Market segmentation is the division of your target market into small and defined subgroups of customers who share similar characteristics. You can do your market segmentation by considering the following components such as demographics, needs, interests, and other psychographic or behavioral criteria in order to understand the target audience better.
Defined market segments can help you not only know your customers well but also boost your revenue. So, whether it is a large E-commerce company or an online marketplace, market segmentation is crucial for any business.
A 5-Step Guide to Market Segmentation
If you want to segment your target but don’t know where to start, these 5 simple and important steps will lead you to success and increase brand awareness. Let’s get started!
1. Conduct A Market Research
The first step should be defining your market and gathering information about your customers by doing market research. You should examine your competitors in order to understand their market position and if you have a chance for taking over a competition.
For a more detailed analysis, you can use the most common and famous SWOT analysis technique. Since it is highly time-consuming, you can hire a personal assistant who will take care of the analysis. It will help your team to identify the strengths and weaknesses of your company.
2. Identify The Need Of The Segments
In order to segment your market in the right way, you should define the needs of the customers and how you can group customers with similar needs. You have to put yourself in the shoes of customers and understand what each of them would like to have.
For instance, there are many beauty salons for women in a specific town, but there is not a single barber shop for men there. So, in this way you learned the need in that specific place.
3. Define The Segments
Once the need of customers is identified, you should decide which type of segmentation to use: demographic, psychographic, geographic, or something else? This step will help you to come up with offerings that best fit your target audience.
4. Target
Targeting is a crucial step in market segmentation. Out of the different segments you have defined via geography, demography, or psychography, you should pick which segment is more attractive to your business. This is a difficult task as you need to eliminate one or some of them.
The attractiveness of the segment depends on the competition. If the competition of a given segment is too high, then it is a waste of time to take that particular segment into consideration.
5. Evaluate And Optimize Your Strategy
To fully reach your business goal, you need to evaluate your market segmentation strategy to understand what worked and what did not go well. This will allow you to identify all areas of improvement. Next time, when you decide to do market segmentation, you will be able to reflect on your previous work and nail the upcoming projects.
In Conclusion
We hope the above-mentioned steps will help you to conduct your own market segmentation. As it was mentioned earlier, it’s one of the most important places to get started on marketing and sales strategies for growing your small business!
