Marketing Segmentation: Meaning, Importance And Benefits

The Meaning Of Market Segmentation

Let’s first begin with the definition of market segmentation. Understanding the meaning of market segmentation is very important. Market segmentation is a strategy that businesses, publishers and advertisers use to divide their target market into specific groups. It’s about creating subsets based on needs, common interests, demographics and behavioral or psychographic criteria. It helps to better understand your target audience and develop content accordingly. If the meaning of market segmentation isn’t understood well, you’ll not be able to come up with the right marketing strategy for your business.

When you have a clear understanding of the meaning of market segmentation, you can use it in your marketing strategies to target the right audience. When you have proper market segments, you can create your product offerings based on those segments. For example, women versus men or low-income versus high-income groups.

The Importance Of Market Segmentation

Now that you’ve understood the definition of market segmentation, let’s understand why you must include it in your marketing strategies and why it’s important for your marketing campaigns.

The importance of market segmentation plays a very critical role in the success of your marketing campaigns. It can help you better understand your ideal customers and target audiences. If you’re a business looking to market your products, then market segmentation helps you identify the right market so that you can target your marketing accordingly. Similarly, market segmentation works for publishers as well because they can use it to offer targeted solutions to different groups.

For example, if you’re someone who wants to advertise dog food, you must divide your audience into groups depending on whether they own a dog or not. You must also segment the audience further depending on the breed and then show them dog food ads based on the specific breed.

You must understand the importance of market segmentation to be able to target your content in the right direction. So, instead of targeting the entire audience, you can have specific messaging that’ll help increase the chance of the audience engaging with your content or ad. This will also result in an improved return on investment (ROI) and successful campaigns. To have successful ad campaigns and marketing strategies, businesses must have a clear understanding of the definition of market segmentation and its importance.

The objectives of market segmentation are to reduce the risk of marketing to an audience who may not be interested in your services or products. It also works to increase your marketing efficiency by reaching out to the right audience in a consistent manner.

The Benefits Of Market Segmentation

Organizations and businesses that use market segmentation properly enjoy a lot of benefits. In a recent survey conducted in North America, 62% of marketers said that improving market segmentation was of top priority to them. Market segmentation offers a lot of benefits to publishers, marketers and businesses. We’ve listed a few benefits of market segmentation below:

Improves Your Campaign Performance

One of the main benefits of market segmentation is that it can help improve your marketing campaign performance. It helps you target the right audience with the right campaign and messaging. When you segment your market properly, you learn more about your target audience. This allows you to tailor your messaging according to their specific needs and preferences.

When you target specific segments that are more likely to show interest in your products or content, it’s more effective than trying to target a larger audience. Advertising to a broader market may prove to be ineffective. You may end up spending too much money on marketing and advertisements, and only a few may convert. Directing your market to the right segment will help increase your conversion rate considerably.

For example, it only makes sense to market dental equipment and tools to dentists rather than anybody.

Helps With Product Development

Market segmentation helps businesses better develop their products, keeping customer requirements in mind. You can develop your products accordingly so that they appeal to the needs of your target audience. Tailor your products in a way that they benefit your main customer base.

For example, you’re an automotive business owner and your main market segments are middle-class people and families. You’ll mostly design your cars with a lot of space, seating and legroom. You’ll also make sure to have mid-range pricing that’s economical and reasonable.

You can also go ahead and segment the audience further and have cars that appeal to every segment. For example, you could have one segment that includes families that love to go on road trips. For this group, you can offer a four-wheel drive with a lot of cargo space.

Designing your services and products according to the requirements of your customers will help increase your sales and also keep your customers satisfied and happy. It also makes customers feel like you understand their requirements and this can improve your brand’s reputation.

Identifies Areas to Expand

One of the main objectives of market segmentation is to identify areas or segments that you’re not reaching with your marketing efforts. It helps you expand your business into new segments. Market segmentation gives you valuable insights and data about your audience that you may have missed or not realized.

For example, a brand might make more sales in its physical store. However, when they look at customer behavioral data, they might notice that a lot of their customers love to shop online. With this information, the brand could either decide to open an online store or advertise their existing online store more.

Improves Business Focus

Market segmentation also helps you focus your efforts, which enables you to establish your brand identity. You can work toward specializing in particular types of products and services. Brands that try to reach out to everybody will look generic. It can sometimes also leave your customers confused about what your brand represents or stands for. Similarly, brands that try to sell everything will most likely not be able to make an impact than brands that specialize in a particular product. As your brand grows, you can look at expanding your offerings. However, when you’re just starting out, your customers could find it hard to differentiate your brand if you have a broad product offering.

Market segmentation also helps increase competitiveness. When there’s a clear understanding of the target market, businesses and marketers can work harder to compete. They can come up with solutions for better brand promotion. With innovative ideas, they can make their brand stand out and engage their audience better.

Make Informed Business Decisions

Market segmentation helps you make other informed business decisions such as how to get your products to customers or the right pricing and distribution of your products. Brands can use market segmentation to help decide on the right pricing that will maximize their sales and also keep their customers happy. Businesses can look at demographic information like income levels to decide on the proper pricing of their products. You may also look at how pricing can affect purchase decisions and change them accordingly. Businesses can also look at festive and seasonal demand changes to roll out special offers and deals to boost their sales during a specific time.

The objectives of market segmentation also help brands come up with the perfect strategies for distributing their products. For example, some segments may prefer shopping online while others like to shop in a store. Brands can decide where to pitch their services and products based on each market segment.

To segment the market for your campaigns, you need to have the right tools, data and understanding of how to do it properly for success. With Harappa’s Select A Strategy pathway, you’ll learn to understand your audience better and figure out what people think and want. The pathway will help you understand other people’s sensibilities, strengths and working styles. Through Select A Strategy, you’ll gain a strategic mindset critical for market segmentation and other organizational strategies.