app will give you a list of people/companies from the United States:
2. Demographic Segmentation
When we try to segment people according to their demographic preferences, we are trying to figure out who they are. There are two common approaches to demographic segmentation, namely B2C (business to consumer) and B2B (business to business).
If you want to target people according to their B2C demographic segmentation, it means that you would potentially be looking at the following aspects:
- Family Status,
For example, you may want to target women in their 30s, working a white collar job, and earning more than the minimum wage.
On the other hand, if you want to target people according to B2B segmentation, as a marketer you would be interested in knowing:
- Industry type,
- Company size,
- Role of the person within the company.
For example, you want to target a Sales Manager that works in an automotive sector that has more than 50 workers.
Since demographic segmentation is the most common type, for this blog we’ve created filters that are including the points that were listed above. If you need more filters, you can easily do so. As a result, using these filters will save you time and decrease the possibility of making mistakes to a minimum.
3. Behavioral Segmentation
This type of segmentation helps you to understand your audience based on their previous behavior with your company. It could be anything from their level of awareness of your business and previous purchases, and their readiness to purchase your product.
For example, your audience likes your product but they don’t want to use it until the end of the year. It basically means that they are open to buying your product, but for some reason, they need to wait for a short period of time. Therefore, you can try to communicate with them at the end of the year in order to remind them about your product and reignite their interest.
Accordingly, we created a filter that is called ‘stage’ for our example for this segmentation. It will allow you to list the companies with the possibility of buying your product. As it is seen in the image below, you could filter on opportunities that are still “open” since the sales have not yet been made. Maybe it will be in a few days or months but the opportunity is still there. Thus, it’s likely interesting to contact them again to support the sales process. In addition to that, with the help of this filter, you can easily remember this situation and see the companies with the opportunities.
4. Psychological Segmentation
While you are trying to segment your audience psychologically, you are looking at the aspects of their personalities like their interests/hobbies, lifestyles, and attitudes.
Psychological segmentation might not be for every business, however, it can be very useful for businesses that are selling a product or service that affects people’s daily life, for example Netflix.
If you create a data extension based on favorite types of movies in DESelect, you can easily target people that like comedy movies. So, you would basically target people based on their movie preferences.
Analysing your audience is a great way to get your campaigns right and increase your ROI. However, there are many options for targeting and segmenting your audience, and as a marketer, you need to figure out what approach is a good fit for your industry or even a specific campaign. You might have a team that is tackling segmentation for you, you might be learning SQL or try to manage it with simple Excel sheets.