Segmentation bases are the characteristics marketers use to separate an audience into groups, or segments, that can be targeted with specific marketing efforts.
These bases help the marketer better understand how consumers are similar yet different from one another, which helps inform a segmentation strategy and analysis.
Understanding the bases of segmentation in marketing is the first step in creating a segmentation strategy that creates beneficial results for your business and customers.
Segmentation bases in marketing
A segmentation base is a specific way of categorizing or grouping people that has been proven to lead to greater responsiveness to marketing efforts. It's an extremely useful but often overlooked aspect of an effective global marketing strategy. Many companies ignore market segmentation and risk losing huge returns on their marketing campaigns.
Working with segmentation bases helps your company develop campaigns that connect to customers and generate results. You become better positioned to create campaigns that outperform your competitors.
To achieve this, you need a solid understanding of the different types of market segmentation and why each is useful for improving your marketing results.
The different types of market segmentation
To succeed, marketers must understand their target audience and potential customers. Small business owners may understand their customers by speaking to them informally, while a Fortune 500 analyst might need in-depth research and focus groups to learn more about theirs. Understanding customers improves decision-making across an organization, not only in marketing.
There are five main types of segmentation bases. Each of these works well with different businesses and industries, so it's essential to consider your options before deciding on the best for your needs.
The five main types of market segmentation are demographic, psychographic, behavioral, geographic, and firmographic.
Demographic market segmentation
Demographic segmentation divides people based on their age, income, education level, and occupation. Some examples of companies that use demographic market segmentation include insurance providers, healthcare companies, and banks.
If you focus on demographics, you can divide customers in many ways, including by age, income, occupation, gender, or race. Each category is a segment. Marketers target these groups with their own messaging and tactics to appeal specifically to them.
Demographic segmentation enhances product value by allowing a product to mean something more to customers. It can make a product more personal to the target group.
Psychographic market segmentation
Psychographic segmentation divides people based on their values, attitudes, and interests. Some examples of companies that use psychographic market segmentation include car manufacturers, clothing retailers, and political campaigners.
This segmentation strategy focuses on an individual's psychological and emotional needs and motivators. It may sound complicated to uncover, but tools are available to help you learn what customers use your solution for. Techniques like market research, focus groups, and surveys can help you better understand your target audience.
Behavioral market segmentation
One of the most widely used types of segmentation is behavioral. In behavioral segmentation, marketers focus on consumers' behaviors and characteristics — how they spend their time, hobbies, personality types, etc.
Marketers who follow a behavioral-based segmentation strategy use existing data to create profiles of groups that exhibit commonalities within specific markets. Marketers then target these groups with products and services that appeal to their interests and needs. Behavioral segmentation divides people based on their buying habits and brand loyalty. Some examples of companies that use behavioral segmentation include supermarkets, hotels, and fast-food restaurants.
In addition to these three popular types of market segmentation, there are other bases certain businesses should consider, including geographic and firmographic.
Geographic market segmentation
Geographic segmentation divides people based on where they live, while firmographic segmentation divides people based on their work.
If you're an international company or plan to expand someday, understanding different customer habits and preferences related to specific geographic regions is a crucial part of your role. Customers in Western Europe might respond differently to campaigns than people who live in Asia.
No two geographic regions, even two that are side by side, are exactly alike. People living on opposite sides of a national border might have vastly different cultures and habits. This is why it's important to know where your customer base is coming from.
Firmographic market segmentation
Firmographic segmentation is data that describes a business, including where it's located, its legal structure, whether it's privately or publicly owned, how many employees it has, and so on.
Firmographic segments are typically stable unless there's a significant change within a company such as a merger, acquisition, or bankruptcy.
The benefits of segmentation in marketing
As previously discussed, market segmentation is about dividing an audience into groups based on different factors. Creating customer segments comes with many benefits for the marketing strategy in the long term.
- Allows you to apply different strategies to specific audience groups depending on what they're looking for, the issues they face, or what they love doing.
- Facilitates better engagement with your target demographic, allows you to be more relevant to your audience, and helps you create more value
- Forces you to look at how your product or service fits into your customers' lives, then communicate that by appealing to their needs to influence their behavior without feeling like you're imposing on them
- Creates brand advocacy and loyalty, e.g., word-of-mouth support – which is always a great boost to marketing
- Allows you to appeal to a broader audience by giving your product more versatility and personality
- Helps reduce costs by focusing on reaching fewer people from your target market overall but making sure each one of them is engaged with your brand
What are the challenges of using segmentation in marketing?
One size does not always fit all, and that also applies when it comes to marketing. Bases of market segmentation only work if you find your audience(s) and niche.
- Every segment has unique needs and wants, so even when you find a perfect base, it may trigger adjustments in your messaging, copy, and adverts to ensure you're speaking your customers’ language.
- There's no fixed formula for segmentation strategy and analysis, but keeping the customers' needs front-and-center is always a good start
- Allow opportunities to receive feedback and empower your market to share their perspectives and experiences with you
- No two segments are exactly alike, but by paying attention to your customers, you can develop clear segmentation bases that help the marketing team exceed their goals
Undertaking a segmentation analysis
When you have identified and outlined your market, what do you do with that information? The first step is a segmentation analysis, which uses market research to determine which markets yield the highest return on investment (ROI).
With segmentation analysis, marketers identify how members of an audience can be grouped based on similarities and differences. This clarifies their preferences and challenges.
For example, a company may identify a core customer group as women between 18 and 24 years old who live in metropolitan areas. They may identify another as men between 25 and 35 years old who live near busy cities, and yet another as couples between 35-45 who make at least $50,000 per year.
After identifying these groups, the company evaluates the similarities and differences. Younger women may be more likely to respond to lifestyle-focused marketing strategies, whereas couples may respond better to product-focused ads. By examining commonalities between your markets, marketers can develop comprehensive marketing strategies that appeal to specific people and cater to individual needs.
How to create a segmentation strategy
Creating a segmentation strategy for your brand is an essential part of modern, data-driven marketing. Your segmentation strategy will vary depending on the industry you're in. It should be considered as you develop your brand voice and tone and choose tactics such as social media posts, advertisements, and email campaigns.
To create a segmentation strategy that works for you, think about the following:
- Who is my audience (age range/gender/socioeconomic status)?
- What do they want (brand value, product benefits)?
- How do I reach them (social media platform usage, types of news outlets read)?
- How can I tell them about my product (content type/value proposition/call-to-action)?
These four considerations form the basis of every good segmentation analysis.
Once you've got answers, outline a strategy and implement it across all digital marketing channels, from email campaigns to social media posts.
By identifying segments of people who share common characteristics and crafting distinct strategies to reach them, you'll be able to increase engagement across all platforms.
Can you use multiple segmentation bases?
There are many ways to use segmentation bases in marketing. Multi-segment marketing exists to cater to businesses that cut across many segmentation bases.
How do you know which base(s) to use for your next marketing campaign? There is no correct answer, but here's what we recommend: test and iterate!
Different segmentation bases work well with various campaigns, so testing helps determine the most effective way to convert leads to customers. As you test, keep track of what works and what doesn't.
Wrike for segmentation bases
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As the campaign unfolds, you can get performance insights with Wrike's performance aggregator, which pulls data from over 50 channels. Our dynamic reports visualize campaign results, meaning the latest stats are always close at hand for stakeholder updates.
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