Market Segmentation and Targeting in 2021
Market segmentation and targeting is a process to identify your potential customers. It also helps you know who to pursue as a customer and how to create value for them. We help businesses achieve through the STP process, otherwise known as segmentation, targeting, and positioning.
This is something that every business should do in 2021 after the tumultuous 2020 left most businesses dead.
You should expect to see some changes in consumer attitudes, behaviors, and values and the reason you should seek market segmentation for your brand.
STP Marketing: Segmentation, Targeting & Positioning
STP means segmentation, targeting, and positioning, as mentioned above. Segmentation is the step where customers who have similar needs are grouped before determining their characteristics. A good example is splitting customers into two groups such price-sensitive and price-insensitive customers. Those who are ready to pay are our company’s indispensable category.
The other step is the targeting one, where a business chooses the segment of consumers to focus on. Most companies determine the segment based on its attractiveness, which means their profitability, competition intensity, size, and capability of the business to serve this group of people.
Positioning is the last step, and it’s about coming up with value proposition creation for a business to attract your selected customer group. After the creation of value, a business communicates the same to its customer via advertisement, design, and distribution. A good example is marketing shoes to pre-sensitive customers and long-lasting, genuine leather.
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What is the difference between segmentation and targeting?
These two terms: segmentation and targeting, are interrelated and can be used in a single marketing strategy. We are conversant with them and help companies identify what works for them.
However, the two have different meanings. Market segmentation refers to the process, while market segment refers to the results. The market segmentation enables you to satisfy your different customers’ needs.
Every customer has their dislikes and likes, goals, interests, and needs.
Market targeting looks at the segments created and decides which one of them is likely to give quality conversions. They include anything brought by your business marketing campaign, including product sales and email signups.
A business should concentrate with great potential to grow and bring high profits while costing your business a budget that you can afford. Here are things to help you in market segmentation:
- The size of a segment is important because it is also likely to determine its opportunity to grow in the future.
- The profitability is also important. Consider the segments that have people who are willing to spend money buying your services or products. But, do not forget to consider their lifespan and quality.
- An ideal target should be easy to reach. The best group is determined by customer acquisition costs. If the cost is too high, it means you earn low profits.
- The factors to consider are many before you decide which group should be your target. However, what you consider should fit with the targeted customers’ needs.
Segmentation in marketing helps the business target people who are satisfied with the products they offer. It involves splitting it into groups that have common characteristics. The segments can be based on one or more qualities. Splitting the customers allows the business to create more precise targeted marketing and personalized content.
Market segmentation helps a business define and understand the target audiences and ideal customers. For marketers, segmentation allows them to identify the right market for their products. Segmentation also allows marketers to target their marketing more effectively.
Market segmentation allows the business to target their content to the right people in the right way, rather than targeting an entire audience, most of whom will not purchase their products. By doing this, businesses increase the chances of people engaging with their advertisements or content—these results in more efficient campaigns and good returns on investment.
How to develop a customer's profile
After identifying the market segment to target, we help a business develop a marketing strategy. The first thing to develop is a communication plan.
We use the information gathered when choosing the segmentations to work to create a profile for our customers.
We do all possible actions to satisfy the needs of the targeted customers better than other businesses in the same industry.
The market comprises of four essential elements: product, price, promotion, and place. Using these four elements, a business can easily develop strategies to ensure they meet its target market needs.
These elements should work without conflicting. Here is how the elements work:
The first step in the market strategy is the product. This refers to what the company is selling to consumers. They may be intangible services or physical products. We help answer the following questions:
- What are the problems faced by the targeted audience, and what solution do we have?
- Is there any other trying to offer a solution?
- What are our unique ways to solve the problem?
- How can we keep our customers satisfied?
The price should not be higher than the perceived value by customers. No one can buy a product that is overpriced. We help our clients identify the average market price, and they decide if they want to go higher, lower or remain within the same price range.
Some of the things that can help you with pricing include profitability. As a business, you have profitability goals, and the prices should help you achieve them.
Another thing is distribution, which means the products will reach customers. Besides, having middlemen when selling your products can also affect your prices; everyone wants a profit margin. Finally, consider sales, which refer to promotions and discounts offered once in a while.
The place is the location where customers can find the product. They may be sold in an online store or a retail store, but the best place to sell the products is where your target market shops. This means they can find your products conveniently.
Promotion allows a business to communicate the product benefits to their target market. By doing so, they convince people to buy from them. These done using unique propositions based on the value of the product. This is what makes your promo stand out among your competitors. You can also highlight the main benefits that the product has for the targeted market.
