What Is Market Segmentation? A Guide To Target Audience Segments

For a marketing exercise to work, brands must have three things, a product to sell, an audience to sell to and a method of communicating the former to the latter.

Creating clever, well written content is one thing and engaging with your audience in a manner that convinces them to keep moving down the sales funnel or along the buyer’s cycle is another. But what if you don’t even have the right audience?

What is Market segmentation?

First of all it is perhaps important that we clarify what exactly audience segmentation is. Sometimes called market segmentation, audience segmentation is one of the primary sales and marketing strategies in which the holder of the market data divides it in order to create bespoke lists. These lists, unique to the client, the market or the current campaign can then expect to see performance rise in a number of areas.

It is one of the easiest ways to find a more engaged audience and allows for a greater conversion rate. History tells us that early marketing principles involved collecting as much data as possible and sending messages on mass. The theory was that by sending the data to everybody in the master list you would of course catch those who might be interested in engaging, but you may also get a few more bites from those who are not or who do not consider themselves at the correct stage of the buying cycle.

The problem with this is that there is now more of a focus on reporting and to that end clients are more demanding of those who work on their behalf. They want to see campaigns that are harnessing high open rates, high click-through rates and low bounce rates.

Choosing your audience

Choosing your initial audience is a two stage process. First of all you must have a clear idea as to who you want to point their information towards. This will be based on the products or services which you sell and the audience research that you have conducted.

Early communications are an easy way of not only getting your message across but also help you to determine future correspondence. By looking at the emails that you send out, the adverts you place and the blogs you post, you can get a real insight into who is connecting and when.

The information that you collect such as open rates, bounce rates, likes, shares, retweets or actual conversions means that you are in a better position to understand what the user is resonating with.

If your content is to be targeted content, you’ll need to know which segment is consuming it. When you know what segment is using your content, you can direct it toward them in a more personal way that gets results.

Clients can be segmented by four key areas and these are in turn divisible to get a more niche audience. The areas are:

Demographic – This area of the audience relates to the very top level ways in which it is possible to segment individuals or groups. Things in this category include age, gender, income, marital status and education level.

The raw side of demographics will largely be influenced by the products or services that you are offering. Ask yourself questions such as is the product solely for males? Are there age restrictions on buying the product? Is the product in the luxury end of the market and therefore unlikely to attract large portions of the audience?

One important thing to consider when it comes to segmenting your audience in this way and indeed according to any of the other groups, is that you cannot be entirely exclusive. Isolating one gender from a product could lose you sales when it comes to gifting. Indeed many companies will now market a product as ‘the perfect product for her’.

Geographic – This relates to the area in which your potential clients are. Ask questions at this stage such as are they in the same country as you and if not can you deliver products and services to them?

In a similar vein when it comes to your marketing, if you are not targeting those who are in you geographical area  this will lead to irrelevant posts and lower open rate or conversions.

Behavioural – The behavioural side of audience segmentation is based on the mnemonic patterns that consumers display when they are making purchase decisions; in essence it is based on variety. It relates to their knowledge of a product or brand and their attitudes, responses or use for a particular product.

If we take the example of coffee, a buyer will only buy bean-to-cup products if they have the ability to make this type of coffee at home. They may also opt for a particular brand due to taste or a decaffeinated option if they believe it to be healthier. When it comes to purchasing out of home, they may choose a style of coffee or add a flavoured syrup for example. The main benefit of behavioural segmentation is that the variables are often closely matched to the parent product.

Psychographic – Fundamentally, psychographics relate to the study and classification of people according to their attitudes, aspirations, and other psychological criteria, especially in market research.

Things falling under the psychographic tag could be focus, social media preference, perception of quality, personality, political stance, newspaper of choice or values.

The second stage is the method of communication with which you want to contact them or market to them. This is where you look at the trends in how information is received. If the audience is one which likes a deal, then capturing their data and using inbound marketing emails as a way of encouraging a purchase is one of the best ways to communicate with them. Here you will have the option to test different email templates and calls to action (CTAs) which promote not only the brand but latest offers. Looking at the analytical side of the emails will tell you which words (such as ‘free’ or ‘sale’), images, products and prices resonate and lead to sales.

If your audience prefers to use social media as the link between brands and themselves then this is where you need to position your communications. Good social media strategy relies on several things including regular posting of succinct yet shareable copy, adding images or video and inserting links back to your site.

It’s a legal requirement in most instances to offer the opportunity to opt out of certain methods of communication or for the user to state their preference e.g. phone or email.

Why is market segmentation important?

Audience segmentation is a crucial aspect of marketing, and is something that must be treated with respect, as it informs all other aspects of both marketing and advertising. If you know what makes your audience tick, you’ll achieve much higher success rates.

Benefits of segmentation

There are many benefits to segmenting out your data and coming up with a targeted audience.

First of all segmentation ensures that your content has value, is relevant and that it is consistent. If you are one of those businesses that produce endless amounts of content without any thought as to your target market you risk losing their trust and this can affect the conversion figures. Ultimately doing this is a waste of time, money and effort. Ask yourself, why would you want to give up these things and jeopardise the initial data collection process? In essence it ensures that your content is relevant.

If you don’t recognise who you’re pointing the content to, it’s very difficult to create material that resonates with the user at all. Understanding the demographics, behaviour, and buying cycle sector of those in your audience is vital in the curation process.

When your audience is a targeted one, it doesn’t matter how you deliver the content, it will appear consistent to the reader since it’s directed to the right audience. The entire point of content is to drive the consumer towards a converting action. Without being able to identify what makes the audience interact, they may not even bother to read it.

Another benefit is that with segmentation, your audience is clearly defined and you can target and retarget bespoke lists and previously engaged individuals. It also doesn’t waste time and resources.

For any business, marketing is essential and can be expensive. Developing content takes a lot of time and resources and it’s imperative not to waste the resources that you have. When you know who you’re sending the information to, you’ll be able to direct it appropriately using the right words, tone, and images to improve response.

Audience analysis

Audience analysis is arguably the most important thing that you can do following a marketing campaign. Seeing the results is a totally different prospective from simple saying ‘yes our sales have gone up in the period following the campaign’. This is about hard data.
One of the things that you can determine from the levels of interaction your marketing is receiving is product usage rate.

This forms part of the behavioural segment of the audience split and it relates to the way we categorise purchasers. The customer can be split into one of three behavioural sub groups, light, medium or heavy user. The aim for businesses is to get the consumer to move through the stages and become a heavy user of a brand advocate.

At the light stage of user behaviour they will be aware of the brand and will try the product out for the first time.

During the medium usage stage the buyer is somebody who buys your products occasionally but may settle for an alternate brand if availability is limited.

At the heavy usage stage, the consumer buys your product frequently and would rather not buy a product if it meant moving away from your brand. These are the most loyal customers and the true brand advocates.

If you run a campaign that doesn’t work the analytics will tell you this and you can alter a number of things. Based on your data you should ask the following questions:

• Have I got the right audience?
• Are they properly segmented?
• Did the content translate?
• Was it informative?
• Was it offering value?
• Was it shareable?
• Were there links to products or the main website?
• Did I send my content out/live at the right time?
• Was the CTA effective?
• What can I change for next time?