What Is Market Segmentation: Types & Examples

This type of segmentation groups people based on shared personal traits that have an influence on their buying habits. It tries to understand the factors that influence how people think, their principles, and their motivations for doing different things. Psychographic segmentation groups people based on their psychological traits. For instance, when it comes to buying vehicles, a couple with two teenage children will be looking for different features compared to a single guy or a young couple with no children.

First, some products are meant majorly for specific genders, which means you have to position and market such products in a way that aligns with that specific gender. There are several different approaches that you can use to segment your audience and tailor your marketing to suit the wants and needs of each segment. A lot of information about these common needs and characteristics can be collected using online survey software and customer activity data. Marketing segmentation means breaking down your target into smaller groups with common needs and characteristics, then creating marketing messages that address the needs of each of these groups.

The extent of name data coverage means a user will code a minimum of 99% of individuals with their most likely ancestral origin. Name analysis (onomastics) is the most reliable and efficient means of describing the cultural origin of individuals. Census data is a valuable source of cultural data but cannot meaningfully be applied to individuals.

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Even when you are selling the same product, this means that different people will have different reasons and different motivations for buying the same product. Marketers often engage commercial research firms or consultancies to carry out segmentation analysis, especially if they lack the statistical skills to undertake the analysis. Analysts typically employ some type of clustering analysis or structural equation modeling to identify segments within the data. The typical analysis includes simple cross-tabulations, frequency distributions, and occasionally logistic regression or one of several proprietary methods.

Steps to Identify Your Target Market

• You want to reach as many people as possible and hope they’ll jump on board with your product or service.
• It has the added benefit that R&D and marketing can concentrate on understanding and meeting the needs of one group of customers rather than a diverse base of customers.
• Also, check out this video from HubSpot’s Stephen Higgins on how to use buyer personas to drive your marketing strategy.
• Customer personas are a tool to help marketers better understand their potential customers.

Your audience’s level of education will also affect how you craft your marketing messages, as well as the channels you use to advertise to them. Segmentation by income level can even help you to come up with a pricing strategy guide. For instance, people with low income levels are majorly worried about affordability, so highlighting low prices will often be effective in marketing to them. For example, when marketing a product to women, you are likely to achieve more success by appealing to the emotional satisfaction of acquiring your product. Even when you sell products that can be used by all genders, you’ll need different marketing positioning for the different genders if you want your marketing to be effective.

When the segments have been determined and separate offers developed for each of the core segments, the marketer's next task is to design a marketing program (also known as the marketing mix) that will resonate with the target market or markets. There are approaches to assist in evaluating market segments for overall attractiveness. Another major decision in developing the segmentation strategy is the selection of market segments that will become the focus of special attention (known as target markets). Customer data stored in online data management systems such as a CRM or DMP enables the analysis and segmentation of consumers across a diverse set of attributes.

FAQs about target market segmentation

The next step would be to collect and analyze attitudinal data for light and moderate users. The choice of an appropriate statistical method for the segmentation depends on numerous factors that may include, the broad approach (a-priori or post-hoc), the availability of data, time constraints, the marketer's skill level, and resources. This analysis of customer lifecycles is usually included in the growth plan of a business to determine which tactics to implement to retain or let go of customers. The technique known as perceptual mapping is often used to understand consumers' mental representations of brands within a given category. Positioning is the final step in the S-T-P planning approach; Segmentation → Targeting → Positioning. Developing the target segments in marketing marketing program requires a deep knowledge of key market segments' purchasing habits, their preferred retail outlet, their media habits, and their price sensitivity.

The average car buyer will be focused on things like reliability, fuel economy, and comfort, while the car enthusiast will be more concerned with things like power and performance, even if these come at the expense of comfort and fuel economy. For instance, five star hotels focus majorly on luxury experiences and quality of service when marketing themselves. When marketing the same event to extroverted people, you’ll be better off emphasizing the social aspects and interactions that will come with the event, because this is part of their personality.