What's market segmentation & how can it help your small business stand out?
Updated: Dec 12, 2021
Your target market is a broad group of people who may be interested in your products and services. Like this group of runners, you could market to them as a whole, but the messaging will be high level to appeal to each of them. By segmenting this market into more focused groups - like male runners or older runners - you can target your message even more which will lead to a more effective experience for everyone.
In this article, we'll give you an overview of market segmentation and how you can use it to stand out.
The value of market segmentation
Higher quality marketing content that leads to more effective results.
More consistent customer experience across your organization.
Increased brand loyalty.
Easier to identify opportunities to differentiate yourself from the competition.
Market segmentation categories
When segmenting your target market, these categories will help you to brainstorm ideas and identify opportunities.
Demographics categorize individuals by characteristics like age, gender identity, education level, and occupation.
Firmographics categorize businesses by elements like industry, employee size, and revenue.
Psychographics are the different values, attitudes, and opinions that unite people.
Behavioral segments classifies people by common behaviors like technology usage, buying behaviors, interests, and more.
How to create market segments
Starting with your main target market you'll then work through each segmentation category to identify your key market segments that you'll continue to research in order to better understand. It helps to create "personas" of each of these market segments. They're fictional people who represent your market segment (i.e. Anne the architect), and they help to summarize your research and humanize the segments.
For example, you own a coffee shop in Des Moines, IA. Your target market includes coffee and tea drinkers within 10 miles of your store.
Age groups - 18-24, 25-34, 35-49, 50-64, 65+.
Gender identity - male, female, non-binary.
Education level - high school, some college, college degree, professional degree.
Occupation - small business owner, office employee at a large employer, student, and teacher.
Small businesses near your coffee shop include law firms, dentists, and a local grocery store.
The large employers are in the financial services industry.
There are also three small universities within 10 miles of your coffee shop.
Prefer to shop local.
Interested in reading and local music.
Shop weekly at the local grocery store.
Members of book clubs with like minded people.
Based on this information, you'll want to identify specific market segments and create personas for each. In this example, one of the market segments that I'd focus on would be local college students - like this persona:
Putting your market segments to work
Use your market segments, and corresponding personas, to identify opportunities to engage with and delight each market segment. Think of what that persona values or what frustrates them, and then think of ways that your business can help make the process easier. What are they searching Google for and what kind of content can you create so you appear in those searches?
Capture what you know about each segment and share it with your entire team. That way, they are better prepared to delight your key customers and look for other opportunities that you may not see yet.
Let us do the work for you
At Violet Clover Consulting, we create and use market segments every day. If you'd like to have our marketing professionals do the segmentation work for you, we'd be happy to help.
To get started, contact us to schedule a free consultation.