What Now: Market Segmentation

As strategists and market researchers, the Campos team is always looking to discuss how consumer insights can be leveraged to grow brands and businesses. Welcome to the first blog in our “What Now?” series, in which our team delves into what we do, why we approach our work the way we do, and how research can help build better brands, products, and customer experiences.

Any good marketer knows that the success of marketing investments depends on your ability to reach the right people with the right message at the right time. If you’re not sending a compelling message to a well-defined target audience, you risk wasting time and money with an ineffective, one-size-fits-all approach to your campaign or brand strategy, resulting in inefficient marketing and media investments. So why do so many marketers rely on generations-based research when developing strategy and messaging?

Generations-based research has been popular for a long time, and there’s a seemingly endless amount of it out in the world (often for free or cheap). For a while the focus was on millennials, and more recently, the focus has shifted to Gen Z. It’s important to keep up with the broad trends of generational research, but this approach does have one big problem: marketers can’t treat an entire generation as a monolith.

Enter market segmentation research. With market segmentation research, you divide your target market into subgroups, or segments, based on a variety of consumer characteristics and identify the segments you wish to target in order to grow your brand or business. By building your strategies around a well-defined target, you’re able to craft stronger, more effective marketing messages that improve your chances of increasing sales and engaging with leads.

What Is Market Segmentation?

Market segmentation research uses data collected in a survey of category users—usually including a subset of current customers—to segment the population. Distinct consumer segments are created using a combination of demographics, category-specific behaviors, and attitudes. Variables included in the survey are determined based on client strategy and category knowledge, and segment profiles often consist of brand awareness, usage, attitudes, and perceptions.

The ultimate goal of market segmentation research is to identify the consumer segments that represent the greatest opportunity for growing your brand or business and uncovering insights to inform the strategies and messages you can use to woo them. With the appropriate research on those segments, you can create marketing and advertising strategies that appeal to those consumers specifically, effectively maximizing your marketing and advertising spend.

Market Research Methods for Segmentation

To truly succeed in using market segmentation, you need to know which demographics to target and how to speak to them. That’s why market segmentation research generally includes both quantitative and qualitative research methods.

The first step is to define the segments by designing and fielding a survey and conducting a custom segmentation analysis. The analysis will result in several distinct subgroups of consumers (or segments). The survey data can be used to determine which group(s) to target and why.

Once target groups are defined, further qualitative research can be conducted with people who represent these segments to help build a richer understanding of who they are and their attitudes and behaviors related to the category in question in order to inform specific messaging and marketing strategies. Often this research is also used to test preliminary messages or marketing materials that have been designed with the segments of interest in mind.

Why Do You Need Market Segmentation?

Market segmentation enables you to assess the business opportunity of the various segments that comprise your category in order to identify existing core segments and segments with the most growth potential, determine which segments to target strategically, and develop messaging based on target segment needs, attitudes, or motivations.

It can also be useful when it comes to identifying opportunities for reaching specific segments based on behaviors and determining how to allocate marketing and media dollars between segments. Without the data to back up your decisions, you might make less-than-optimal choices.

What Industries Use Market Segmentation?

When used appropriately, market segmentation research is relevant to every industry. At Campos, we’ve done this kind of work for brands in all different industries. Often our clients are struggling to determine who to target for growth and how to market to them without alienating their core legacy segments with growth prospects. Segmentation provides them with the quantifiable data they need to adjust their marketing efforts for maximum impact.

While every client’s challenges are different and each industry has unique segmentation needs, here are a few questions that clients in various industries commonly use market segmentation to help answer:

• Arts & Entertainment
  Who should you target in your market to grow visitation? How should you position your brand and its offerings in order to get consumers through the door?

• Banking
  What segments of the market should you target to grow assets under management? How do you have to position your brand and experience to appeal to consumers?

• Transit
  Who are the people who ride or fly with your brand? Why do they travel with you, how often, and what do they expect out of an experience with a brand like yours?

• Healthcare
  What segments of patients or members do you serve? How can you deliver value to each that will ultimately improve health outcomes?

• Higher Education
  What segments of the potential student population should you be targeting to grow enrollment? What do those potential students want in their higher education experience?

Tapping Today’s Trends

Marketing is more hyper-targeted than ever since brands can use digital media to easily and precisely target consumers by demographics and behaviors. Market segmentation provides the data-driven intelligence that marketers need to adapt both media buys and messaging at a truly granular level. By deeply understanding not just the demographics, but the attitudes of the segments you’re targeting, you can develop campaigns that speak to the unique motivations and desires of each target segment in the places where you’re most likely to catch their attention.

Market Segmentation for Marketing Success

As a market research firm, Campos uses market segmentation to help our clients apply our research for maximum marketing success. After we conduct the research needed to segment the target audience successfully, we provide complete profiles and personas detailing ideal consumers for your brand.

When it comes to developing and perfecting your brand message, Campos is here to help. Contact us today to see what we can do for your brand.