First of all, what is market segmentation?
Market segmentation is essentially the process of dividing and grouping your users based on commonalities and shared characteristics, such as interests, needs, wants and motivations.
The aim of market segmentation is to enable brands to better target their products, services or content, making sure they reach the right users, in the right place and at the right time.
So what are the 4 main types of market segmentation?
#1 Demographic segmentation. This is arguably the most basic of the segmentation types. Demographic segmentation divides a group or population based on variables like age, gender, income, occupation, education level, marital status, religion or nationality. And it’s usually one of the first stops when brands begin to segment their users.
Why? It’s because demographic information is easy to collect, simple to measure and analyse, and it’s cost-effective. On the flip side, it has been criticised for being vague, or based on assumptions, and not taking into account the needs and wants of individual consumers.
#2 Geographic Segmentation. Geographic segmentation basically groups users based on their geographic details. Similar to demographics, geographic tends to be objective, so it is essentially based on facts about the individual. The 5 key areas that marketers take into account when segmenting geographically are:
#3 Behavioural segmentation. Behavioural segmentation does what it says on the tin - it segments users based on their behaviour in a store, on a website or in an app. Behavioural data tends to be gathered and analysed through particular algorithms or with tools like Google Analytics.
These tools and algorithms are able to track user’s ‘dwell time’ on a website, a website’s bounce rate, online or in-store actions, communications with the brand and whether they are new or returning users.
Big brands such as Spotify and Netflix are at the top of their game when it comes to behavioural segmentation, offering things like Spotify’s ‘Recommended Daily Mix’ or Netflix’s ‘Top Picks for [insert the user’s name]’.
#4 Psychographic segmentation. Arguably one of the most subjective and difficult to quantify, but also the most valuable, psychographic segmentation focuses on a user’s psychological attributes, such as personality, values, attitudes, opinions, interests and lifestyles.
Psychographic data can be collected through surveys, interviews or, most commonly, using analytics data gathered from Google, or social media, where users often freely reveal personal information, like their favourite TV shows, their political views or how much sourdough toast they had for breakfast.
The benefits of using psychographic data in your marketing strategy can’t be overlooked. Psychographics offer such a personal look into what consumers like, dislike, need, want and love. But it’s not all roses, because psychographic information is definitely the most subjective of the segmentation types, and psychographics, in particular, can be harder to collect and analyse. Marketers must also make sure that information is interpreted properly, and for the right reasons.
So let’s recap our main points:
Number 1: Demographic segmentation. This data is easy to collect, it’s based on facts, but doesn’t tell us much about the real person.
Number 2: Geographic segmentation. Similar to demographics, geographic information is simple to collect and analyse, but doesn’t give us insight into our users as individuals.
Number 3: Behavioural segmentation. It’s one of the best ways to get to know your consumers as people and then personalise content based on their actions and interests.
Number 4: Psychographic segmentation. It lets you get to know your users better than ever. Taking into account things like someone’s values, opinions, interests and lifestyles are so important for completely personalising experiences.
So, there you have it. The 4 top market segmentation types. Now, these aren’t mutually exclusive, multiple segmentation types can be used together and can really complement each other, drawing actionable insights for more accurate segmentation and analysis.
Overall, segmentation helps to focus marketing efforts, making sure products, services and campaigns are streamlined and delivered to the most appropriate audience for that brand.
Each segmentation type will have its benefits and its drawbacks. So it’s important to always remember to respect the privacy of your users and make sure you’re transparent in your endeavours.
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Finally, we’d like to hear from you. Are you going to start using segmentation in your marketing strategy? Or maybe you’d like to share some of your own info that we might have missed.
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