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Market Segmentation

The key to an effective strategy


Market segmentation consists of dividing the audience of a brand or business into smaller groups, identified by determined characteristics that they share. It is the first step to achieving marketing and sales objectives because it allows one to direct the efforts of time, resources, and money to the right place and obtain a better result.

For example, if a bank wants to offer personal loans, the segmentation will be different than for loans for SMEs. Campaigns for personal loans should be aimed at people who have shown interest in changing their car, remodeling their house, or taking a trip; while loan campaigns for SMEs should be aimed at entrepreneurs and businessmen who want to scale their business.

The advantages of carrying out a market segmentation strategy are:

  1. Improve the use of resources: Segmentation helps to make better use of resources since you target the audience that is most likely to purchase and most interested in approaching your proposal.
  2. Increase the brand's reach: Because segmentation directly influences the target audience, it is easier to connect with them and become a reference in the sector. This increases loyalty and improves your image.
  3. Increase customer satisfaction: Personalizing your marketing and sales strategies is one of the things you can achieve with good segmentation. By sending the appropriate messages to the right audience, you create a solid and empathetic bond with those who receive them.
  4. Reduces long-term costs: When you already know the market segment you will target, your chances of achieving success are greater; With proper segmentation, you will avoid investing money in two campaigns or having to wait a long time to see results.

Up to this point, we explained why it is essential to have good segmentation, but now, how to carry it out?

The first step is to define the objectives, that is, to know what and why you are implementing the segmentation. Some of the specific goals that a segmentation strategy can target are:

  1. Locate sales opportunities: by segmenting your clients you can more accurately evaluate who has repurchase profiles and who to offer specific products to.
  2. Know your audience better: through segmentation, you can better understand the audience's interests. This will help you create solutions tailored to their needs.
  3. Differentiate strategies: linked to the previous point, with segmentation, you can speak to each group through different channels, and formats, and customize strategies for each segment.
  4. Personalize messages: when you carry out differentiated strategies you can personalize your communication, with the right content at the right time.
  5. Greater customer satisfaction: creating unique experiences increases customer satisfaction and long-term loyalty.
  6. Determine market conditions: segmentation helps you identify and determine certain market conditions based on the profiles of your segments; For example, you can establish the right prices or the best ways to distribute your products or services.

Secondly, we need to define the variables on which we are going to base the segmentation. The most common are demographic, geographical, psychographic, and technographic.

Demographic variables

They are general variables such as age, the gender with which they identify, sexual preferences, educational level, the culture to which they belong, and their profession. This data helps create reliable profiles and gives insight into what consumers are looking for, what problems they face, and which solutions we can provide.

Geographic variables

Although there are fewer and fewer geographic limitations to selling products or services, some companies still need to segment the location of their consumers, either due to difficulties in shipping over very long distances or other variables. Likewise, geographic segmentation can help you analyze the particular needs of that region.

Behavioral or behavioral variables

It refers to the consumer behaviors of the target audience: the prices they choose, whether they buy online, whether they follow fashion or trends, what they consume for entertainment, etc.

Psychographic variables

This criterion covers everything related to lifestyle: beliefs, values, interests, attitudes, political or religious affiliation, whether they consider themselves logical, practical, artistic, or creative people. These elements are reflected in the personalities they follow on social networks, the messages they share with their friends, and the social causes they adhere to and criticize, among other publications and similar data.

Technographic variables

This variable includes user behaviors regarding devices, applications, and programs. By analyzing this variable we can know how much time our audience spends on each channel or social network and where is the best place to direct our efforts.

The third step is to work on the segmentation itself. Some criteria to segment are:

Finally, once all the variables that make up the target group are defined, we can start planning the actions we will develop according to their motivations and needs.