What Is Market Segmentation?
Market segmentation is the process of researching an audience and sorting them into groups or segments based on common traits in the hopes that they will respond similarly to marketing initiatives. This allows organizations to better understand consumers and target them more effectively. Compass by The Harris Poll makes this easy by providing real-time customer insights and numerous filtering options.
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Why is Market Segmentation Important?
Marketing segmentation helps companies market and advertise more effectively to all of their customer base. By segmenting your audience, you can send specialized messages to each group to get the most engagement possible. With that said, the importance of market segmentation cannot be understated. These efforts will lead to improved performance, higher conversion rates, increased customer retention, and more upsell opportunities.
So what is the purpose of market segmentation? The purpose of market segmentation is to communicate with your customers on a more granular level. One size fits all marketing efforts are bound to be less successful than those that are personalized. The more work you put into connecting with each of your customers, the more likely you are to be successful.
Types of Market Segments
There are a variety of segmentation strategies, however, we have detailed the four most common below. Compass by The Harris Poll is uniquely designed to implement these strategies using brand intelligence data.
One of the most common types of segmentation strategies, demographic segmentation creates market segments that are focused on individual attributes, like age, education, and income. This strategy is valuable because this information is relatively accessible and easy to obtain at a low cost.
Geographic segmentation targets the physical locations of individuals and businesses to better understand their needs. This market segmentation strategy allows brands to create location-specific messaging that will produce a much more individualized experience for that audience.
Psychographic segmentation focuses on values, opinions, lifestyles, and personality traits. These attributes, while not as easy to observe as other market segments, add value to a marketing strategy because they can give insight into an audience’s motives, preferences, and needs that a company wouldn’t have otherwise.
This marketing segmentation strategy allows B2B and B2C companies to divide their audience based on actionable behaviors, such as purchase decisions and usage rates. This is especially beneficial because it allows them to create messaging that caters to those specific behaviors.
Market Segmentation Strategy
The best place to start when developing a marketing segmentation strategy is to identify segments that are quantifiable, measurable, actionable to ensure that they will maintain buying power and continuously interact with your services. Compass makes it easy to identify segments and track how your brand is faring with each of them. Our brand tracker streamlines the process of market segmentation, which can save time and resources.
Marketing Segmentation Mistakes To Avoid
While you’re developing a marketing segmentation strategy, it’s important to be aware of the common mistakes that can occur throughout the process. Some of the most common traps that companies fall into is creating segments that are too small, not evolving as audiences change, and focusing on segments instead of ROI. These mistakes can cost your company a lot of time and money.
When utilized effectively the benefits of market segmentation are certainly worthwhile. Although this type of strategy does require research, planning, and careful implementation the return on investment can be huge and our brand strength metrics make it easier than ever. Don’t wait to start enjoying the advantages of market segmentation!
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Subscriptions to Compass offer you continuous, real-time tracking on five brands. With your membership, we will collect over 10,000 interviews per brand, giving you a robust ability to conduct pre-/post-testing and dive deep into various customer groups.
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