Targeting best prospects with market segmentation based on geography, behavior, demographics, and psychographics

1. Describe Market Segmentation
Chances are, your mass marketing efforts aren’t working as effectively as you
would like. It is likely that your marketing messages are reaching the wrong
people, or worse, alienating your best prospects. While mass marketing allows
for economies of scale to be realized through discounts on production,
distribution, and communication, each customer’s needs and preferences will
differ. The same offering will not be viewed by each customer in the same way.
Market segmentation can help with this. By targeting your best prospects and by
tailoring your message to particular subsets of your market, you become more
likely to convert more prospects into customers. By understanding the diversity
of your customers, you can target your message with unique offerings for each
subset, allowing you to get a higher volume of paying customers. In this article,
I’ll describe market segmentation and how you can segment your market for
maximum effectiveness today.
So how do you know what constitutes a market segment? Each segment of your
market can be defined by any number of categories, and each will have different
needs and preferences. Each market segment should have measurable
identifying attributes, unique needs to justify separate offerings, and should be
sufficiently large and stable to justify using resources to cater to them.
Additionally they must be reachable through existing communication and
distribution channels.
Here are a few of the most common bases for segmenting consumer markets:
geographic, demographic, psychographic, and behavioral.
Geographic
Depending on your product, a good place to start when segmenting your market
is by region, whether it is country, state, county, or even individual
neighborhood. You can conduct segmentation by population or population
density. Are you targeting a very large city or a rural farming community? You
can even segment by climate, depending on your product. For example, is is
much harder to sell umbrellas in Tucson than it is in Seattle.
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2. Demographic
Demographic variables range far and wide, and typically have a few standard
values. For example, gender can be expressed as male or female. Generation can
be assigned the value of baby-boomer, Generation X, Generation Y, and so on.
You can segment demographically by age, gender, family size, family lifecycle,
generation, income, occupation, education, ethnicity, language preference, and
religion… As you can see, the list goes on and on. In fact, demographic
segmentation probably offers the widest variety of segmentation variables than
any other technique.
Psychographic
Psychographic segmentation refers to a person’s choice of lifestyle and general
attitudes toward life and the world. Activities, interests, opinions, attitudes and
values are all variables that shape a person’s psychographic makeup.
Behavioral
Finally, behavioral segmentation is based on your customers’ actual behavior
towards buying and using your products. Behavioral segmentation hinges upon
key customer buying behaviors such as frequency of purchase, ticket (order)
dollar amount, recency of purchase, and product mix.
Usually, the best segmentation employs a combination of each of these factors.
Contact MindEcology today to get started.
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