The Advantages of Marketing Segmentation
Market segmentation is an important part of modern marketing because it helps an organization identify different audiences. Within any given market, potential customers can be divided by characteristics such as age, income or even personality traits. These segments can each be marketed to differently, because each segment has its own needs and prioritizes different things.
There are many market segmentation benefits that should not be underestimated, since proper segmentation can help businesses tailor products and services to the needs of specific groups and increase revenues.
One of the more common types of market segments is the geographic segment. Effective brands recognize that their product is best sold when it is advertised in a way that appeals to local tastes. Coca-Cola, for instance, does not simply translate its U.S. advertisements into different languages in global marketing campaigns. Instead, Coca-Cola creates campaigns that appeal to the specific culture of a specific country.
Even within a country, a brand can develop different advertising campaigns that appeal to different tastes and preferences.
Demographic market segmentation refer to the characteristics of the population. Demographics include race, ethnicity, gender, age, occupation, income and other factors.
Advertisers routinely try to market to different demographic groups because they traditionally assumed that purchase behaviors were largely influenced by demographic factors.
A prime example of this is income, since people are limited in the types of products or services they can purchase based on their respective income brackets.
Whereas demographic marketing has traditionally been one of the most common approaches to marketing, behavioral targeting is now becoming one of the most appealing ways of advertising to the public.
Behavioral marketing still relies on demographic research to a degree, looking at factors such as age and determining buying trends within those demographic segments. However, behavioral marketing doesn't tailor advertisements to a single demographic.
Following demographic research, marketers attempt to appeal to multiple demographic groups who all enjoy the same product or service. If three different groups all enjoy the same thing, then marketers run the risk of alienating one of those groups if their advertisements are too narrowly focused on only one segment of the market.
Behavioral marketing studies demographics only to find behavioral trends among several groups. The resulting advertisement is narrow in that it targets a single behavior, but broad in that it appeals to multiple demographic groups.
The market is more diversified than ever before, so the importance of market segmentation should not be underestimated. The globalization of the market, thanks largely to the internet, has diversified the consumer base to an unprecedented degree.
Businesses that perform best know how to identify these segments and appeal to them accordingly. In the same way that market segmentation helps sell to a diversified customer base, so, too, it helps retain the existing base.
By reaching out to new audiences while retaining existing ones, businesses are able to expand. Expansion can occur within the immediate geographic area or in new areas. Since marketing segmentation includes finding out more about the regional tastes and preferences of new audiences, businesses can learn a lot from their market research. By uncovering these preferences, businesses make it easier to craft marketing campaigns for these regions and establish a foothold.
With customers are being retained, new customers brought on and expansion taking place, profits start to rise. However, a wider customer base, business expansion and increasing profits are just a few of the market segmentation benefits.
When a business knows its audience, it can better communicate with that audience. Understanding what different consumers want can also make a business leaner and more focused.
For all of these reasons, it is important for businesses to perform the kind of market research that helps them better understand the tastes and preferences of the different segments of their audience.