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What Is Marketing Segmentation

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Have you ever felt like your marketing dollars just aren’t attracting the clients you had always imagined? Are you struggling to attract clients that are more profitable? Do you even know which type of client is the most profitable for you?

One method to give your marketing programs a real kick along is the concept of market segmentation.

Market segmentation is the targeting of subsets of your total market by grouping consumers together that share one or more common characteristics.

For example, consider a financial planner. They may choose to segment their prospective clients by industry type – Doctors, Lawyers, Executives, Business Owners, Retirees. Alternatively they may segment by “wealth” – those still paying off their mortgage, those accumulating excess wealth, those about to retire, those that are retired.

Or even in combination – Doctors that are still paying off their mortgage vs Doctors that are accumulating wealth.

ADVANTAGES.

Clarity – Segmenting your clients will make it easier to delve into their minds and design more effective marketing strategies that are more likely to appeal. Advertising for “people needing financial planning” is much less effective that advertising for “doctors on the west side seeking pre-retirement strategies”.

Differentiation – Even the very process of segmenting different consumer groups will immediately and positively differentiate your business offering from many of your competitors.

Perception of Expertise – Presenting your business offering to clients on a segmented basis also creates a perception of expertise with that subset – another very attractive advertisement for your business.

Budget Setting – Once your target market is segmented, it will be easier to undertake budget setting programs and implement sales pipeline tools.

Identification – Segmentation of your clients will also help, over time, identify which clients are the most profitable allowing you to further focus your business and marketing.

Confidence in staff – When marketing individually, you and your staff will find greater confidence by becoming mini-experts in each segment. That is, it’s easier to market the same proposition to ten doctors than to have to change the proposition based on whoever walks in the door.

Referrals – Market segmentation, by creating a perception of expertise, also helps your referral generation program. If that doctor doesn’t need your financial planning, maybe they know a few other doctors instead.

Brand reputation – By aligning your offering with a specific client group you will also start to create a reputation among that client group (much easier than creating a reputation among the general populace).

Monitoring – Any good marketing strategy needs effective monitoring. Marketing to specific segments of your client base makes it much easier to monitor the results and establish where your marketing is most effective.

POTENTIAL DISADVANTAGES.

Expectations – If you create a perception of expertise, you also create an expectation of expertise. Be sure you can follow-up.

Multiplies marketing materials – If you had one brochure, you might now need multiple brochures. Not such a problem for electronic delivery but it can increase the costs of printed material.

Is service a differentiator anyway – Segmentation assumes that its service that your client value. If it’s price, then the impact of segmentation may be reduced.

CONCLUSION.

Market segmentation can help you find clarity in your marketing strategy and dramatically increase its effectiveness. It will also help you gain a better insight into just who you are targeting and why. Consider spending an hour on your target market to see if your marketing strategies are really focused on the right areas.

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David King has sinced written about articles on various topics from The Beach Resort, Computers and The Internet and Acai Berries. David King is the Managing Director of Vue Consulting Pty Ltd, an Australian sales and marketing consulting and training firm. He has held numerous Executive and Sales positions with JPMorganChase, BNP Paribas and ANZ, working extensively in investment b. David King's top article generates over 18100 views. Bookmark David King to your Favourites.

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