Market Segmentation

Written By Vishal Mehra


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Market Segmentation


What is Market Segmentation? The process of defining and subdividing your Customers into clearly identifiable segments having similar needs wants, or demand characteristics. Its objective is to design a marketing mix that precisely matches the expectations of customers in the targeted segment. You want to see your customers in full colour and not just Black and white. By Segmenting your Markets you have a lot more data at hand and this would help you maximise your ROI.

Why do you need Market Segmentation? 

If you want to Target the right customers at the right time you need to clearly define your target Market into segments.

These could be as under

  • Behavioral Segmentation
  • Geographic Segmentation
  • Demographic Segmentation
  • Psychographic segmentation

Behavioral Segmentation

Behavioral Segmentation is the process of dividing customers by how they Interact with your product/company, their knowledge of your Product/company, attitude towards, use of, likes/dislikes of, or response to a product, service, promotion, or brand. 

One of the best examples of Behavioral Segmentation is Apple. What made Apple so successful? Apple was the not the first company to invent Computers or Laptops or a Phone. Yet leveraging the data they get Once a consumer purchases a product or downloads iTunes, Apple uses this information to gain significant insight into the consumer and what drives purchase behavior. Based on this Behavior they are able to market the right products to the right mix of people. 

Geographic Segmentation

Geographic Segmentation is when you divide your audience by basis of where they live. This could be broad segmentation like Country wise division (more applicable to Global E-commerce platforms like Amazon) or state wise or city wise. You can further narrow this down to particular ZIP Codes as well. 

One of the best examples of Geographic Segmentation would be a Travel Company leveraging this for promoting Packages for Holidays. Lets say you are in India and since not all regions have the same festivals you could promote packages to specific States which have holidays and not others. Another perfect example of this would be targeting by Zipcodes. Someone living in a more affulent Zipcode may prefer a certain Luxury resort v/s someone at a different Zipcode. 

Demographic Segmentation

Demographic Segmentation is dividing the audience on basis of age, gender, family size, income, occupation, religion, race and nationality. Each of these variables plays an important role as pushing the right product to the right audience would result in sales.

Knowing who your target audience is, what age, what Gender, narried or unmarried, if married are they new parents or parents with teenage kids, what religion and race etc are very important factors in helping you decide what product to psuh out to what audience.

Have you ever wondered how you keep on seeing certain Ad’s on Facebook and Instagram which maybe very relevant to your age group. This happens using Demographic Targeting.

Psychographic Segmentation

When you start using psychological aspects of consumer behaviors into account that becomes Psychographic Segmentation. These psychological aspects may be consumers lifestyle, his social standing as well as his Activities, Interests and Opinions.

When you start targeting people based on their Social Status, opinions (which people openly share today)  their activities (from simple things like how you are feeling to checking in at a place) your lifestyle and Interests this is a perfect example of Psychograpic targeting of audience. An example of this would be an automobile company targeting an active person with an AD for a SUV and someone else who is not so active with a Sedan or someone living in a rural area with a more rugged car than someone who lives in a city.

One of the key roles of any marketer today is to understand the Market segments properly. This could make a difference in not only your Ad spends and ROI but also in the bottomline of the Business. A GOOD MARKETER would use this data to his advantage leveraging A) what is available in house and B) Using the right data points with Facebook and Google.

This may sound extremely complicated but it isn’t. There are enough tools available today which can help you achieve this. One such tool that I have used very effectively is called Connectio. (read about Audience Insights and how Facebook Audience Insights helps you with Market Segmentation here) this helps you find sub niches within a niche and create very detailed targeting inside facebook. Ideally if you are at a Stage where you are considering segmentation you should have a Marketing professional either on your payroll or as a consultant.


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