7 benefits from good market segmentation

Written by Carl West

Benefits of market segmentation

Let’s deal with the elephant in the room first – customer personas DO NOT constitute market segmentation. They are rooted in stereotypes and assumptions from individual bias or discussions and are usually created by poorly trained marketers or agencies in an attempt at strategy.

Similarly, gender or age-based stereotypes in isolation of more insightful data, are pointless. Millennials, Boomers, or Gen-Zs DO NOT constitute segments. They are generational cohorts, but as they think and behave very differently from one individual to the next, treating them as segments is a very common mistake.

Market segmentation is about using factual insights and data to divide a category into clusters (using a combination of variables) to better understand their needs, priorities, and interests, all in relation to their relevancy, accessibility, and importance for your brand’s strategic choices.

Common segmentation variables:

  • Demographics: Variables include age, gender, geographic locations, income etc.
  • Firmographics: Variables include industry sector, no. of employees, turnover etc.
  • Behavioural: Variables include purchasing habits, patterns, and behaviours etc.
  • Psychographics: Variables include attitudes, interests, beliefs, and lifestyles etc.

7 benefits from good segmentation:

1. Maps a categories relevancy, importance, and accessibility to guide strategic choices.

2. Helps mitigate marketing investment risk and enhances limited budgets or resources.

3. Clarity for mass marketing brand campaigns to build mental availability across category.

4. Enables more targeted performance marketing activities to leverage brand campaigns.

5. Provides an opportunity to sharpen brand positioning for each market segment’s needs.

6. Informs category, buyer, and brand health tracking surveys to measure correct attributes.

7. Provides a vehicle to consider and evolve distinctiveness AND differentiation v competitors.

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