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Marketing segmentation: definition, methodology and application

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Marketing segmentation: definition, methodology and application

Imagine buying a baby baby carriage and a pacifier on an online shopping platform.

You then receive in your mailbox a 50% promotion on a walker, a Costa Rican flag and a fishing rod. Sounds strange, doesn't it? It could happen without marketing segmentation. Thanks to marketing segmentation, the website will instead offer you a promotion on a baby bottle warmer and a baby monitor, or a discount in a store near you.

But what exactly is marketing segmentation? How do you apply this concept to your organization? What segmentation criteria should be used? Answers in this article.

 

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What is marketing segmentation?

Marketing segmentation is simply the process of dividing a market into homogeneous groups of consumers with similar needs and buying behaviors.

This enables companies to create targeted offers and marketing strategies for each market segment more easily.

What’s more, marketing segmentation is now a means of personalizing the user’s experience with his or her company. Thanks to precise criteria, the organization is able to communicate the right words, the right offers, at the right time. All this increases customer satisfaction and value over time (Lifetime Value).

The different segmentation criteria used in marketing

Segmentation criteria are the characteristics that companies use to divide their market into segments. These criteria can be demographic, geographic, psychographic or behavioral. Let’s take a closer look at some concrete examples.

Demographic segmentation

These criteria are generally the easiest to obtain and the most widely used in marketing: age, gender, education, occupation and income. Example: you buy from a ready-to-wear website. You then receive newsletters according to your gender.

Geographical segmentation

Geographical segmentation is based on data such as the region, city or country in which the user lives. This is particularly useful for companies with local stores in each city. Example: a large retailer can segment its customers according to their city and thus offer them offers exclusive to their region on local seasonal fruit or inform them of a change in the shelves.

Psychographic segmentation

Psychographic segmentation is probably the least well-known of the four. It is based on the customer’s personality, values and lifestyles. Organizations can establish this segmentation based on repeated behaviors or through a survey. Example: to take up the example in the introduction, you’re looking for naturally sourced baby items on an online shopping platform. The latter can segment according to your ecological values and product quality. It will therefore offer you organic cotton panty liners or natural wooden toys.

Behavioral segmentation

This last segmentation criterion uses buying behavior, product usage and involvement in purchasing decisionsto divide consumers. This is particularly used in the e-commerce environment, to push people to add to the shopping cart or finalize their purchase. Example: you add a baby baby carriage to the shopping cart on your favorite shopping platform. The latter sends you an e-mail (obtained thanks to your customer account) to encourage you to finalize your order and receive your baby carriage before Friday.

Key steps to successful marketing segmentation

You now know the segmentation criteria. To integrate them into your current strategy, the steps are based on analyzing your data, creating segments, applying your strategy and following up to capitalize on your segments.

Customer data analysis

To analyze your customer data, you can use several data sources:

  • demographic data (place of delivery or store of purchase);
  • purchase data via a loyalty card or a customer account ;
  • behaviors on your website (using Tag Manager, for example) ;
  • the satisfaction surveys.

This is where you can integrate data science into your marketing strategy. All sources of data are good for optimizing the next step.

Definition of relevant segments

The second step is to define the relevant segments. Here you need to identify market segments with similar needs. Make sure that each group is large enough to justify a specific marketing strategy.

Development of appropriate marketing strategies

Once the relevant segments have been identified, you candevelop marketing strategies tailored to each segment. This might include creating specific advertising messages, promoting products tailored to each segment, or relevant information for each segment. Remember to monitor the results of your campaigns to ensure their effectiveness and adjust if necessary.

Conclusion

Marketing segmentation is a powerful tool for companies, enabling them to better understand their customers and offer them tailored products and services. This strategy improves the consumer experience with personalized offers and relevant advertising. By following the key steps to successful marketing segmentation, organizations can maximize the benefits of this method and improve their profitability.

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