Marketing Strategy 7 Steps To Market Segmentation
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Marketing Strategy: 7 Steps to Effective Market Segmentation
Market segmentation, a crucial aspect of any marketing strategy, involves a detailed process broken into two primary phases: identifying broad markets and further segmenting them to define target markets. This allows marketers to create tailored marketing mixes for each segment. Despite its importance, many marketers struggle with segmentation due to common misconceptions and a lack of understanding of its mechanics. Here, we'll guide you through a seven-step model to creatively and effectively segment your market.
Step 1: Identify and Define the Broad Market
First, determine the broad market your business aims to serve. For established companies, this may be straightforward; for new businesses, more exploration may be needed. The key is to ensure your market isn't too narrow or overly broad. Use your experience and insights to find the right balance.
Step 2: Inventory Potential Customer Needs
This step challenges your creativity, akin to a brainstorming session. Identify as many potential customer needs within your broad market as possible. To do this, step into your customers' shoes: Why would they buy your product? What prompts their buying decisions? Answering such questions helps you list the needs of potential customers in a specific market.
Step 3: Develop Narrower Market Segments
Create sub-markets by identifying your "typical customer," then group similar individuals into these segments. Ensure each segment's needs can be met with a specific marketing mix. Build upon the major needs you're addressing and consider demographic and psychographic factors. Consult with others to gain diverse perspectives and refine your segments.
Step 4: Identify Key Dimensions
Review your segmented list to pinpoint the determining dimensions that drive customer behavior within each segment. Understanding these dimensions helps you tailor your marketing strategies more precisely.
Step 5: Name the Segments
With determining dimensions identified, assign appropriate names to each market segment. Utilize the most significant determining dimension as a guide for naming, making it easier to strategize effectively for each group.
Step 6: Evaluate Segment Behavior
Examine the behaviors and triggers of your market segments. While segments may have similar needs, there are nuanced differences that need recognition. Understanding these distinctions will help you develop competitive and effective offerings.
Step 7: Estimate Segment Size
Estimate the size of each segment, even if it's a rough approximation due to data limitations. These estimates are valuable for creating sales forecasts and planning your marketing mix, making the subsequent strategic planning easier and more effective.
By following these steps, you can build focused marketing mixes for each segment, significantly enhancing your chances of success. This method is accessible and practical for most marketers. For those interested in exploring further, computer-aided techniques like clustering and positioning might offer additional insights.
This practical approach to market segmentation allows businesses to truly understand and cater to their varied customer base, setting the foundation for successful marketing strategies.
You can find the original non-AI version of this article here: Marketing Strategy 7 Steps To Market Segmentation.
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