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Market Segmentation Examples and Why You Should Care

Market Segmentation

Can a stylish millennial help a slightly stodgy luxury fashion accessories company appeal to young buyers? Coach sure hopes so. The company recently entered into a significant partnership with global superstar Selena Gomez with the hope that they can use her to target the highly coveted millennial market. The Coach partnership with Selena Gomez is an excellent example of the use of market segmentation to drive brand positioning. Let’s examine some market segmentation examples and why this type of marketing is so dominant.

What is Market Segmentation?

Are all of your potential customers the same? If you just answered no, you are on your way to understanding the concept of market segmentation. Successful marketers analyze the total potential customers for a business and then break that ocean of customers into more manageable groups based on specific characteristics that are common to the customers in the smaller group. Once you understand the needs of the different segments of your customer base, you’ll have a much better idea of how to effectively market to them.

Market Segment vs. Target Market

Market segmentation only works if you’ve determined the make-up of your target market. The target market is the group of customers who you want to buy your product. The target audience tells you who you’re marketing to, but it doesn’t give you enough information about them to create an effective marketing campaign. You’ll need to do some market segmentation research to learn how to reach your target audience.

For example, Coach wants to target the millennial market in the hope that if they can instill brand loyalty in the young market, it will carry on as the customers mature. Once Coach decided to target the younger market, the company had to gain an intimate understanding of their particular customer needs. Marketers employed market segmentation research to develop a persona of the typical young customer.

A persona is a descriptive story of a fictional person that embodies your market segment. So a fashion accessories company like Coach, for example, might put together a persona named Madeline. The fictional Madeline possesses the characteristics of a fashion-forward young woman who has a taste for luxury brands at an affordable price. Marketers can use tools like personas to craft a marketing campaign that speaks directly to that particular market segment. The Selena Gomez campaign was born out of this robust research into the target market and market segmentation at Coach.

4 Consumer Market Segmentation Classifications

Now that I’ve got you thinking about how market segmentation might work for you, let’s look at the four most common ways of using market segmentation to classify consumers.

  1. Geographic Segmentation is the most common type of market segmentation because it is relatively simple to figure out where your potential customers reside. This classification system includes categories like city, state, region, country, suburban, urban, and rural.
  2. Demographic Segmentation is a valuable way to analyze your target audience because it gives you some of the in-depth information that can help your brand to stand out in a market. Examples of the type of demographic data that comprises this way of viewing your customers are age, gender, income, race, housing, and marital status.
  3. Psychographic Segmentation is a fancy way of saying that you’re examining the lifestyle and attitudes of your customers. For instance, Facebook is a hugely successful corporation because it collects psychographic data on its users, and marketers will pay a pretty penny for access to that knowledge. Attitude and lifestyle information can give your brand an inside edge with customers and can make your business flourish.
  4. Behavioral Segmentation analyzes customer behavior and is very helpful in crafting your marketing strategy. What motivates your customers to perform specific actions? Are they early adopters who want to be the first on their block with a new car? Are they tech savvy? Do they tend to stay loyal to a brand?    

Benefits of Market Segmentation

By now you probably think that market segmentation research is a significant undertaking. It does take toil and detective skills on your part, but I’ll promise you that the benefits of effective market segmentation far outweigh the effort. After all, it is all about getting to know your customer. Imagine the possibilities for your marketing strategy once you fully understand your customer.

A primary benefit of market segmentation is that it focuses your marketing strategy. If your customers are young and social media savvy, for example, it makes sense to interact with them through social media channels. When Coach partnered with Selena Gomez, for instance, they gained immediate access to her 100 million-plus Instagram users and 45 million Twitter users. Within months of connecting with Gomez, Coach had grown the number of users of their own social media channels by around 50%. Their social media brand presence has skyrocketed through this marketing focus.

A concerted focus on the market makes you much more competitive. While a social media influencer, such as Gomez, is an effective way to market to young people, it would most likely fail if the target audience consisted of people who did not use social media. The knowledge that you’ll gain from market segmentation ensures that your marketing reaches your desired audience and utilizes that reach to drive your brand forward.

Another compelling benefit to market segmentation is that it promotes beneficial customer communication. The most effective brands have all mastered the art of customer interaction. Gone are the days when you hope that you’re communicating with your clients; market segmentation shows you the best ways to have an ongoing conversation with the people who buy your products.

Lastly, market segmentation is one of the most critical components of a robust market strategy. Without this tool, you can’t know the needs of your customers. Market segmentation gives you the details so that you know how to reach your specific target audience. CONTACT me today for a complimentary 30-minute strategy session to discover how we can grow your business through market segmentation.

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