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Market segmentation sounds like a scary prospect if you don't fully know what it means. Really it's just a fancy way of saying groups of people!

My good friend Hunter Leonard over at Blue Frog Marketing gives a great explanation of marketing segmentation in his Book titled "Marketing Has No Off Switch" which he was more than happy to allow me to share with you:

This is a customer analysis tool that again aims to help you apply your marketing to a small segment of the population in order to best use limited resources.It is effectively a two-step process...

 

The first step is to list out all the segments of the population who might be potential customers of your product. If you had an anti-wrinkle cream you might list out all people over 50, people who work in the outdoors and perhaps even 40-50 year old women – who may be more interested in an anti-wrinkle cream than men of the same age. These would be your potential targets and depending on the size of your business you might then try and find out how many people fit these segments.

The second step in the process is to target one customer group to be your primary audience of marketing. If you product was more oriented towards a female audience you might select women over 50 as your target. The purpose of all this is to guide you on the selection, later in your plan, of media targeting this group of women so you don’t have to spend money on more general advertising in mass circulation newspapers for example.

It’s a big mistake to treat your customers as if 'one size fits all' so to avoid that trap you need to find out which customers want similar things.

A segment is simply a group of similar customers. It is much easier to communicate with a group who have similar behaviours, characteristics or needs than with groups of customers who are quite different. When it comes to customers, one size doesn't fit all.

The key to effective segmentation is insight into which attributes provide the greatest commonality within a segment and the greatest difference between segments. Customers can be grouped based on: Characteristics - such as their age, socioeconomic status, gender or where they live or behaviour - such as their willingness to try new products or how cost-conscious they might be Buying Patterns - such as whether they have historically been high or low purchasers

The last of these is a very common approach to segmentation but it isn't a good idea! Why? Because it doesn't help you understand why they are big or small purchasers. And if you don’t know why, then you are no wiser about what to do next. It is helpful though to know which of your customers is a big buyer because you will want to focus your activity on them, which is called 'targeting'.

This article is brought to you from "Marketing Has No Off Switch" by Hunter Leonard, Blue Frog Marketing.

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