Target Segmentation
Target Segmentation is a marketing and promotional tactic that involves dividing a broad base of consumers or customers into multiple groups (segments) and creating strategies and initiatives tailored to each group’s characteristics. By segmenting in this way, you can more effectively reach each group, potentially enhancing the results and efficiency of your marketing.
Main Objectives of Target Segmentation
Addressing Diversity in the Market and Customer Base
A single, uniform approach may not yield sufficient results because every consumer has different preferences and behaviors.
By categorizing diverse consumer groups into segments, you can propose the most suitable promotions and products to each group.
Improving Marketing Effectiveness
Crafting messages and choosing channels that reflect the needs and behaviors of each segment can boost the response rate and conversion rate of your ads and campaigns.
Can also lead to optimized spending and maximized sales results.
Differentiation from Competitors
Even within the same market, understanding which segments align with your company’s strengths allows you to focus on those areas strategically.
Clarifies your unique brand value or product features, making it easier to stand out in the marketplace.
Common Segmentation Criteria
Demographic
Dividing the market by age, gender, occupation, income, family structure, etc.
E.g., 30-something male professionals, students, etc.
Psychographic
Grouping based on lifestyle, personal values, hobbies/interests, and personality traits.
E.g., environmentally conscious individuals, outdoor enthusiasts, fashion-driven consumers.
Geographic
Categorizing by geographic location, such as country, region, urban vs. suburban areas, and more.
E.g., women in their 20s living in the Tokyo metropolitan area, mothers in smaller regional cities, etc.
Behavioral
Classifying based on behavioral data such as purchase history, website visits, and brand loyalty.
E.g., subscribers who make regular purchases, first-time visitors, people who only buy during sales, etc.
Firmographic
Often used in B2B contexts, focusing on aspects like company size, industry, and location.
E.g., manufacturing firms with over 100 employees, tech startups, etc.
Points to Consider When Conducting Target Segmentation
Clear Objectives and Goals
Outline the purpose of segmentation and the desired outcomes for each segment from the start.
Choose segments that align with your product/service and business direction.
Data Accuracy and Utilization
Leverage multiple data sources (customer databases, access logs, surveys) to achieve higher segmentation accuracy.
Ensure data consistency and privacy compliance.
Validity and Effectiveness of Segments
After implementing initiatives for each segment, measure results and revise or regroup if needed.
Too many segments can inflate operational costs, whereas too few may restrict your ability to differentiate effectively.
Long-Term Maintenance and Optimization
Markets and customer needs change over time; regularly reassess segments to keep them up to date.
Apply the PDCA (Plan-Do-Check-Act) cycle and refine communication methods to continuously improve.
Conclusion
Target Segmentation is the foundational practice of:
Dividing a broad market or customer base by specific characteristics
Adapting promotions or services to suit each segment
When executed well, it can lead to improved marketing performance, easier differentiation from competitors, and higher customer satisfaction. However, it is also crucial to engage in ongoing data gathering, analysis, and segment review to maintain accurate and effective segmentation.