Step by Step on How to Make a Market Segmentation

Market segmentation - Complete Controller

In organizations, it is common for a certain target audience to be chosen to work. In some moments, that makes us think and consider that the company limits its actions and, consequently, not making money.

But, if we think a little more, we will realize that this definition improves the company’s results.

What is market segmentation?

Market segmentation is used by companies to separate the target audience with which they wish to work. Considered a market phenomenon, the technique consists of defining the marketing strategy by identifying the target market.

Segmenting this market means dividing it so that consumers are grouped according to a series of characteristics, needs, or preferences. A segment must have people with homogeneous factors, and these depend on the objective of the segmentation.

This separation into groups of consumers allows the company to identify and privilege one or several segments according to a range of objectives or products. Check out America's Best Bookkeepers

The segmentation process requires that the criteria that affect or affect purchase decisions be identified. There are various segmentation criteria: social, geographical, demographic, economic, social, lifestyle, etc.

Normally, in market segmentation, it is necessary to address several criteria to better guide the marketing actions to follow. The more aspects used to characterize an audience, the easier it will be to develop a marketing strategy.

There is no way to segment a target audience without knowing what characteristics you need to have for the strategy to be correctly defined. A study or market research needs to contemplate an objective such as creating a product, optimizing the concept of a brand, or another that has strategic relevance.

Benefits of market segmentation

Undoubtedly, one of the main benefits of segmenting the public and selecting a group of personnel to reach is the high possibility of reducing costs. This decrease in costs is caused by the administration of smaller groups of consumers.

As a result, it is possible to devote more attention to the target audience and generate higher profits.

Market segmentation becomes even more important in small companies because this size has limited resources to meet high demand. Besides, it cannot maintain the high costs required by a high logistic and administrative capacity.

In general, the segmentation of micro and small organizations is carried out considering geographical location, age, sex, and some feature that brings the company closer to the target people. Check out America's Best Bookkeepers

No major disadvantages have been detected when talking about segmentation, but one aspect that could be evaluated is the difficulty of obtaining clear information about the behavioral characteristics of people.

Is market segmentation cost or investment?

If you were to answer this question, what would be your argument?

Well, here we must make you think a little bit. When you do segmentation, you need to know people, which requires previous market research. OK, this was already mentioned in the article!

We have not yet said that to make this study, it is fundamental to put money in play. That is, you must pay to get to know people. According to this point, segmentation could be considered a cost.

On the other hand, if we think about the integral situation generated, we realize that the segmentation requires investment and that this can be recovered in a short time. Calm down; if you did not understand, we would explain it to you.

By making a segmentation, we reduce the probability of carrying out a marketing campaign so that nobody sees it or spends money on a product without knowing if the public is going to accept it. Segmentation guides the actions of the company to reduce production and administrative costs.

Seen that, it can be said that segmenting is an important investment. Moreover, it can be said that it is possible to obtain more profit by making a good market segmentation for various reasons.

  • The company knows its target audience better.
  • The company recognizes the needs of the group it chose to serve.
  • A closer link is created between the company and consumers.

Arriving here, you will already have a defined position about segmentation. If, on the one hand, it reduces the public for which the company will work, on the other, it broadens the chances of success within that group. That is, it allows actions to be addressed and not be lost in the attempt. Check out America's Best Bookkeepers

5 steps: How to make a market segmentation

Consider general criteria

This criterion allows the recognition of the socioeconomic and demographic characteristics of the prospects or clients. It is easy to do since it considers age, sex, residence, and income.

Choose the target market

It is fundamental to define the group for which we want to offer the product / s or what can buy what the company provides. For example, if we want to sell a high-level cosmetic product, the target market will be composed of segments of middle-aged women with a higher income.

Consumption profile

Here is considered how the sector relates to the market. Besides, it recognizes how it defines the behavior of consumers when it comes to buying a certain product or contracting a certain service. At this time, the study should consider variables such as:

  • Lifestyle.
  • Tastes and preferences.
  • Opinions
  • Consumption habits.

It is important to highlight that the investigation of the consumption profile must be done considering the segment selected in the previous point.

Design of the marketing strategy

This must adjust to the needs of the company and the market so that there is a coherent relationship between production and consumption. For that, it is necessary to consider the marketing mix.

Sale of the product/service

If all the previous steps were completed, it is time to sell the product or service in the market segment. It is also time to expand sales and seek new horizons.

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