Uncovering The Iceberg... Why it is essential for organisations to segment their market
  • David Hardy

Uncovering The Iceberg... Why it is essential for organisations to segment their market


Iceberg depicting "known" and "unknown" market segments

In order to create a successful marketing strategy a company must first segment their market.

The most common reason for creating a marketing strategy is to increase profits by finding new customers or by retaining your current customer base. Market Segmentation should look at the whole market first and from there you can then break this down into smaller groups. This basic premise enables an organisation to target a specific customer set to a specific set of products/services.


Example:

You have just been employed by a car manufacturer, on your first day your new boss tells you that your job is to make the tea. He offers no further advice.

This causes somewhat of a problem if you are to complete your task correctly; i.e. when do you make tea, how many people do you make tea for, how often do you make tea, who is allowed tea, does everyone take their tea the same way, do you deliver the tea or is the tea collected, do you charge for the tea or is the tea free.


In this example without more information you are possibly; making tea five times a day to hundreds of people who don’t like tea and you are trying to charge them for the tea.


Organisations face the same problems if they do not segment their market as they may end up selling the wrong product/service at the wrong time to the wrong person. Segmenting your market into smaller groups is key to ensure you are targeting effectively.

Segmenting your market into smaller groups is key to ensure you are targeting effectively.

Every company will need to segment their own markets in different ways and this can vary considerably from one company to another; however here are some of the core ways in which you can approach segmenting your market:


Product/Service Categories

Product/Service Categories

Firstly you have to understand the types of products/services your company offers and then look at the wider industry as a whole. This enables you to understand what your competitors are doing and what if any adjacent markets you could move into.


Demographic

This will offer statistical data relating to the general population and particular groups within it. The most common sets are age, gender, marital status, occupation, religion, education and income.


Geographic

This will offer statistical data relating to where your customers live. The most common sets are region, state, county, country and community.

To help you segment further and quicker you can purchase software from organisations such as Eurostat, who provide a wide range of statistics for the 28 EU Countries. This data set is vast and includes statistics ranging from policy, economy, population, industry, agriculture, environment and transport.


Global Geographic Segmentation

Behavioural

We have all seen over the past 10 years the increase in advertisements when browsing the web and using social media. Big Data as it has been coined is extremely useful in identifying consumer traits; such as patterns of use, price sensitivity, brand loyalty and benefits sought. This information is vital to organisations as they strive to create a unique and personalised customer buying experience.


Cost-effectiveness

Identifying the right product at the right price to the right consumer is essentially in order to make your company a success. There is no logical reason you would open a fine dining restaurant on an industry estate next to a factory hoping to capture a great lunch time trade.


Benefit

Benefit Segmentation allows you to divide your market based upon the perceived value/benefit or advantage your customers perceive that they will receive from your product/service.

You can segment the market based on the following; quality, performance, customer service, special features and or other benefits.


The Advantages to you of Segmenting your Market

  • A greater understanding of the ‘Whole’ market that your organisation is operating in

  • Knowing what your competitors are doing and not doing

  • Having the advantage to focus on where you need to be

  • The ability to identify additional markets you can sell to

  • Enable you to become more competitive

  • Increase brand awareness

  • Improve market share

  • Retain a great percentage of your current customer base

  • Understand your customers by effective communication

  • Increase in sales


In an ever-increasing competitive technological world, it is imperative that you stay ahead of the game. Not only to survive but to thrive.

If you are running a sole trader business or a global empire you can only gain by better understanding your surroundings and your customers.

If you can segment your market effectively in order to target the right customer with the product/service, they desire; then you have a real opportunity to succeed.

If you can segment your market effectively in order to target the right customer with the product/service, they desire; then you have a real opportunity to succeed.
0 views

 +44 203 105 1318

  • LinkedIn - White Circle
  • Facebook
  • White Twitter Icon

Clear Commercial Solutions Limited

 

The Atrium, 4 Curtis Road

Dorking, RH4 1XA

United Kingdom

Kemp House, 152-160 City Road
London, EC1V 2NX
United Kingdom

Company Number 11472606