Segmentation | Marketing Basics - Vol. 1

Updated: May 11

Segmentation is one of the mainstays of a marketing strategy. As a small and medium enterprise marketing agency, we begin each project with a segmentation analysis. Understanding segmentation and how it effects your customers is key to effective marketing.

What is segmentation?

Segmentation is the process of dividing the overall market into pieces based on one or multiple meaningful characteristics. In essence, you are reviewing your customers and what variables some hold in common. If your business has a most valuable customer, we recommend analyzing these customers and looking for similar characteristics.

Note before we begin, your segmentation variables will depend on whether you are primarily a B2B or B2C business.

How to segment B2B

While targeting business customers, there are a few segments to be keenly aware of. First, look to analyze the size of firm. Next, assess whether the business operates domestically or internationally. These two variables are particularly helpful to know if you are advertising in a specific geographic region.

Line of business, good vs. service, and business specialization are great categories to review and segment. For example, if many of your past customers work in a particular service, you may choose to advertise in specific trade journals.

How to segment consumer customers

Consumers often have additional segmentation variables from B2B consumers. If you run a B2C business you may need to take in evaluating the importance of each segment to your revenue.

First, segment your ideal customers into demographic variables. Demographic variables consist of age, gender, income, family size, education etc. These help you to develop a picture of who exactly is purchasing your product or service.

Next, using psychographic attributes, evaluate the motives of your consumers. Look to divide into personal attributes, attitudes, motives, and lifestyles. This is a bit less concrete, however, it should begin to materialize a living picture of the consumer your company will be targeting.

Other segments to consider are behavioral and geographic. As both of these are far more intricate topics, each will be covered in a respective future article.

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