Are your marketing dollars working as hard as they could be?
Market segmentation strategy is all about resource allocation. EquiBrand can help stretch your marketing and product development budgets by optimally aligning spending with the right target customers.
Market segmentation (also called customer segmentation) and target selection are two related concepts central to marketing strategy and plan development.
Market segmentation flows from the perspective that not all customers are alike — and individual customer groups will seek out different products and brands for different reasons.
Quantifying a customer segmentation framework gives a clear understanding of the most attractive segments, including their size, profitability, and growth potential. Resources can then be better aligned to meet customer needs, both today and in the future.
Target marketing, a related concept, is one of the most critical, though often overlooked, components in strategy development. Targeting recognizes that most companies have limited resources and therefore need to “place their bets” to yield the highest return.
Many companies are reluctant to select a core target, fearing that excluding certain groups will decrease sales. In turn, companies try to serve all customer groups equally, which can result in a diffused offering, that no one group finds appealing.
Our marketing consultants understand the key difference between 1) the more narrow “target market” (think the center of the bullseye); and 2) the broader “consumption market” that falls outside of the core, though often finds the offering appealing. Targeting, then, becomes an issue of prioritization vs. necessarily excluding customer groups.
After grouping and targeting customers, strategic brand positioning is often the next step, completing the STP (or Segmentation, Targeting and Positioning) framework .
Market Segmentation Research and Target Selection Issues
Who are the various types of customers across the customer base? Should we employ geographic segmentation, demographic segmentation, or psychographic segmentation?
What are the the underlying differences or factors across customer segments? How might these factors align with our offerings?
What is the optimal customer framework solution? What are the implications for target selection?
Which are the most attractive targets for the business, in terms of market size, profitability, brand-fit and long-term attractiveness?
Should current offerings be realigned or new offerings introduced to better meet the needs of the target?
Segmentation Consulting Approach
Qualitative and quantitative research is used to develop customer segmentations types
Target selection workshops (including persona development) are used to prioritize targets.
Growth concept development is then used to iterate strategic positioning and targeted strategic opportunity areas.
Don’t get hung up on differences between market segmentation vs customer segmentation, customer segments vs customer personas, or the role of segmentation and ABM (or account-based marketing). The are a variety of market segmentation models — the important thing is to make segments and personas a part of your strategic approach to marketing.