How Market Segmentation Can Help You Understand Your Target Audience
When Brands are planning their marketing efforts, they inherently know they’re targeting a certain group of people or a target audience. Developing a target audience profile is extremely important for brands, especially when the marketing budget is limited. There are many different ways to create a target audience profile and one of the most effective methods is through market segmentation.
Market segmentation is a term that describes the process of breaking a large market into smaller groups that share similar characteristics and will react in a similar way to a marketing campaign. This article will break down the different ways a market can be divided.
There are four main categories of market segmentation that helps brands break down a large market into smaller, easy to understand groups.
The first category is Geographic Segmentation, which refers to dividing a market into smaller groups based on different geographic units. Some common geographic units are nations, regions, city size and climate. To illustrate this point, let’s introduce a fictional brand called Serf that is launching a new surfing product called Serfer. Perhaps Serf only knows they want to target surfers who live in big cities. A savvy marketer could use geographic units to determine that their target audience lives in American cities with more than 500,000 people, where it is warm year round and close to an ocean.
Just by doing this quick calculation, Serf could discern that there are five cities that match those descriptions and hence, that is where the majority of their marketing budget will go. If the same brand didn’t make that calculation, they could fall into the trap of making assumptions and potentially wasting precious ad dollars on markets with less potential.
Another well-known category is Demographic Segmentation, which divides a large market into smaller groups based on variables like age, gender, family size, income, occupation, and generation. For this example, let’s say Serfer is an expensive device that attaches to a surfboard and integrates with an app to track a surfer’s performance. Since the product is expensive and tech oriented, the brand could choose to target a millennial audience that makes over $60,000 a year.
Now Serf is getting somewhere. They now know where their target audience lives, how much they earn and their age. A profile is starting to emerge of who their target audience is, but they can still dive much deeper and get even more specific.
To really find out what makes a target audience tick, it is important to look into Behavioral Segmentation, which divides an audience based on traits such as knowledge, attitudes, benefits sought, user status and loyalty. For Serf, their target audience are most likely already surfing, so we know a little bit about their attitudes on certain things like being outside, exercising, enjoying the beach.
However, even among this audience, there may be large differences in what benefits they are seeking. Some may use surfing to relax while others participate in competitions on a regular basis. Since Serf is marketing a product that tracks performance, they can discern that they will have more success with surfers who care deeply about their performance.
Lastly, to fill in all the cracks there is Psychographic Segmentation, which divides markets into groups based on social class, lifestyle and personality traits. It is easy to imagine how this category can get extremely specific when looking into things like lifestyle and personality traits. Often times it is more important for brands to appeal to a target audience’s ideal lifestyle or personality trait than their actual statues. A competitive surfer may perceive themselves as a winner, dominant or dedicated and will react positively to marketing that confirms or reinforces this idea.
Now, after going through this relatively simple process, Serf will have a great idea of who their target audience is. They now know their target audience for Serfer lives in large cities, near the ocean where it is warm year round (Geographic), are between the ages of 18–35 with income over $60,00 a year (Demographic), are competitive and performance motivated (Behavioral) and perceive themselves as successful and powerful (Psychographic).
Just like that, Serf has a specific audience profile they can use to analyze where the best place to allocate their marketing budget is. Maybe Serf decides that a pop-up shop on a beach in a wealthy neighborhood is the most effective way to create buzz without spending a lot of money. Or maybe Serf chooses to sponsor a specific surfing competition where they know their target audience will be at. Either way, Serf is now making decisions based on research and analysis which will result in efficient and effective marketing.