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Start segmenting and grow your business
Marketing Cornwall Knowledge Base
Article level - Marketing introduction
Time to read - 5 minutes
Do you have different groups of customers for your products and services? For example, families, males over 40 years, solo travellers? If so, are you benefitting from a segmentation strategy? A segmentation strategy can lead to greater awareness about your product. And it can help convert more enquiries into customers.
In this article I want to show you the key steps so that you can start to gain the benefits of segmenting.
What’s segmentation and why does it provide so many business benefits?
It’s all about identifying a group (a segment) of buyers who have characteristics in common. Let’s break that sentence down…
- Buyers - They all have a need for your product or service
- Characteristics in common - e.g. age, behaviour, location, gender, socio-economic group, preferred brands
A segment is any group within a marketplace. The process of splitting them into a defined group is segmentation.
But not any group, you’ll want to find the most profitable group for your business. This group then becomes your target market.
If you get to know a group of buyers really well, then it means you’ll understand critical stuff like…
a. what they exactly need…
b. how to best serve them and…
c. what message to say to them to encourage them to buy
d. how to identify them and find more of them
When you segment, you better align your business and its products to the segment’s needs. In effect, you’re tailoring the offer to the segment. A tailored offer will lead to a more positive response from your segment. A more positive reaction to…
- Your product
- Your message
- Your people
- And so on…
This better reaction leads to a quicker and more profitable sale for you.
Remember, your aim is to find the most profitable segment. I.e. the group of buyers that’s going to buy most from you, be the easiest to work with etc.
Your business will likely have more than one group to target.
So what are the key steps?
Step 1 - Define your segment
Start to think of the characteristics that define your particular groups of buyers. You can use any variable that could help support this definition. Here are some variables to get you started:
- Demographic - age, gender, marital status, income, education, occupation…
- Lifestyle - shared activities and interests, opinions, attitudes and values
- Geographic - location
- Business to Business - number of employees, business type, industry, turnover, job title
You need to use a combination of variables. This is so that the resulting group is neither too small nor too large for your business. There’s no point saying you’re going to target all accountants in the UK if your business won’t be able to cope with it. It would be better to define your segment as - accountants in Cornwall, employing more than 5 people.
TIP - Marketing is an ongoing process and a segment is not set in stone. You’ll adapt your variables as you learn more about the segment and how it responds to you.
Step 2 - Research and Assess
As a marketing consultant, I understand that the word research can make your blood run cold. But remember, not knowing about your target market could cost you more in the long run. This is because you could be paying the price for failed products and campaigns.
Find the answers to some of these key questions…
- What does this segment exactly need?
- What is the pain that this segment has?
- Why do they buy products like yours?
- What is the size of this segment?
- How often do they buy?
- How much do they spend?
- When do they buy?
- How do they buy?
- Where do they buy?
- What’s the best marketing method for targeting them?
- How are things for this segment? E.g. feeling rich, feeling poor?
- How many competitors are vying for their attention. How vocal or aggressive are these competitors? (Write down key questions that would improve your profit if you had the answers).
You could do the research yourself, for example, by having lunch with a friendly customer. Or read research reports that other businesses and organisations have compiled. Send surveys, conduct interviews over the phone or observe them in action. Check out our article called - ‘Research - take the fast track to profitability’.
Warning - Try and ensure that you get a good picture of the segment. You don’t want only the views of one or a few individuals. Also, use a mixture of the research tips outlined so that they confirm your findings.
Warning - Try to risk assess this segment. Is there anything that could stop the segment from buying.
Once you know the answers to these questions, you can make a judgement on how profitable it is. If it’s good-to-go, then move on to step 3. Otherwise, back to the drawing board and look at step 1 again.
Step 3 - Align your business and go for it…
Start to make changes to your business so that they are better aligned with your segment. Use the 7Ps framework as a good way of categorising the different elements of your business.
- Product - do you need to make any tweaks to your product or service to better align it with their needs?
- Price - do you need to make any adjustments to your price, or your pricing model, to better target them?
- Place - Are you located in the right place to sell to your segment?
- Promotion - what’s the best thing to say, when’s the best time, what’s the best method?
- People - what skills will you need your people to have to target this group of customers?
- Physical Evidence - what physical things need to be in place to provide reassurance. For example, a showroom, a printed folder for sales letters?
- Process - how can you change your business’s processes so that you’re easier to do business with?
The 7Ps framework is a concept developed by E. Jerome McCarthy and is also known as the marketing mix. It’s a well known tool that is in the toolbox of many a marketing consultant.
Once your business is better aligned with your segment, you can start targeting it.
Remember to learn as you go along. Measure the success of each step you take and make amendments to your elements within the 7Ps.
We can help you with your segmentation strategy. Give us a call or email. We’re based in Cornwall but we’re happy to support your business wherever you may be.
By: Tim Bowerbank
Role: Marketing Consultant