Market segmentation is the process of grouping or dividing an audience into subgroups based on commonalities and shared characteristics. These characteristics can range from things such as a user’s age, location or income to their needs, wants, behaviours and values. This results in valuable subgroups consisting of existing and prospective customers for your brand.

A strong, relevant segmentation is the cornerstone of business strategy. Understanding what makes your current and prospective customers tick allows you to tailor brands, products, pricing and communications to specific groups, so you can make best use of limited resources. Here’s why segmentation is key…

Customer-centric growth

Every organisation says they have customers at the heart of their business. If they don’t have functioning segmentation…they’re lying! Segmentation facilitates the creation of detailed personas of both current and future customers. Deep understanding around customers should inform every element of your business, from product or service development, customer acquisition, account growth and retention.

Establishes a framework

The customer journey has never been more fragmented than it is today. Consumers interact with brands on multiple platforms and expect 24/7 instant communication in many cases, As such it can be extremely difficult for brands to provide a consistent tone of voice, consistent experience and consistent resolution to issues. Segmentation establishes a framework, a single language that ties together multiple business units and allows the company to speak with one voice.

Personalised Communication

B2C companies are striving towards better targeting and more personalised approach and messaging. The problem has always been that achieving this has historically required a 1 to 1 approach, which can only ever be adopted to hot leads or loyal customers. Segmentation allows for personalised marketing and communication at scale, leading to greater returns from your investment. By its very nature, segmenting your audience diversifies your approach, increases your marketing collateral whilst focusing your sales efforts. All these actions mature your acquisition process and procedures.

Identifies White Space

As well as fleshing out your current and future customers, segmentation facilitates the discovery of gaps in your current audience in which you might expand. Secondary markets are becoming more important as brands look to broaden their appeal and audience base. We have already seen a noticeable rise in unisex clothing and the dissolvement of ‘boys toys’ and ‘girls toys’ for example. As well as charting untapped areas of potential in terms of new targets, through deep analysis of your current data, you can discover additional interests from existing customers which may lead to new product or service developments.

STRAT7 Bonamy Finch are the experts on segmentation. With over 1500 successful projects we combine insight from multiple sources and techniques. Multi-national organisations turn to us for their challenging segmentations, to find out why you should too: sign up for our next event or get in touch.

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