In common man’s language segmentation is nothing but understanding customers in structured manner by dividing the customers into logicalgroups.
Need of Customer or Market Segmentation:
Any brand or product is designed in a way keeping certain objective or solving a particular problem. The market or customer universe is huge with mix of various types of people with different needs, wants, priorities and problems. So particular product may be fit for or will be able to cater needs of certain set of customers and not all of them at a time.
If the market or customers re-divided into logical smaller groups based on various parameters then each smaller group formed exhibits similar characteristics or customer buying behavior and it becomes simple for a brand to identify the right set of potential customers whose needs can be best addressed by the product.
Types of Segmentation:
Market can be divided generally based on following aspects. The variables should also reflect meaningful customer differences so s to come up with meaningful segments.
- Demographic segmentation – Based on variables like Age, Gender, Education, SEC class etc
- Geographic segmentation – Based on area, location etc
- Behavioral segmentation – Based on behavioral attributes
- Psychographic segmentation& – Based on customer thought process and decision making factors
- Customer journey segmentation – Based on customer lifecycle approach.
Other way in which market can be divided is Segmenting by needs and value
- Market-based segments: Based on observable psychographic, firmographic and demographic attributes.
- Needs-based segments and personas: Based on business needs, use cases, and jobs-to-be-done.
- Value-based segments and personas: Based on willingness to pay versus the status quo.
Importance of Segmentation:
- Value-based segmentation evaluates groups of customers in terms of the revenue they generate and the costs having relationships with them.
- Using Segmentation and micro segmentationapproach companies determine which segments are the most and least profitable so that marketing budgets can be allocated accordingly.
- Market segmentation it makes planning of marketing campaigns easier, as it helps to focus the company on certain customer groups instead of targeting the mass market and see improved marketing performance.
- Segmentation helps marketers to be more efficient in terms of time, money and other resources.
- Market segmentation allows companies to learn about their customers. They gain a better understanding of customer’s needs and wants and therefore can tailor campaigns to customer segments or micro segments that are most likely to purchase products.
Segmentation approach in B-B and B-C companies / organizations
In case of companies or organizations that have consumer based product or services the segmentation is done based on the customer level tributes that re mentioned above.
In the organizations that have product or service of B-B nature usually the variables used are Industry type or sector, designation of decision makers, type of co i.e public or private, Size of the company, turnover, location, level of technology intervention etc…
For segments to be viable they should have following characteristics:
- Identification – It is easy to identify certain segmentation variables because they are easily visible or observable.
- Measurability – degree of measurability of the size and purchasing power of the segments. Marketer should be able to define size of market based on this.
- Accessibility – The consumers must be accessible or available to the marketers So that the right communication can be sent to them to market right product.
- Substantiality –the segments should be large enough and worthy of investment keeping in mind the product / service that company is into.
Benefits of segmentation
- Effective allocation of marketing resources and the maximization of cross-selling and up-selling opportunities.
- Improved responses and ROI – Better responses to the marketing campaigns as the campaigns that are most relevant for the particular segment is sent to them.
- Customer delight using personalization approach for each segment
- Market competitiveness – You can be ahead of competition as the communication you are using and a product offering is the most relevant for that customer segment.
- Increased operational efficiency and effectiveness – The structured approach of marketing strategies towards each segment ensures campaign operations done more effectively and large volume can be managed by same amount of resources.
- Greater company focus – Company has identified specific market segments, it helps them to focus on what segments they want to target with specific products/ services/ content/ blogs and campaigns.
- Better serve a customer’s needs and wants – Having defined segments enables companies to satisfy a variety of customer needs by offering different bundles and incentives.
- Market expansion – With geographic segmentation as discussed earlier, market expansion is possible immediately. When a company understands their segments and how to market to a segment in a particular location, they can expand immediately into another nearby location.
- Targeted communication – Even when product features and benefits are the same, it is important for companies to target segments with specific communication that is very convincing and relevant for that particular set of customers. Segmentation approach can help define and send right communication.
How it can be effectively implemented through marketing automation platform and Marketing Technologies?
This makes life of a marketer easy by giving them more time to focus on strategic aspects of marketing on not day to day marketing operations.
MarTech Management covers implementation, day-to-day operations, technical maintenance, migration, integration, version upgrades and license and performance optimization of MarTechplatforms. The cost of tool licenses, hardware and people to manage the platforms are all blended resulting in cost optimization to a greater extent.
There is a dedicated team of tech experts that support the execution of marketing activities end to end keeping minimum friction while execution.
In modern day marketing where life is Digital automation is unavoidable.
Today’s customers are evolved and informed.They are digitally literate and tech savvy in nature. it’s important to adapt technology to reach out to them and market them right products at right time and through their preferred channel of communication. This can be achieved only through marketing automation as the micro segmentation,personalization etc can be effectively implemented on large scale using Marketing technology to bring in digital transformation or a marketing transformation effectively.
So get set for Micro-segmentation.
By Jayanthi K
The author is having a decade and a half of experience in content writing and content marketing spread across different sectors and presently working with Xerago as a Senior Content editor.