In marketing jargon, “segmentation” refers to splitting your audience into subsets or segments that share common characteristics, whether in terms of expectations, demand, or needs. Segmenting customers and prospects is essential when building and executing a marketing strategy because it helps you better understand the structure of your target audience and, consequently, propose a marketing mix that more precisely addresses the different needs of each potential customer belonging to a segment you’ve defined.
As a reminder, the marketing mix covers the strategies and actions companies put in place to promote their brand. It’s based on the “4 Ps” (Product, Price, Promotion, and Place).
WHY SEGMENT YOUR AUDIENCE?
First, note that marketing segmentation benefits your potential customers by enabling you to get as close as possible to consumer expectations. Research has shown that consumers prefer brands that provide more personalized shopping experiences.
For the company, marketing segmentation offers the opportunity to better understand one or more target markets and the customers that compose them.
Segmenting your market lets you analyze precisely how it’s structured and observe the characteristics of the customers who make it up. It also allows you to see which customer groups are most loyal to your brand, which spend the most, etc.
This segmentation is actually indispensable for developing your future marketing strategies and actions, providing a better shopping experience to visitors on the website, and thus improving customer relationships.
Another advantage of marketing segmentation is that it enables price optimization by, for example, identifying which groups are willing to pay more for a product or service.
Finally, it’s smarter and more effective to optimize the marketing campaigns segment by segment than to attempt one-size-fits-all optimization across the entire market.
In theory, results will be better with rational audience targeting. The corollary of segmenting your market is that you’ll be able to analyze the return on investment of campaigns for each market segment you’ve defined, reflecting a much more relevant and precise marketing approach.
WHAT ARE THE MAIN SEGMENTATION CRITERIA?
As we’ve already said, segmentation consists of creating homogeneous subgroups within an audience made up of consumers who share identifiable commonalities. These shared characteristics, called segmentation criteria, can be various types — age, gender, place of residence, lifestyle, or website behavior, for example.
Individuals grouped in the same segment will generally have the same expectations, and you can reasonably expect them to react similarly to a given commercial offer or to a type of content specifically presented to them.
By cross-referencing these different types of data, you’ll be able to obtain even more subtle analyses of your target audience.
Key segmentation criteria in detail
Demographic criteria
This is a very commonly used type of segmentation because it relies on easily obtainable criteria that allow you to quickly target a market or potential customers. Common demographic criteria include age range, gender, nationality, occupation, education level, income, and family situation.
For example, clothing brands and retailers almost always segment their audience by gender (men/women).
Geographic criteria
Geographic segmentation is based on the geolocation of visitors. It’s therefore a very simple characteristic to collect for e-commerce merchants and website owners. With geographic data, you can propose and optimize marketing actions according to where your different audience segments are located.
For instance, Sportmaster segmented its audience by geolocation and local weather. The sports brand focuses on offering products that meet visitors’ immediate needs and that match temperature variations across different regions.
Psychographic criteria
This type of segmentation concerns consumers’ lifestyles broadly and looks at their personality, values, beliefs, opinions, etc. Psychographic criteria are harder to obtain than the previous ones: you usually need to ask site visitors directly via a survey or questionnaire.
To optimize user journeys and immediately present the right travel choice between sea and mountains at every visit, Club Med uses psychographic criteria.
Behavioral criteria
Behavioral segmentation analyzes how visitors behave on the site. We distinguish online data that describes current user behavior (time spent on site, pages visited, exit point, purchase intent, brand loyalty, search engine and device used, traffic source, etc.) and offline data (purchase history, number of visits, date and amount of last orders, etc.).
For example, Auchan segmented its audience based on the browsing paths of site users to offer perfectly targeted promotions.
HOW TO DEVELOP YOUR MARKETING SEGMENTATION?
There are two main methods for segmenting an audience.
Rule-based segmentation (“a priori”)
The rule-based method, called “a priori” in French, aims to manually split your audience into homogeneous subgroups according to predefined criteria. The choice of these criteria is generally guided by your data analyses.
For example, imagine a sports apparel brand that decides to segment its audience by gender and geolocation. A woman living in London visiting the brand’s site in December would logically be shown a down jacket, while a man living in Seville visiting the site in August would be shown swimsuits.
To master this rule-based method, you need a clear idea of which criteria are relevant to correctly segment your audience. That requires a deep knowledge of your market.
This “a priori” strategy has limits: a woman in London in December might be buying a swimsuit for her husband who trains in an indoor pool, for example.
Cluster-based segmentation (“a posteriori”)
The cluster-based or “a posteriori” method takes the opposite approach. It doesn’t rely on predefined criteria or rules. Instead, it looks for similarities and common traits among visitors, which are then grouped. These similarities aren’t fixed criteria like age, gender, interests, or location. They are extracted from a dataset that includes questionnaire responses, purchase behaviors, visitor data, etc. The advantage of this method is that it reveals tangible similarities rather than assumptions.
To succeed with the “a posteriori” method, you must collect a lot of data about your site visitors and analyze it to identify audience clusters with shared traits.
This approach can suit companies that don’t yet have a deep understanding of their market or struggle to identify segments using the rule-based method.
HOW TO APPLY YOUR MARKETING SEGMENTATION?
After learning how to segment your audience, it’s time to put that segmentation into practice. The secret is personalization.
You should personalize as much as possible the following elements:
- Your advertising and communications: develop advertising strategies tailored to the characteristics of each segment. For children, for example, favor playful communication.
- Your web content: provide personalized content for site visitors. You might change the homepage depending on the visitor’s characteristics and segment.
- Site navigation: reorganize the main menu or search results based on the visitor’s segment.
The same applies to your email campaigns, pricing, promotions, etc.