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Use Remesh to create campaigns that resonate
Better tools to engage and understand your employees
Use Remesh to ideate and gather feedback about your product.
Learn, improve and optimize the experience for your audience
Get to the heart of the issue in real-time, without filters or bias
Emily has an eye for all things strategy, spending most of her time spinning data into stories.
Emily has an eye for all things strategy, spending most of her time spinning data into stories.
Companies need stronger, faster, and cheaper insights. But how can an insights or marketing team divide their customer base up more precisely to accomplish this task?
Cue, customer segmentation research.
Segmented personas will present your insights team with the strongest data. Behavior-based segmentation, especially, is increasingly popular among researchers.
Let's dive into these 5 types of market segmentation strategies your team can use to unlock employee and consumer insights. In this market segmentation guide, you'll learn:
1. What is Market Segmentation?
2. How to Conduct Segmentation Research
3. 5 Types of Market Segmentation & Segmentation Variables
- Behavioral Segmentation
- Psychographic Segmentation
- Demographic Segmentation
- Geographic Segmentation
- Firmographic Segmentation
Market segmentation enables a business to conduct strong market research into customers. It also enables in-depth market-based research. It reveals consumer experience insights, product development innovation approaches, suggestions for boosting customer loyalty, and more.
Market segmentation can be split into four distinct stages within a larger market research method. This is separate from the segmentation divides themselves.
1. Set an objective
What is the purpose of this market segmentation process?Identify customer segmentation models and variables, then develop a hypothesis based on those findings.
Establish a research design, collect data, analyze the results, and develop your segments. This step will validate or disprove your hypothesis in part.
There are a number of potential consumers to choose from. For the purpose of market segmentation, you must choose your most viable option and move your product forward from there.
Think of this step as a service to your future customer base. Identify the most specific use case, and your company will be able to offer a more personalized product or service. Think of your company as a resource, not a selling point.
This step in market segmentation can be performed in a variety of manners. An online focus group is one fast and efficient way to discover new segments. Platforms like Remesh can also be used to dig into pre-existing customer segments.
Select your target segment and identify the implications of this segment or persona. Make moves based on target segment, project goals, and product status.
Identify key stakeholders, ideate and communicate the launch plan internally, then execute the project using your target segments.
There are 5 ways to break down your customer profile into unique segments, including behavioral, psychographic, demographic, geographic, and firmographic!
Behavioral segmentation digs deeper into customer habits than demographic segmentation. It’s also one of the most popular customer profile types to be integrated into marketing campaigns.
This type of market segmentation is comprised of behavior patterns, like customer loyalty or engagement level. This is specific to customer interactions with a brand or company. Other behavioral segmentation variables can include:
Behavioral segmentation is used to gain insights into customer experience, allowing for improvements in customer success. Some questions to consider:
Behavioral segmentation is also used for marketers to determine future customer leads. It’s also used in determining which prospects in the market are more likely to purchase your product.
Similar to psychographics, behavioral segments are primarily collected based on a consumer’s digital footprint. New improvements in technology compile metadata from customers in order to better understand their preferences. Unused data can be sent to customer support or used for marketing messages.
Psychographics are a type of customer segmentation that focus on inner or qualitative traits. Psychographic segmentation variables can include:
Psychographic attributes are the ones that aren’t obvious just by looking at your customer, like demographic segmentation. Instead, psychographics require deeper analysis.
By defining a customer persona this way, you’ll be more equipped to tailor your marketing strategies. And, you’ll appeal to customer tastes.
Psychographic segmentation is used to develop a “brand personality,” or brand personification. In other words, the personality traits that your brand exemplifies.
For example, let’s say your insights team discovers your customer base purchases a new type of running shoe every year. Your market research team also knows that people who are interested in new running shoes value high energy and independence.
Then, you can use that finding as a feature in your brand style. This could help sell other products related to fitness under those same traits. For example, your commercials might be fast-paced and emphasize the strength of the individual.
There are a few ways to collect demographics...
Depending on your relationship with a customer, you can more or less ask them directly about their consumer habits. Some quantitative feedback questions might sound like:
If you’re running out of ideas, you might start looking into some unusual places to collect customer feedback.Or, you might begin by investigating potential groups of customers you're not currently interviewing.
