Is the process of dividing a market into subsets of consumers with common needs?

Customer segmentation is the process of dividing customers into groups based on common characteristics so companies can market to each group effectively and appropriately.

In business-to-business marketing, a company might segment customers according to a wide range of factors, including:

• Industry
• Number of employees
• Products previously purchased from the company
• Location

In business-to-consumer marketing, companies often segment customers according to demographics that include:

• Age
• Gender
• Marital status
• Location (urban, suburban, rural)
• Life stage (single, married, divorced, empty-nester, retired, etc.)

Why Segment Customers?

Segmentation allows marketers to better tailor their marketing efforts to various audience subsets. Those efforts can relate to both communications and product development. Specifically, segmentation helps a company:

• Create and communicate targeted marketing messages that will resonate with specific groups of customers, but not with others (who will receive messages tailored to their needs and interests, instead).
• Select the best communication channel for the segment, which might be email, social media posts, radio advertising, or another approach, depending on the segment. 
• Identify ways to improve products or new product or service opportunities.
• Establish better customer relationships.
• Test pricing options.
• Focus on the most profitable customers.
• Improve customer service.
• Upsell and cross-sell other products and services.

How to Segment Customers

Customer segmentation requires a company to gather specific information – data – about customers and analyze it to identify patterns that can be used to create segments.

Some of that can be gathered from purchasing information – job title, geography, products purchased, for example. Some of it might be gleaned from how the customer entered your system. An online marketer working from an opt-in email list might segment marketing messages according to the opt-in offer that attracted the customer, for example. Other information, however, including consumer demographics such as age and marital status, will need to be acquired in other ways.

Typical information-gathering methods include:

• Face-to-face or telephone interviews
• Surveys
• General research using published information about market categories
• Focus groups

Using Customer Segments

Common characteristics in customer segments can guide how a company markets to individual segments and what products or services it promotes to them. A small business selling hand-made guitars, for example, might decide to promote lower-priced products to younger guitarists and higher-priced premium guitars to older musicians based on segment knowledge that tells them that younger musicians have less disposable income than their older counterparts. Similarly, a meals-by-mail service might emphasize convenience to millennial customers and “tastes-like-mother-used-to-make” benefits to baby boomers.

Customer segmentation can be practiced by all businesses regardless of size or industry and whether they sell online or in person. It begins with gathering and analyzing data and ends with acting on the information gathered in a way that is appropriate and effective.  

refers to the process of defining and subdivision of a large homogeneous market into clearly identifiable segments that possess similar needs or characteristics. Their goal is to design a kind of marketing mix that exactly suits the expectations of customers in the target segment.

• 1 How to do a segmentation in marketing
• 2 Basic segmentation strategies
• 3 Factors affecting segmentation
• 4 Segmentation in Web Analytics

How to do a segmentation in marketing

This marketing strategy consists of dividing a broad target market into subsets of consumers, companies or countries that have, or are perceived as common, needs, interests and priorities, and then design and implement strategies to target them. Market segmentation strategies are generally used to further identify and define target customers, and provide supporting information for elements of the marketing plan, such as positioning, to achieve certain goals. Companies can develop product differentiation strategies, or a differentiated approach, referring to specific products or product lines based on demand and attributes specific to the target segment.

Few companies are large enough to cover the needs of an entire market, most must section the total demand into segments and choose those in which the company is best equipped to handle them. For example, a sports shoe company might have market segments for basketball players and long-distance runners. As distinct groups, basketball players and long-distance runners will respond to very different advertisements.

Basic segmentation strategies

The four basic market segmentation strategies are based on:

• Behaviour.
• Demography.
• Psychography.
• Geography.

Factors affecting segmentation

In addition, there are four basic factors that affect market segmentation:

• Clear identification of the segment.
• Measure of the effectiveness of its size.
• Its accessibility through promotions.
• Your adjustment to the company’s policies and resources.

Segmentation in Web Analytics

In tools such as Google Analytics, segmentation is done through segments, which allow you to isolate and analyze subsets of data in order to examine and respond to the trends of the components of a page.

Is the process of dividing the market into subsets of consumers?

What is the process of dividing customers into different groups called?

What are the 4 subsets of market segmentation?

What is the market segmentation?