4 Segmentation Strategies

4 Segmentation Strategies to Help Target Customers

One of the most frequently applied marketing strategies today is that of customer segmentation, targeting and positioning (STP). Segmentation strategies help marketers define and understand specific buyer populations and leverage that insight to deliver more relevant offers.

This is not a new phenomenon. Traditional marketing techniques also involved separating and targeting consumers by general characteristics like age and sex. What has changed with the advent of the digital age is that both the stakes and the possibilities have been raised and the gold standard is now a segment of one.

Segmentation Strategies Inspire Greater ROI and Loyalty

For many companies the investment in technology, tools, and human capital may not be available to get to the segment of one. But that doesn’t mean more sophisticated segmentation strategies are entirely out of reach.  There are a variety of segmentation strategies we can employ to engage customers in the more appropriate and effective way — inspiring greater ROI and better brand loyalty. What are the available options?

Segmenting Our Database to Increase Relevance

What all of us can do, to increase the relevance of our messaging and offers, is segment our database using these four strategic principles:

1. Demographic Segmentation. Demographic segmentation models group customers by certain key population markers such as age, sex, socio-economic class, income, family size, occupation, and ethnicity. Marketers were employing simple grouping principles, long before big data came into the picture, by intuitively noting which populations (male/female, urban/suburban, high/low income) were most likely to buy their product and targeting their message accordingly. Today’s demographic segmentation models can offer a more accurate and specific picture of a buyer population, informed by customer data rather than observation and speculation.

2. Geographic Segmentation. This is also one of the simplest and widely-used segmentation strategies. Geographic segmentation models provide insight into where a given brand’s customers are located and specific location driven behaviors or preferences.

3.Psychographic Segmentation. While psychographic segmentation strategies aren’t new, they’re exponentially more informed and accurate in the digital age. Psychographic segmentation divides our customers into different segments by their specific personality traits, values, attitudes, and interests — and understanding how those characteristics affect a customer’s lifestyle and buying choices.

An example of psychographic segmentation would be a car company that markets the same model to different segments based on their value of luxury versus practicality and their level of eco-consciousness. For example, the company would market to the luxury-valuing segment by emphasizing luxury features and market to the practical, environmentally-conscious segment by highlighting corresponding features like gas mileage, storage space, and eco-conscious design — essentially ensuring that the product offer resonates with both audiences.

4. Behavioral Segmentation. This segmentation strategy groups people by the specific behavioral patterns they display when making purchasing decisions. Because customer behavior is such a nuanced topic, there are many possible approaches. Product-specific behavioral segmentation strategies often focus on customers’ expectations for, attitude towards, and response to, a given product. More general behavioral segmentation strategies group customers based on their buying and product-using patterns, identifying how different customer segments prefer to spend their money and time. This strategy not only helps target specific groups that are a good fit for an existing product. It also helps identify product gaps making it a favorite of consumer goods corporations that produce a variety of products spanning a variety of product categories.

To find out more about how segmentation strategies can help target customers more effectively download our eBook, The Value of Context, Cross-Channel and Real-Time Capabilities: Advancing Marketing’s Productivity.

About VeraCentra: Marketers everywhere want to use data to implement more modern customer engagement strategies. But there can be many obstacles standing in the way of success. That’s where we come in. VeraCentra provides easy-access Customer Data Hubs. We represent best of breed Cross Channel Engagement Platforms (so marketers get the right fit) and offer the Marketing and Data Services that guarantee speed to value and quick win ROI from technology investments. We deliver these solutions with an unmatched wholehearted approach bringing personalized support, care, and service to every client. That’s why many of our client relationships span more than a decade.