What are the 4 types of market segmentation?
There are different types of marketing segmentation, but the four main types are; Demographics, Behavioral, Geographic and Psychographic segmentation.
Market segmentation refers to a situation where a brand divides the market into small groups that are easy to organize.
The research conducted in connection to market segmentation aims to provide consumers experience, success towards innovation, and ways of improving customers’ loyalty. The types of market segmentation are:
Behavioral segmentation focuses on giving reasons based on why customers buy individual items and decide the way they do. It also includes altitude towards an object and its usage. Maybe you’ve come across adverts; these are meant to capture the market’s attention.
A newly produced item is likely to capture the most significant percentage of customers.
To avoid this, most companies advertise their products to make sure that they keep their prospective buyers.
Some companies also reward loyal consumers. Some supermarkets and beauty companies like Sephora use points; the more you buy from them, the more issues you will likely track.
Geographical segmentation groups the customers based on their location. Knowing and grouping your customers according to their site gives you an easy time when advertising products. The Yieldify tool indicates the geographical location of customers of certain products.
This segmentation is most popular since every consumer’s life is impacted in one way or the other. If most of your products sell well in a particular country, it is advisable to create a government website to enhance your business growth. International companies mostly use this form of segmentation.
Psychographic segmentation groups individuals according to their personalities. The personal characters considered are; interests, values, and altitude. This segmentation is subjective because if you realize some individuals like a particular product because of quality, you must reshuffle your plan to cater to the quality.
Targeting an individual’s personality will increasingly improve your yield; hence you need to cover this factor. Usually, conduct surveys, interviews, questionnaires, and practice audience testing to get precise information about your target customers.
For example, Starbucks is aware that chocolate and cheese sticks are meant for children, but they believe that parents will adapt with time hence increasing their income.
Demographic segmentation is known among many people. It is the commonest since it is easy to classify people.
The classifications are based on age, gender, education level, income earning, obligations, and ethnic background. When you budget towards individuals earning a particular amount of income, the probability is that you will not waste your money.
Don’t waste your resources targeting a non-interested group. For example, if targeting a particular audience gave you maximum output, then in the next period, you should be able to retain your customers.
Why Is Segmentation And Targeting Important In Marketing?
Improves Campaign Performance
Market segmentation helps businesses improve marketing campaign performance by targeting people with the correct marketing message at the right time.
Also, segmentation enables you to learn more about your audience to create an advertisement suits your audience.
Customer segmentation helps you tailor your messaging to different groups when selling a product with a broad appeal to engage with them better.
Targeting a segment that is likely to be interested in your product is more effective than targeting a broad audience because only a small percentage of the people who will be reached by your message will convert.
However, if you direct your marketing to a segment with suitable characteristics, you increase your campaign’s conversion rate considerably.
Informs Product Development
Market segmentation is of great importance to companies as it helps them develop products that meet their customers’ needs. Designing products with your customers’ needs in mind helps you sell more, makes your customers happier, and improves the company’s reputation.
You can create products to appeal to your primary market segment’s needs and develop various products customized to different parts of your customer base.
Reveals Areas to Expand
Market segmentation helps businesses identify audience segments that are not currently being reached with their marketing messages and expand into new markets. When you look at your clientele, you might discover its interests that you didn’t realize they had.
For example, a clothing company that primarily targets middle-aged women might decide to start selling kids’ clothing for their current customers to buy for their kids.
Improves Business Focus
Market segmentation also helps businesses focus their efforts, enabling them to establish a brand identity and specialize in a particular product type.
A company that tries to sell everything most likely won’t make a significant impact in any market. Also, its offerings may be of lower quality compared to companies that specialize.
It becomes challenging to differentiate your company if your product offerings are too broad.
Helps Forming Other Business Decisions
Market segmentation also helps businesses to indealize other important business decisions regarding how to get their products to customers. These decisions may include matters such as distribution and pricing.
Businesses can also use segmentation to help them decide on pricing, which maximizes their sales and keep their customers happy.
Businesses can also use demographic information, including the level of income.
Besides, do not forget to observe changes that come with seasons and identify the best time for promotions and special deals.
We help you be in control of your segmentation and target marketing.
We have the tools, skills, knowledge, and experience to gather, organize and assess the data.
This ensures you understand your market properly.
This way of marketing help you reach thousands of customers whose majority and quality conversions, which means increased sales.