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What Are Key Market Segments?

There are many ways to segment markets to find the right target audience. Primary segment markets include demographic, geographic, psychographic, behavioral, and firmographic segmentation.

Demographic segmentation

This includes factors like age, gender, occupation, income, and education. Demographic segmentation assumes that people with common characteristics will have similar lifestyle patterns, tastes, and interests that will influence their purchasing habits.

Geographic segmentation

This allows marketers to group people based on where they live, work, or travel. The location has a significant influence on buying habits that marketers can use to develop their marketing messages. Culture and population density (urban or rural) are also crucial variables to include in their market research. These location variables will influence what problems people have in that region and how marketers can solve it.

Psychographic segmentation

This divides people into groups based on their personality, lifestyle, social status, activities, interests, opinions, and attitudes.

Behavioral market segmentation

This describes specific steps in their ideal customer’s buying process, including what their ideal customers want, why they want it, the benefits sought, and how they go about getting their needs met.

Firmographic segmentation

This segmentation is to B2B marketers what demographics is for B2C marketers. A B2C market may have thousands of customers, but a B2B target market may have only a few large commercial companies in their target market. Firmographics provide information for marketers who want to understand companies’ strengths and viability within their target market.

Companies who properly segment their market enjoy significant advantages.

Some of these benefits include:

Stronger marketing messages

You no longer have to be generic and vague – you can speak directly to a specific group of people in ways they can relate to, because you understand their characteristics, wants, and needs.

Targeted digital advertising

Market segmentation helps you understand and define your audience’s characteristics, so you can direct your marketing efforts to specific ages, locations, buying habits, interests etc.

Developing effective marketing strategies

Knowing your target audience gives you a head start about what methods, tactics and solutions they will be most responsive to.

Better response rates and lower acquisition costs

These result from improved conversion tracking with hyper-specific goals and through effective ad messaging + advanced targeting on digital platforms.

Attracting the right customers

Market segmentation helps you create targeted, clear and direct messaging that attracts the people you want to buy from you.

Increasing brand loyalty

Wwhen customers feel understood, uniquely well served and trusting, they are more likely to stick with your brand.

Differentiating your brand from the competition

More specific, personal messaging makes your brand stand out.

Identifying niche markets

Segmentation can uncover not only underserved markets, but also new ways of serving existing markets – opportunities which can be used to grow your brand.

Staying on message

As segmentation is so linear, it’s easy to stay on track with your marketing strategies, and not get distracted into less effective areas.

Driving growth

You can encourage customers to buy from you again, or trade up from a lower-priced product or service.

Enhanced profits

Different customers have different disposable incomes; prices can be set according to how much they are willing to spend. Knowing this can ensure you don’t over (or under) sell yourself.

Product development

You’ll be able to design with the needs of your customers top of mind, and develop different products that cater to your different customer base areas.

How to get started with segmentation

There are five primary steps to segmentation:

Define your market

Who is purchasing your goods or services?

Segment your market

Divide a broad population into subgroups according to shared factors.

Understand your market segments

Conduct market research surveys, focus groups, polls, etc. Ask questions that relate to the segments you have chosen and use a combination of quantitative and qualitative questions.

Analyze the responses from your research

This highlights which customer segments are most relevant to your brand, so that you can address their specific pain points.

Test your marketing strategy

Test, test, then again, test your marketing strategy.

Once you have interpreted your responses, test your findings on your target market, define your goals and prioritize events using conversion tracking. And keep testing. If uptake is disappointing, re-examine your segments or your research methods.