How to Build Effective Market Segmentation Strategies?
Before entering a market, businesses must devise an effective market segmentation strategy. Organizations can leverage market segmentation strategies to streamline their marketing plans and devise targeted marketing campaigns that appeal to specific groups of consumers. Market segmentation enables the marketers to slice and dice a broad target market into specific consumer groups with key similarities. Identifying viable segments helps the marketing function in not only targeting the consumers but also in positioning the product or service in a way that appeals to the potential customers. Market segmentation is key to successful marketing campaigns and helps minimize wastage of resources and time.
Importance of Market Segmentation
Segmentation helps in identifying similar customer groups or clusters, thereby devising effective strategies to meet their unique needs. What is the importance of market segmentation, you ask? In simple words, it helps the organization market the right products to the right customers. Additionally, it enables businesses to direct their efforts towards profitable segments that help the company to grow in the long run. Why do organizations need to segment their markets, you ask? Every organization caters to a wide market base, making it impossible for them to cater to customers, individually. The main objective of conducting a segmentation, targeting, and positioning (STP) process is to certify that the identified market segments can be used to reach the potential target markets.
Checklist for Effective Market Segmentation
An effective market segmentation strategy enables the company to streamline processes, reach the intended audience, and offer the accurate product or service with minimum wastage of money and time. Businesses can ensure effective market segmentation by devising strategies that offer the right product to the right customer at the right time. It is crucial for marketers to test the potential effectiveness of their marketing strategies and segments with the help of a five-point checklist, which includes
- Identify market segments that are measurable in sales or volume terms, thereby devising market entry strategies and marketing campaigns for the particular segment
- The market segment must be substantial in size and have a stable consumer group, that is unlikely to disappear, dissolve, or witness short term changes in the consumer traits and preferences
- An effective market segmentation strategy ensures that the selected market segment is accessible through the various marketing campaigns and promotional activities. Marketers are aware that every market segment responds differently to different promotional campaigns, mediums, and channels depending on the consumer traits
- Organizations must ensure that the segments are internally homogenous but externally are different from each other. Differentiable market segments avoid overlapping of resources, campaigns, and marketing tools
- The identified market segments must be actionablee. the marketing or sales function can attract customers and serve them; thus, yielding positive and easily quantifiable outcomes.