Segmentation is the division of the target audience and current customers into groups based on a number of characteristics that influence consumer behavior. For example, gender, age, income level, beliefs, and lifestyle.

Why you need customer segmentation

Customer segmentation improves a company’s profitability, saves resources and enhances competitiveness.

Dividing the audience helps a company build communications with customers and identify the most promising parts of the market where it makes sense to focus efforts first.

Segmentation allows you to:

  • Build a portrait of the target audience, to understand who buys the product and why.
  • See the needs for which there is no solution on the market yet, find a new niche.
  • Create a product or a package offer for a particular segment, set a price.
  • Formulate USP (unique selling proposition), separate from competitors and define market positioning.
  • Develop a strategy and choose promotion channels, launch an effective advertising campaign.

Different categories of target audience in the targeting or direct advertising land on different pages, focusing on how customers make purchasing decisions, how they choose contractors, when they are looking for a solution to their problems, what is important for them to make this decision.

Stages of segmentation

A properly formed segment:

  • homogeneous – consumers within the group have similar characteristics and respond equally to the marketing mix;
  • stable – it does not change within two or three years;
  • is available for the company – the company can produce and sell the product at the market and deliver information to potential customers.

The process of segmentation is conventionally divided into five stages.

Information Gathering. Gather information about customers from available sources. Use data from analytics, social networks, sales department data, competitor advertising, market research.

Selection of criteria. Make a list of all possible characteristics. There is no single list of criteria. Choose the most important depending on the characteristics and goals of the company.

Formation of segments. Group the consumers with similar characteristics. Formulate hypotheses and describe the segments in detail: behavior pattern, habits, attitude towards the product.

Assess attractiveness and select a segment. Determine audience size, profitability and sales volume, availability to the company, level of competition. Choose one or more of the most promising segments.

Product positioning and choice of strategy. Analyze competitors in the chosen niche, determine the company’s advantages. Develop marketing mix: product, pricing policy, sales channels and promotion strategy.