Target Market Segmentation: How to Use it to your Advantage

Defining Target Market Segmentation

Market segmentation, or audience segmentation, is the practice of dividing potential customers into meaningful subgroups based on their characteristics and preferences.  

Marketing content can then be tailored to these segments, helping to create a more efficient and cost effective marketing strategy.  

Why it Matters

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.

It all comes down to understanding what consumers want, which varies from person to person. Brand messaging should cater for this.

Casting aside the one-size-fits-all mentality and placing audience interests at the core of your brand’s content results in hyper-targeted products and messages.

Four Segmentation Criteria

Audiences are traditionally divided using 4 main criteria.

Within each of those, further divisions can be made for a more granular understanding of a market.  

Behavioral – Consumer interactions with products and brands. This can include how and where they engage with brands, their social media usage, and online consumer journey.

Demographic – Criteria includes gender, age, income, education, social class, religion and nationality.

Geographic – Information on where they live. This can be subdivided by nation, state, town and so on.

Psychographic – This can include personality variables such as introvertedness and extrovertedness, lifestyles and attitudes to life.

A Step-by-Step Guide to Market Segmentation

A target market analysis will help you identify exactly which groups of people you should be speaking to.

Step 1. Gather recent, reliable data.

Third party data sources are hugely valuable in helping you build that real-life picture of your industry, market segment, competition and potential customer base.

But knowing what data you need to gather 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 platform like GlobalWebIndex that’s updated quarterly, you can ensure the data you’re looking at is up-to-date, fresh, and highly relevant.

Step 2. Divide your market.

People who are attracted to your product or service often share certain characteristics, and identifying these will help you create your target market segments 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. 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’s 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 into.

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 4. Integrate your analysis in your business plan.

Once you’ve completed your market analysis and identified the audiences with the most potential, it’s essential to incorporate these different target market segments into your wider business plan.

This will enable you to make predictions 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 of your target market segments, enabling you to craft the right marketing messages and identify the best channels and tactics to use for a high value campaign.

Building Up the Picture One Question at a Time

Let’s take a hypothetical example.

Say you own a brand selling healthy packaged sandwiches through retailers.

From your demographic and geographic research, you’ve segmented your audience into two key markets: students and young professionals.

Now you want to increase brand awareness amongst the student market so they pick your sandwich off the shelf.

But in order to reach them effectively, you need to understand their behaviors and attitudes – namely how, where and why they consume content.  

Using third party data, it’s possible to reveal the answers to these questions to build a detailed picture of their media usage and online behaviors.  

Chart detailing on which media students spend the most time.

With this insight alone, you know that students are spending a considerable amount of time on social media daily. The next step is understanding how and why they do so.

Incrementally and methodically combining data in this way will help you establish what types of content will resonate with your separate audiences and where’s best to place it.

Target Segmentation in Action: Visit Scotland

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 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 target market 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 Target Market Segmentation into your Marketing Strategy

Target market segmentation should underpin your brand’s marketing approaches and strategy, helping you 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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