How to Use Customer and Target Market Segmentation to Your Advantage

Brand loyalty matters to today’s consumers, but a large number of brands are still failing to tap into what drives this level of commitment. The answer lies in target market segmentation; dividing your audience into meaningful groups based on their individual preferences. Armed with this information, brands can focus their marketing on the benefits that will appeal most to each specific group of potential customers.

How to Analyze Your Target Market

Segmenting your target audience involves getting started with a target market analysis. This will help you identify exactly which groups of people you should be speaking to. There are several key steps involved in conducting and applying target market analysis:

Step 1. Identify your target consumer market.

Start by clearly defining your target market. Doing this means asking some key questions about potential consumers:

Who’s buying (or will buy) your product? What’s their average age? Gender? Income? Interests? Values? Specific Needs..?

Conducting this kind of research into your target market should be the first step for any brand. Use in-depth audience profiling to get the level of detail you need about customers.

Step 2. Divide your market.

People who are attracted to your product or service often share certain characteristics, and identifying these will help you divide your markets and refine your messaging for each. Ask questions like:

What defines this particular group of people? What do they have in common? How do they go about researching products? Which touchpoints matter most..?

Creating customer profiles or personas that pull together these shared traits will help you hone in on what matters, identifying patterns, trends and insights that will spark ideas, bringing in high value customers.

Step 3. Gather recent, reliable data.

Third party data sources are hugely valuable in helping you to build that real-life picture of your industry, market segment, competition and potential customer base. But knowing what data you need is a familiar challenge. With consumer and industry trends evolving so fast, one key thing to consider is how recent and reliable the data you’re gathering is.

With a database like GlobalWebIndex that’s updated every quarter, you can ensure what you’re gathering is up-to-date, fresh and relevant. Ask questions like:

What are my consumers’ buying habits? Which devices, channels and platforms do they use most? What drives brand loyalty and customer retention among this group?

These insights will give you a good idea of the market potential in terms of size and value, and will identify which particular market – whether geographically or based on buying habits, for example – offers the biggest opportunity.

Step 4. Know your competitors.

Understanding the competition in the market is key. This will tell you exactly what your product or service is up against, and what tactics you need to take on to compete. Ask questions like:

How many businesses have a comparable offering to you? What is their pricing structure? What reach do they have? Who do they appeal to most?

You may find that one group of people is very well served by competitors while another group has yet to be tapped. This will help you identify the most profitable group to target in your marketing plans, as well as identify what types of marketing communications may or may not have worked prior.

Step 5. Include your analysis in your business plan.

Once you’ve completed your target market analysis and identified the audiences with the most potential, it’s essential to incorporate these different segments into your wider business plan. This will enable you to make projections about who will buy your new product, in what quantities and how often, as well as identifying any possible peaks or troughs in demand.

Understanding the data set and variables that differentiate one group of people from another is key to knowing your market. Look at previous customer data, whether specific groups have different needs, or how their attitudes or lifestyles differ.

This will help you understand their specific behaviors, alongside demographic and life stage information, enabling you to craft the right marketing messages and identify the best channels and tactics to use for a high value campaign.

How Visit Scotland Segments its Audience into Adventurers and Food Lovers: Case Study

In 2006, Visit Scotland conducted a large scale consumer research programme that led them to the discovery of five core audience segments: adventure seekers, curious travellers, engaged sightseers, food loving culturalists and natural advocates.

Each customer group segment was defined by factors including personality, interests, age, what they look for in a holiday, accommodation preferences, the activities they enjoy and how they use technology.

The segmentation approach also identifies the key challenge of marketing messaging to each group. For example, curious travellers generally ‘dislike returning to the same place more than once’. These insights give Visit Scotland a clear focus for their messaging, enabling them to target customers and start to build customer relationships based on their individual preferences.

Incorporating Segmentation into your Marketing Strategy

Segmentation of this kind should underpin your brand’s marketing approaches and strategy, helping you to set objectives and form ideas in the most audience-centric way possible.

Equipped with a better understanding your target audience, and being able to divide this knowledge into meaningful and distinct groups, different audiences based on individual preferences means you know what they want, when and where they want it.

This increased relevance ensures your marketing campaigns are tailored to your audience for maximum impact.

This translates into numerous business benefits, from more intelligent marketing spend to increased sales and greater loyalty, all of which contribute to a healthier ROI and customer value.

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