What is Market Segmentation?
Market segmentation is the art of finding niche markets for your products by building profiles of potential customers and breaking them down into groups. Segmenting customers with similar needs and wants into groups makes it easier to target them directly. Whether you’re a small business or a Fortune 500 company, knowing who your customers are can boost revenue and lead to sustained brand growth.
Marketers can choose from several useful tools and strategies that can help them get to know their customers and keep marketing plans up to date. Segmentation analyses of target markets over time help businesses of all sizes stay ahead of the curve. Here are the four different types of market segmentation and how you can reap the rewards of knowing your target audience.
Demographic Segmentation
The demographic market segment classifies customers by individual attributes. Examples include age, gender, disposable income, family size, marital status, and education level. All of these stats might impact demand for a product or service.
Interest levels may depend on a variety of different attributes at the same time. Some products may or may not be gender-specific A completely different approach might be needed if you plan to target baby boomers or trend-wary millennials.
B2B can focus on Firmographic segmentation – a sub-category of demographic segmentation that groups companies by size, revenue, industry, and other relevant stats.
Psychographic Segmentation
This segment is concerned with who a potential customer is. Value set, lifestyle, political slant, personality traits, and aspirations can all affect consumption patterns in a big way. Certain consumers may be willing to pay a premium for products that they covet as status symbols or value as ethical or sustainable.