Targeted marketing
Market segmentation enables companies to focus their marketing efforts on specific groups, making campaigns more relevant and effective.
The market segmentation process
1
Conduct market research
Gather data on customer demographics, behaviors, and preferences.
2
Identify segmentation criteria
Choose relevant bases (demographic, geographic, psychographic, behavioral) for dividing the market.
3
Segment the market
Group customers with similar characteristics or needs.
4
Evaluate and select target segments
Assess segment size, growth potential, and alignment with business goals.
5
Develop tailored strategies
Customize marketing mix (product, price, place, promotion) for each target segment.
Impact on business and marketing decisions
Product development: Products can be tailored to meet segment-specific needs
Pricing strategy: Pricing can reflect segment value perceptions
Promotional focus: Messaging resonates more with targeted segments
Market expansion: Reveals new or underserved customer groups
Real-world examples
Case study: Nike’s market segmentation
Nike uses market segmentation to target different consumer groups. For example, it segments by demographics (age, gender), psychographics (athletes vs. casual wearers), and geography (urban vs. rural markets). This approach allows Nike to develop specialized products, such as performance shoes for athletes and lifestyle sneakers for fashion-conscious consumers, and to tailor its marketing campaigns for each segment.
Frequently asked questions about market segmentation?
Demographic, geographic, psychographic, and behavioral segmentation are the most common types.
It enables businesses to better understand customer needs, improve product offerings, and create more effective marketing strategies.
Segmentation divides the market into groups; targeting involves selecting which segments to focus on.
Ineffective segmentation can lead to wasted resources, missed opportunities, and weak customer engagement.