When you ask qualitative questions, you can discover meaningful insights about your customers. These questions might sound like:
These questions lead to further insights into a customer’s lifestyle. These questions, especially when asked to larger groups of people, are typically asked by creating a survey. However, online focus groups are becoming increasingly popular customer feedback tools, as well.
2. Observing customer data
This type of psychographic probe is more low key, and becoming increasingly efficient with the advancement of A.I. technologies. For companies studying consumers, A.I. systems have allowed for a deeper understanding of consumer insights.
Some questions to consider:
Analyzing your customer’s social media and digital habits will enable you to optimize your product marketing efforts – and probably contribute to your market segmentation strategy, as well. An increasingly popular example of this method in play is coming with the rise of voice technology.
Voice search is an essential asset in psychographic segmentation. Customers use devices like Google Home or Amazon’s Alexa to discuss personal preferences, interests, and other potentially sensitive data. Now, consumer data is available for companies to sculpt customer profiles.
With this access to detailed customer information comes some concerns over data privacy and the ethical corporate use of it. Some risks can include:
Without consent and transparency, this data could easily make consumers less inclined to share their information with brands. If used responsibly, these technologies can create a fully tailored consumer marketplace, speed up efficiency, and increase time to market.
Demographics are the breakdown of your customer personas in the market for cursory traits like age or gender. These traits offer basic information on your customers, and are often considered one of the more broad segmentation types. Examples of demographic segmentation include age, income, family size, education, or gender.
Dive into these segments to cut down on time and resources to understand your target audience. Or, tap into potential consumers that have yet to be honed in on. Demographics are generally less invasive to collect than other segmentation types.
Other demographic segmentation variables can include:
Geographics are the study of your customer based on their physical location, which can affect more physical interactions in the market. Consumers grouped together in similar locations may share similar preferences. That’s why this type of market segmentation is great to pair alongside more abstract types, like behavioral.
Geographic segmentation variables can include:
For example, consider a company that is advertising a subscription model lawn care service. The company would likely be more successful in targeting a suburban area where residents need extra yard care. The campaign would be less successful in an urban area, where consumers might be more interested in a food delivery service.
Studying customer geography can also help target search results in your prospect’s region.
Firmographics are used to describe the attributes of firms or businesses. Put simply, firmographics are to firms and investors as demographics are to people. Companies can use this type of segmentation to determine whether or not a smaller firm is apt for an investment.
With millions of firms across the globe, businesses can use firmographics to identify prospects based on size, scale, and funding. Firms can also be broken down into sections of:
Investing in a smaller firm or company always comes with a risk. Therefore, investors have to be precise in segmenting venture opps in order to minimize that risk.
Segmentation variables for firms typically include things related to a smaller company’s potential. For example, before investing in a new application, venture capital firms look for company strengths. These can include things like the vision of the executive team or the product’s target market.
Other firmographic segmentation variables can include:
Once you’ve created segments, keep an eye out for common mistakes that marketers and researchers make.
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Making your segments too small or specialized
Segments that are too small will be more difficult to organize or inaccurate, and they can distract from your objective. Like sample size, an over-segmented group can yield data that is not statistically or directionally significant.
Not allowing your segments to change
Stay focused on ROI. If your strategy isn’t working efficiently for your business, it may be time to switch things around.
Ignoring new potential personas
Customer profiles change. Don’t get too attached to your segments, as they will evolve with the market.
Targeting and positioning are the next steps in the roadmap following market segmentation. In order to evaluate the potential commercial value of a segment, use these strategies to evaluate the following criteria:
After settling on a target segment, move on to product positioning, which presents the benefits of your product to the chosen target segment. A simple way to evaluate your best positioning opportunities is to map them out.
Follow these steps to create a simple product positioning map:
Whether it’s conducting an interview or writing a survey, the next phase of your research can sometimes be unclear.
When collecting massive amounts of market segmentation data, keep the greater brand or marketing in mind. Rather than relying on one or two sole strategies to characterize your customer segments, combine the efforts of multiple strategies. For researchers, this allows for a more complete perspective on target customers.
Marketing segmentation allows companies to define and optimize future products and advertising your product to consumers in the future.
Don't leave your market segmentation up to a manual process. Optimize your customer insights with AI, using our free guide below.
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