Marketing is one of the most appealing branches of business you can pursue a career in because it’s a crucial need for virtually every company worldwide. On top of that, each company’s marketing strategy will look vastly different from others depending on the type of products/services it sells and whom it sells to. This concept, known as market segmentation, is essential knowledge for anyone looking to succeed in marketing.
Professionals can gain in-demand marketing segmentation skills, among other business knowledge, in a Master of Business Administration (MBA), such as the online MBA in Marketing program at Fitchburg State University.
What Is Market Segmentation?
According to Tech Target, market segmentation is when a company divides its total addressable market into smaller groups depending on their shared characteristics. Market segmentation allows companies to create more targeted products, offerings and advertisements depending on the audience. Implementing marketing segmentation will almost always generate a higher ROI on your advertising efforts.
There are four main ways to segment a market:
- Geographically: Dividing a market into different areas depending on where people live
- Demographically: Dividing a market using attributes like sex, age, ethnicity, income, education, career and marital status
- Behaviorally: Dividing a market according to individuals’ actions or behaviors, such as past purchases, lifestyle choices, travel destinations or daily routines
- Psychographically: Dividing a market based on individuals’ beliefs, values, lifestyles, opinions or interests
These segmenting strategies can also be mixed and matched. For example, a company could choose to run ads that target females living in Northern Ohio, aged 25-35 and who make over $100,000 a year (this uses both geographic and demographic segmentation). Or a company could target everyone who is a registered member of a specific political party and bought a house in the past six months (this uses both psychographic and behavioral segmentation).
As you can imagine, there is quite a bit of trial and error as marketers tweak their marketing efforts and target demographic to see what generates the best results.
Importance of Segmentation
Many people think of marketing as the process of creating engaging and funny commercials or advertisements. While this is an important aspect of marketing, a marketer’s main job is to determine who will benefit the most from the company’s offering, which is known as the company’s target customer. From there, the marketer needs to discover the best ways to get the company’s message in front of this target customer. Usually, the best way to do this is through market segmentation.
According to a G2 article, some of the main benefits of market segmentation include:
- Increased sales: If you’re targeting people with a need for your product, you will have a better chance of running more effective ad campaigns and converting more customers.
- Customer retention: Targeting a highly-specific customer will help create a stronger connection between your company and its customers, which almost always leads to higher customer retention.
- Lower ad spend: Better segmentation leads to more effective ads, allowing you to acquire more customers while spending less on advertising.
On top of these benefits, segmenting your market can also be a great way to discover new potential customers. Analyzing your customers in-depth could help uncover needs from your target market that your company is positioned to solve.
Common Mistakes of Segmentation
Market segmentation is a process that requires constant trial and error. With so much testing going on, you’ll occasionally make a mistake. That said, here are some common mistakes when segmenting your market, according to the G2 article:
- Creating segments that are too small: It’s critical to narrow down your target customer, but getting too specific might actually harm your marketing efforts by making your potential base of customers too small.
- Not adjusting to changes: Your customer base will be constantly changing. As such, you’ll need to adapt your strategies in response to your customers. With this in mind, companies should commit to reevaluating their strategy at least once a quarter.
- Targeting segments that aren’t buyers: You might find the perfect target demographic, but you’ll have a hard time converting customers if this customer doesn’t have the money or a need for your product.
Building Your Foundation
Marketing is a business process that’s constantly evolving as our world changes and new technologies become available. With that said, several immutable laws of marketing have stayed the same for years. Market segmentation is a perfect example of a strategy that largely remains the same even as other factors change.
To learn these laws of marketing, it’s usually a good idea to pursue an advanced degree in the subject, such as a marketing MBA. Some programs, such as Fitchburg State’s online MBA in Marketing, will help teach you the core marketing rules while addressing the notions that change across the digital age.
For example, Fitchburg State offers a course called Marketing Strategies that discusses key concepts such as strategic positioning, SWOT analysis and pricing strategies. These individual concepts are then connected to larger themes like globalization, leadership and teamwork. Students can complete the program and gain critical market segmentation skills in as few as 12 months.
Learn more about Fitchburg State University’s online MBA in Marketing program.