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How to Use Market Segmentation to Group Customers

Market segmentation can help improve the effectiveness of your business’s marketing.

In the early days of marketing, you had to cast a wide net to attract customers. Mass mailings and major ad buys were the norm. But with the advent of computers, data technology, and new media, casting a wide net can mean throwing away a lot of money. As any top business school will tell you, the modern key to improving your ROI is to improve your use of marketing data. And that means embracing market segmentation.

What is market segmentation?

Not all of your customers are the same and they’re not all attracted to your product for the same reasons. Market segmentation is the act of separating out each type of customer you attract. For instance, let’s say you make a breakfast cereal. Some customers may buy your cereal for the taste, some might buy it because it can help them lose weight, some might buy it because it offers a good dose of protein, while others might buy it because it’s a convenient way to have breakfast. A one-size-fits-all marketing campaign is unlikely to successfully address each market segment. Instead, you would be better off addressing each segment individually.What’s the advantage to addressing market segments individually?

How to Use Market Segmentation to Group Customers

When any of us see a message that appeals directly to our wants and/or needs, we are likely to take notice. In the case of the breakfast cereal, if you’re looking to improve your fitness, you’ll likely be excited to see that you can easily get a good amount of protein with breakfast. A specific message promoting the protein instead of a general promotional message is more likely to motivate you to buy the cereal.

How do you determine which customers fit into which market segments?

Data collection is the key to determining the different market segments your product appeals to. You can collect data through customer surveys as well as through the monitoring of buying habits. You can also research your competitors to see which market segments they are successfully appealing to. The key is to pair a market segment’s motivation (taste, weight loss, protein, convenience, etc.) with a buyer profile. For instance, your data analysis may reveal that 80% of your customers who purchase your cereal for the protein are men aged 18–40 with yearly incomes over $50,000. You can use that information to directly target that specific market segment with a protein-centric message, increasing the likelihood your message will resonate.

What are some common market segments?

While every business has its unique appeals and customers, most market segmentation includes the following:

Demographic segmentation

Customer data can help you uncover differences in consumer desires and behaviors between demographic groups. You can divide demographics by age, gender, income level, education, ethnicity, and sexual orientation. If a demographic group responds strongly to a specific type of message, you can improve your chances of success by targeting members of that group with that message.

Geographic segmentation

People who live in different areas may have different needs and/or respond to different types of messaging. You can use data to uncover which zip codes the majority of your customers live in and also determine if there is value in varying communication between urban, suburban, and rural customers.

Psychographic segmentation

Do cyclists have a strong interest in your product? How about people who attend farmers markets? By making connections between your product’s performance and specific hobbies, lifestyles, values, and/or attitudes, you can find new venues for marketing (fairs, special interest magazines, hobbyist websites, etc.) and new ways to communicate.

Behavioral segmentation

Some customers will purchase your product at a higher frequency than others. Some will switch back and forth between your product and a competitor’s. Still others might have a habit of buying one of your products in conjunction with another (e.g., those who buy the individual packets of your cereal might also be buying your granola bars). By identifying specific buyer behaviors, you can adjust your marketing efforts to appeal to those behaviors and increase the likelihood that specific customers will purchase more of your product.

How can you learn more about marketing?

If you’re looking to improve your business’s marketing efforts—or if you’re looking to enter the field of marketing—you can learn a lot through an MS in Marketing degree program. By earning a master’s degree, you can acquire in-depth skills in everything from market segmentation to marketing metric analysis to strategic development of marketing campaigns.

Best of all, thanks to online learning, you don’t have to take time away from your business or job to earn your graduate degree. Through an online marketing degree program, you can earn your Master of Science in Marketing from home while you continue working full time. Earning an MS in Marketing online can help you master the skills you need to advance your business or career in the way you want.

Walden University is an accredited institution offering an online MS in Marketing degree. Expand your career options and earn your degree in a convenient, flexible format that fits your busy life.

Walden University is accredited by The Higher Learning Commission,