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Market Segmentation – 9 pointers to segmentation success


Posted on May 15th, by Bill Vallis in Blog. 2 comments

Bullseye, or just plain bull… is your marketing on target?

As an agency on a mission to help our clients achieve their commercial maximum, we keep an eye on a selection of the best blogs, interest groups and industry comment. And while these sources SHARE useful marketing content, ideas and tips, debate often focuses on tactical issues, ahead of the bigger strategic concepts.

Don’t get us wrong: knowing how to optimise an email design, utilise social media, integrate digital and offline channels – and all the other tactics we read about daily – is valuable. Nevertheless, if the strategy’s off centre in the first place, the best tactics in the world will achieve… diddly squat.

Go for glory – talk segmentation
One of the most fundamental ways to improve marketing results is through improved targeting, and you can’t achieve that without first segmenting your audience. Segmentation goes right to the heart of business success, because it relies on a clear understanding of the different groupings of customer needs and wants in your market.

Like all really powerful ideas, segmentation as a concept is simple. Different customers will buy from you for different reasons: grouping them into sub-sets based on shared purchase motivations is what creates ‘segments’ relevant to your business.

One of our software clients has a customer segment that buys the individual product modules they consider to be ‘best of breed’, picking and choosing standalone tools from a variety of vendors. It has another customer segment whose members are committed to the product ecosystem and want a complete, integrated solution from a single supplier. The significance in terms of campaign design and the wider marketing mix is clear.

9 pointers to segmentation success

Hit the segmentation bullseye – here’s our ‘9 darter’:
1. Remember, tactics only work if the strategy’s right to start with
2. Profitable targeting relies on segmentation
3. Segmentation = grouping your customers according to their needs, wants and purchase motivators
4. Don’t try to ‘segment’ your market by buyer classification – that’s not as powerful
5. Assess and prioritise your segments (how large, reachable, homogenous, etc?)
6. Tailor your marketing mix for each segment
7. Segmentation will improve marketing ROI
8. Tailored propositions = raise perceived value -> greater margins
9. Make segmentation information a core element of your agency briefs

9 Pointers to Market Segmentation Success from Bill Vallis

 

Watch out for the bull…
For your market segmentation to have value, it has to be done on the basis of the purchase motivations and benefits sought. It’s common for businesses to talk about customer segments when in fact they are simply classifying their buyers (eg. by location, company size, sector, technology used, etc). Because such groupings are not based on common purchase motivators per se, they don’t inform marketing in the same way – and your campaigns won’t reap the same rewards.

Customers are special – so treat them as such
With a clearly defined series of market segments you can prioritise them accordingly, based on their needs, commercial potential, viability and other factors. An in-depth understanding of each segment’s distinct purchase motivators enables you to devise a specific marketing mix for each.

This approach will make your marketing programmes more cost effective, and also increase perceived value by customers, creating potential for margin growth. And that has to be a great position from which to brief your agency to create killer campaigns.

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