How to Segment a Market

How to segment aMARKETCreated by SimplyDigitalMarketing.com

What is MarketSEGMENTATION?

Segmentation is the process of grouping together markets who have similar characteristics, needs and buying styles.

Markets can be consumers/customers/businesses/individuals/groups or a mixture of many.

Why segment yourMARKETS?

1. Having well segmented markets sets the foundation for who you target and how you position your brand, products and services to them. (Segmentation, Targeting, Positioning- the STP process)

2. Quality segments gives you a chance of understanding how they might respond to your marketing activities, thus you can tailor your activities and messages accordingly.

Many reasons; here are two

Stages ofSEGMENTATION

There is no substitute for comprehensive segmentation, however these 4 high level steps should help start you off in the right direction:

1. Define your market(s)2. Map your market(s)3. Understand your audience(s)4. Form your segments (B2B, B2C, Both)

4 steps to start you off...

1. Define yourMARKETS

For each market, answer the following:

- What is the market?- What is that market’s need?

Note: You need a clear set of boundaries for each market; for instance, geographic area. Your markets should be broad, yet specific as there could be a number of ways in which to satisfy your audiences needs (not just yours).

Gives clarity and focus

2. Map yourMARKETS

1. Map out your suppliers, distributors, retailers, contractors, final users and so on.

2. Plot out any decision points and break down of stock

Helps you understand the buying points

3. Understanding yourAUDIENCE

At what points do your audience come in contact with your business during the buying process?

Helps you understand the touch points

3. Understanding yourAUDIENCE

Develop micro-segments on what is bought, where, when, how and by who. You will end up with 10’s of micro segments.

Understand What, Where, When, How and Who?

3. Understanding yourAUDIENCE

Split out your influencers and decision makers. They will need different messages.

Who are the decision makers and influencers?

4. Segment byCONSUMER

Group your decision makers and influencers as appropriate. Could be by demographic, geographic, psychographic, behaviouristic

* Based on 8 class levels

Customer/Consumer grouping

4. Segment byBUSINESS

Group your target businesses as appropriate e.g. Sector, Private, Public, Size, Location, Company age

Business grouping

Criteria forSUCCESS

Your segments should be:

1. Measurable2. Accessible3. Substantial4. Unique5. Appropriate6. Stable

Source: CIM The Marketing Planning Process

How you qualify your segments

A FinalWORD

The segmentation process is arguably the most challenging, but insightful of all marketing tasks. This presentation only scratches the surface and further reading should be done on each stage.

Marketing Plans by Malcom McDonald and Hugh Wilson has an excellent section on segmentation.

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InformationREFRENCES

Phil Megicks, Ray Donnelly, Graham Harrison. (2009) The Marketing Planning Process. Elsevier, London.