Segmenting your markets

Posted on June 17th, 2008 by Adam in Marketing

Market segmentation is simply taking the markets you operate in, or would like to operate in, and dividing them into smaller units. Focussing on segments allows you provide targetted messages and offers, resulting in higher conversion rates; a more effective use of your marketing dollars.

There are many ways to segment your markets. Common approaches include:

Geography: Physical location eg country, county, city etc.
Geodemographics: Lifestyle information eg age, car ownership
Social Class
Type of Business
Size of Organisation

Once you have created suitable segments you will need to validate them before you create segment specific offers and marketing communication. There are no standard tests but if you satisfy yourself that you can answer the following common questions you should be well underway:

Is the segment big enough? - can you make enough profit?
Is the segment sustainable? - will it be there long enough to make it profitable?
Can you reach the segment? - can you identify and contact potential customers?
Does the segment respond differently? - two or more segments respond the same combine them