How can markets be segmented

Behavioral segmentation divides people and organization into groups according to how they behave with or act toward products. Benefits segmentation—segmenting buyers by the benefits they want from products—is very common. Take toothpaste, for example. If marketing professionals know what those benefits are, they can then tailor different toothpaste offerings to you and other people like you.

Another way in which businesses segment buyers is by their usage rates—that is, how often, if ever, they use certain products. Companies are interested in frequent users because they want to reach other people like them. They are also keenly interested in nonusers and how they can be persuaded to use products. The way in which people use products is also be a basis for segmentation. Avon Skin So Soft was originally a beauty product, but after Avon discovered that some people were using it as a mosquito repellant, the company began marketing it for that purpose.

Encouraging consumers to use your products for multiple purposes is a smart marketing strategy. She is now thinking of trading him in for a hedgehog. Segmenting buyers by personal characteristics such as age, income, ethnicity and nationality, education, occupation, religion, social class, and family size is called demographic segmentation.

Demographics are commonly utilized to segment markets because demographic information is publicly available in databases around the world. You can obtain a great deal of demographic information on the U. In addition to current statistics, the sites contain forecasts of demographic trends, such as whether some segments of the population are expected to grow or decline.

At this point in your life, you are probably more likely to buy a car than a funeral plot. Marketing professionals know this. Into which category do you fall? The baby boomer generation is the second largest, and over the course of the last thirty years or so, has been a very attractive market for sellers. Baby boomers are aging and the size of the group will eventually decline.

However, a recent survey found that the latest recession had forced teens to change their spending habits and college plans and that roughly half of older Generation Yers reported they had no savings 1. So which group or groups should your firm target? Several companies have introduced lower-cost brands targeting Generation Xers, who have less spending power than boomers. For example, kitchenware and home-furnishings company Williams- Sonoma opened the Elm Street chain, a less-pricey version of the Pottery Barn franchise.

The video game market is very proud of the fact that along with Generation X and Generation Y, many older Americans still play video games.

You probably know some baby boomers who own a Nintendo Wii. Products and services in the spa market used to be aimed squarely at adults, but not anymore. Parents are now paying for their tweens to get facials, pedicures, and other pampering in numbers no one in years past could have imagined. Watch the YouTube video to see a fun generational type of advertisement. As early as the s, U. Plus, Japanese cars had developed a better reputation. Despite the challenges U. If you are a car buff, you perhaps have noticed that the once-stodgy Cadillac now has a sportier look and stiffer suspension.

Likewise, the Chrysler looks more like a muscle car than the old Chrysler Fifth Avenue your great-grandpa might have driven.

Automakers have begun reaching out to Generations X and Y, too. General Motors GM has sought to revamp the century-old company by hiring a new younger group of managers—managers who understand how Generation X and Y consumers are wired and what they want. Companies have to develop new products designed to appeal to Generations X and Y and also find new ways to reach them. People in these generations not only tend to ignore traditional advertising but also are downright annoyed by it.

To market to Scion drivers, who are generally younger, Toyota created Scion Speak, a social networking site where they can communicate, socialize, and view cool new models of the car. Online events such as the fashion shows broadcast over the Web are also getting the attention of younger consumers, as are text, e-mail, and Twitter messages they can sign up to receive so as to get coupons, cash, and free merchandise.

Advergames are likewise being used to appeal to the two demographic groups. Advergames are electronic games sellers create to promote a product or service. Would you like to play one now? Click on the following link to see a fun one created by Burger King to advertise its Tender Crisp Chicken. Tweens might appear to be a very attractive market when you consider they will be buying products for years to come. But would you change your mind if you knew that baby boomers account for 50 percent of all consumer spending in the United States?

Americans over sixty-five now control nearly three-quarters of the net worth of U. Higher education levels usually result in higher paying jobs and greater social status.

The makers of upscale products such as Rolexes and Lamborghinis aim their products at high-income groups. However, a growing number of firms today are aiming their products at lower-income consumers.

Firms are finding that this group is a large, untapped pool of customers who tend to be more brand loyal than most. If you capture enough of them, you can earn a profit von Hoffman, Based on the targeted market, businesses can determine the location and type of stores where they want to sell their products.

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Partnerships Become a Partner. What is XM? Back Partnerships Overview Become a Partner. Back Resources What is XM? Back What is XM? Experience Management. What is market segmentation? The benefits of market segmentation Companies who properly segment their market enjoy significant advantages.

Other benefits include: Stronger marketing messages : You no longer have to be generic and vague — you can speak directly to a specific group of people in ways they can relate to, because you understand their characteristics, wants, and needs.

Developing effective marketing strategies : Knowing your target audience gives you a head start about what methods, tactics and solutions they will be most responsive to. Better response rates and lower acquisition costs : These will result from creating your marketing communications both in ad messaging and advanced targeting on digital platforms like Facebook and Google using your segmentation.

Attracting the right customers : Market segmentation helps you create targeted, clear and direct messaging that attracts the people you want to buy from you. For example, the luxury car brand may choose to focus on customers who value quality and status. While the B2B enterprise marketing platform may target marketing managers who are motivated to increase productivity and show value to their executive team.

Related: 4 types of market research to fuel your marketing strategies. While demographic and psychographic segmentation focus on who a customer is, behavioral segmentation focuses on how the customer acts. These activities may relate to how a customer interacts with your brand or to other activities that happen away from your brand.

A B2C example in this segment may be the luxury car brand choosing to target customers who have purchased a high-end vehicle in the past three years. The B2B marketing platform may focus on leads who have signed up for one of their free webinars. Geographic segmentation is the simplest type of market segmentation. It categorizes customers based on geographic borders. Geographic segmentation can refer to a defined geographic boundary such as a city or ZIP code or type of area such as the size of city or type of climate.

The marketing platform might focus their marketing efforts around urban, city centers where their target customer is likely to work. Use the following market segmentation process to learn about your audience and find new marketing and product opportunities. If you have existing customers, start your market segmentation process by performing an audience analysis. An audience analysis allows you to learn about your customers and begin to identify trends that exist within your current customer base.

Use these market research questions to guide your research. Go right to the source and conduct interviews with existing customers, past customers, ideal customers, and prospects and leads.

Ask questions that help you fill in the details of all four types of market segmentation. If you have a sales team that spends a lot of time working with customers, use them as a resource. Interview them to find commonalities or trends they often see while working with your customers. Your business likely has loads of data that can help you get to know your customers.

Use your customer relationship management tools and point-of-sale systems to find trends related to behavioral segmentation. Pull data that shows how much customers spend, how often they visit your store, and the type of products and services they buy. Your website also has data that can help you learn about your audience.

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These choices will be signaled globally to our partners and will not affect browsing data. We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Business Marketing Essentials. What Is Market Segmentation? Key Takeaways Market segmentation seeks to identify targeted groups of consumers to tailor products and branding in a way that is attractive to the group. Markets can be segmented in several ways such as geographically, demographically, or behaviorally.

Market segmentation helps companies minimize risk by figuring out which products are the most likely to earn a share of a target market and the best ways to market and deliver those products to the market. With risk minimized and clarity about the marketing and delivery of a product heightened, a company can then focus its resources on efforts likely to be the most profitable.

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