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Why Market Segmentation is important for any business

More and more often we hear on TV or radio about the differences between Gen X and Millennials, about their preferences related to device usage behaviour, or about their attitude regarding a social or political event. 

These two groups are differentiated by the year that they are born, but it is possible we will find individuals from different generation that can have similar opinions, hobbies and maybe the same taste in music or movies. Although they are perceived as two distinct groups, these people can be grouped on other particularities.

This is why segmentation is useful. The process of grouping individuals with similar needs, behaviours or attitudes can identify if they will also like the same products or services. 

It is very important for companies to understand their market, and realise that their product / service will not be appreciated at the same level by everyone. That's why it’s useful for companies to understand their consumers/members by dividing them into separate groups. 

Targeting everyone is a chaotic process with increased costs for marketing campaigns, because, let's be honest, each person has different needs and tastes.

water bottlesWe can take the simple example of water. Everyone is consuming it daily. Even if the recommended dose of water per day, per person, is 2 litres, you can't sell only these types of bottles. Because various situations will require different behaviours. We buy smaller bottle because it will be easier to carry, but if we are buying for home a larger bottle may be more suitable. Each circumstance will require different consuming behaviour.

Segmenting your customers (exiting and prospective) and understanding their needs will allow you to target your marketing campaigns and understand your consumers/member’s behaviour.

To be able to find out relevant details that can be used forward in marketing campaigns and will be able to understand your consumers/member’s behaviour. Once you will have this information, the following step is to create new custom campaigns addressed exactly to your target.  

By using market segmentation, you will be focusing your activity on a specific direction, reaching those consumers who will be responsive to your products. That means that your company will not waste effort and money.

However, we must also ensure the process of data gathering and segmenting does not stop here, because consumer’s behaviour can constantly change.

By Cristina Radu, Data Services Executive


This entry was posted in Market research, tagged Millenials, Segmentation, Member Behaviour and posted on December 13, 2016

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