How can customer segmentation help me to define my target audience?

By Christina Haigh, Freelance Marketing Consultant

At its core, marketing is about reaching and engaging with your target audience so that they buy into you and buy from you. You want to effectively communicate your product and/ or service offering to those most likely to benefit from your offering, but also crucially – most likely to purchase. However, people’s (and therefore businesses’) motivations to purchase are a complex mix of functional, economic and psychological criteria. So how as a small business owner can you get to the heart of what motivates your target audience, to make sure you reach the right ones, to give you the profitable growth you’re looking for? Applying customer segmentation techniques can help us achieve this.

Customer segmentation is the first stage in a series of marketing techniques known as “Segmentation, Targeting and Positioning”. It enables a business to group its existing and potential clients according to common criteria, so that a product and/or service offering can be tailored to them. 

Four broad types of segmentation are commonly used:

  • Geographic
  • Demographic
  • Psychographic and
  • Behavioural

Many small businesses are limited in their reach by the geographic area that they are able to service. Improved website functionality, online ordering through apps on mobile devices, plus the growth of mail and courier delivery services have meant that for some sectors, location has become less of a factor. 

Demographic segmentation means that a business can target potential customers  based on factors such as someone’s age, gender, education, life stage, family size, income and occupation. In a Business to Business (B2B) context, criteria like company size and sector, and a person’s role and time in position are also likely to be relevant. However, a recent article in Marketing Week describes a move away from defining markets according to demographic criteria. In a survey of 800 marketers from 23 different sectors, the top 3 segmentation  criteria employed are behaviour (44%) and location (42%), with age in 3rd place (38%). 

Another article in the same publication questions how well many consumer brands are targeting the over 50s. The term “over 50” covers such a vast range of habits and lifestyles, dictated by factors such as disposable income and health – it is perhaps the best illustration that grouping people too simplistically can lead to poor and ineffective communication. For example, a woman in her 60’s who runs marathons in her spare time, is active with her grandchildren and has a busy social life has little in common with someone in her 80’s who has chronic health issues and lives in a care home. Yet both of them fit into the “over 50” category.

A segmentation approach based on people’s behaviours or rather, the benefits they seek from a product or service, their usage of it and their decision-making process is a lot more relevant. This, combined with psychographic segmentation, which focuses on their lifestyle, interests and activities, plus their attitudes and values, adds a powerful level of insight that brings customer profiles to life. At this point it’s a matter of identifying which segments offer the best potential for your business: which best matches your USPs, and whom would you most like to work with?

Now you can build a “customer journey” for your target audience profile(s). Identify the best ways for them to come into contact with your brand and see or experience what you have to offer. If you know how and where they already spend their money, and which media or social media they engage with, it will be much easier to develop appropriate messages and promotions to encourage them to try your brand.

If you would like to find out more about segmentation and targeting and how to apply these principles to your business, why not join our fun and interactive workshop on the morning of Thursday 27thJune in Wokingham? Click here for more information and make sure you book early to secure the earlybird rate!

Sophie Comas

A highly successful self-motivated and results driven, senior marketing professional. My passion lies within developing and delivering marketing solutions which make a difference in today's complex digital market place. A marketeer with a strong academic background and broad ranging level of experience working with small businesses and in the travel and hospitality sector, across the Thames Valley, I love a challenge!

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.