Understanding your audience is vital in marketing—yet, knowing how your product stands out from the crowd requires an extra skill set.
This is where market segmentation comes in. It involves a detailed analysis of your target audience, breaking down the broad market into specific clusters based on various characteristics.
The goal is to better understand and address your audience's needs, allowing you to fine-tune your marketing to attract your ideal customers.
What is market segmentation?
Market segmentation means dividing the broad target market into smaller, defined groups of people who share similar needs, behaviors, motivations, characteristics, etc. This allows you to create tailored messaging that resonates with each specific group.
You can segment your market according to:
- Demographics
- Psychographics
- Geographics
- Behaviors
- Values
- Product usage
By defining your market segments, you can focus on the clusters with the highest potential, developing strategic campaigns that directly address the core needs and interests of these groups.
The different types of market segmentation
Let's explore the various types of segmentation along with practical examples for each.
Demographic segmentation
Based on attributes such as age, education, occupation, income, gender, family size, interests, and more. It’s widely used because demographics significantly influence spending habits.
Example: T-Mobile’s 2019 campaign targeted baby boomers, recognizing their desire to connect with family and friends, introducing a new data plan for customers aged 55+, which removed extras that may work with millennials (who spend more time on platforms like TikTok).
Psychographic segmentation
This focuses on personality traits, lifestyle, values, opinions, and hobbies, explaining why customers buy a product.
Example: Mercedes Benz targets customers who value luxury and status, while Volkswagen focuses on affordability and reliability.
Geographic segmentation
Categorizes customers based on geographic boundaries like country, state, city, zip code, climate, and whether they live in urban or rural areas.
Example: A company selling waterproof outerwear would more effectively target markets in Seattle than in Arizona.
Behavioral segmentation
Divides consumers based on their interaction patterns with a business, such as product knowledge, preferences, and usage frequency.
Example: Netflix uses behavioral segmentation to provide personalized recommendations, with about 80% of views coming from its recommendation feature.
Market segmentation criteria
After completing a market segmentation study, your results should be:
- Measurable: Segments must be quantifiable to help marketing strategists allocate efforts and resources.
- Accessible: Choose segments that can be effectively reached.
- Substantial: The segment should have sufficient purchasing power.
- Differentiable: Differences between segments should be clear.
- Actionable: The segment must provide actionable data for marketing strategies.
Benefits of market segmentation
Understanding your customers allows for more effective marketing strategies, identification of market gaps, and creation of tailored messages.
- Create stronger marketing messages: Personalize messages to address specific needs and characteristics.
- Discover effective marketing strategies: Identify tactics that will attract your ideal audience.
- Create hyper-targeted ads: Use segmentation data for effective digital ad campaigns.
- Stand out from competitors: Tailored messaging and value propositions foster stronger customer relationships and brand loyalty.
- Identify niche opportunities: Uncover underserved market segments for new products and services.
Segmenting your audience into developer personas
Developer personas are semi-fictional representations of actual product users or buyers—specifically developers and other technical people.
They enable you to understand your target audience’s experiences, behaviors, and goals in detail. Using these personas helps you enhance the customer journey and experience, which can lead to better retention and reduced churn rates.
Additionally, developer personas can inform and shape your developer marketing strategies and tactics, from the initial ideation phase to performance metrics.
Marketers need to understand their consumers. When creating personas, you’re not just guessing – accurate developer personas that truly represent your customers and are actionable come from thorough research.
Personas are the end goal, not the starting point; this means your research (such as surveys) should shape your personas, not the other way around.
In essence, remember this principle: no data = no persona.
The relationship between segmentation, targeting, and positioning (STP)
STP is a marketing model that prioritizes propositions and delivers personalized, relevant messages to different audiences.
Smart Insights did a survey in which STP was revealed as the second most popular model, behind SWOT/TOWs matrix.
STP is the journey you take to position your brand/company in the minds of customers and it’s the difference between your products and those of your competitors.
It involves:
- Targeting: Using segmentation data to identify your target market.
- Product positioning: Tailoring the presentation of your product to meet the specific needs of your target audience.
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