Qualtrics defines market segmentation as “the practice of dividing your market into approachable groups … subsets of a market based on demographics, needs, priorities, common interests, and other psychographic or behavioral criteria used to better understand the target audience.”
Segmentation provides real benefits as 81% of executives say it is crucial to growing their profits. Segmentation can increase response rates and lower acquisition costs with:
- More specific messages that resonate with customer’s wants and needs.
- More personal messages that help brands stand out from the competition.
- More targeted advertising to those most likely to convert to customers.
Once a business defines their target market or the specific group of people they will focus their products and services on they establish various target audiences to focus their marketing messages. There are further benefits in segmenting the target audience.
How do you segment your audience?
Consider an amusement park promoting tickets sales for the upcoming season. Their core target market is most likely adults 25-45 will children living at home. They would be the group most likely to plan and purchase tickets for immediate and extended family trips to the park.
First determine your general message.
Most businesses need to create general awareness before consideration by customers. Brand ads do this well.
An amusement park builds overall brand awareness through traditional TV, radio, print and billboard ads. These ads have a general theme showing kids, adults, grandparents and teens having fun at the park. This would appeal to their core target audience of adults with children planning family trips and looking to make sure the park has something for everyone.
Mass media must have broad appeal in messaging and imagery. In digital and social media there is opportunity to customize messages, imagery and offers.
Brainstorm audience segments.
Based on your knowledge of the target audience consider possible differences in wants and needs within the group. The amusement park may want to look at stage of life and location.
People in different stages of life may want different experiences at the park:
- Adults with young children (age 25-34)
- Adults with pre-teens/tweens (age 35-45)
- High school/college students (age 13-24)
- Grandparents (age 55+)
People who live different distances from the park may plan different types of trips:
- Multi-visit locals (Within 40 miles)
- Day trippers (40 to 100 miles)
- Over nighters (Over 100 miles)
Consider content for each segment.
Now see if your segments make a difference in content. Determine how the messages, imagery and offers could differ for each of the segment’s needs.
Parents with young children would probably respond to content focused on smaller rides. Parents with elementary and middle school kids would look for more exciting attractions. High school and college students hang out with friends and take on the big roller coasters. Grandparents want see their grandchildren on rides while being able to sit and rest enjoying shows and restaurants.
With the geographic segments messaging and offers could get more focused. People within 40 miles would be most interested in season passes whether talking to families, teens or grandparents. People 40 to 100 miles away are most likely interested in day trips. Those over 100 miles away may want to know about other area attractions and park plus hotel packages for a multi-day trip.
Plan out content combinations.
Now plan out a content segment grid. Link various segments together to determine how many content variations you need.
Based on the amusement park brainstorming we have identified 12 market segments (4 X 3 = 12). Four are based on age and family demographics and three are based geographic variables. In a social media or display advertising campaign each of these 12 segments could be targeted with a unique message, image and promotional offer.
Consider your CRM data.
Most companies have customer relationship management (CRM) databases that could add another layer of segmentation. Look at that data for meaningful segments. This could help you rule out segments or find additional ones.
The amusement park could use their CRM to discover that the market for grandparents purchasing tickets is fairly small and decide not to target them. Their adult children tend to plan and purchase tickets for trips where the parents, younger children and grandparents come together. The data reveals parents purchase tickets for the high school and college students yet they often go to the park with friends. Thus, that audience may still be a worthwhile target as they influence the decision.
From these narrowed down segments the amusement park could send emails out to past customers with the segmented communications we’ve identified. Then from their email data they could create a remarketing campaign through custom audiences in social media and display advertising.
Unique remarketing messages could target email subscribers who:
- Did not open the email
- Opened the email but did not click
- Clicked to the website but didn’t purchase
From the CRM database they also know how often people visit per year. They could target previous season ticket holders and people who visited three times on individual tickets with different season ticket messages.
They also know who has gone to concerts at the park amphitheater. They could target people who have been to concerts but not to the amusement park with a concert and park ticket package message, image and offer.
Additional possible segments from CRM data:
- Previous season ticket holders
- People who purchased 3 individual trips
- People who purchased concert tickets
Look at your customer journey.
In any business their is a unique customer journey where customers move through various pre-purchase, purchase and post-purchase stages. People in these different stages tend to seek different information.
Consider additional segments to target people in each of these stages with different content. This could include brand awareness, product, sales promotion, customer service, loyalty and advocacy messages.
When creating online social, video and display ads services such as YouTube and Google Advertising allow intent targeting for more relevant messages. Tara Walpert-Levy of Brand Solutions at Google explains it this way:
Let’s take the example of someone interested in buying a winter coat. To date, if you wanted to target video ads for winter coats, you could guess a demographic that might be more likely to buy winter coats (say, women 18 to 34) or use psychographics to target people who might be particularly into preparing for winter (say, ski enthusiasts). Intent signals eliminate that guesswork. You can serve ads to people who searched for winter coat deals, spent a lot of time scouting nearby ski resorts, or scrolled through coats in a shopping app.
Mobile campaigns that used intent-based targeting were found to have 20% higher ad recall and 50% higher brand awareness lift versus demographic targeting alone.
Create your content for each segment.
Once you have your audience segments you are ready to create your unique content. As seen in the chart above some will require only one customization while other contact may require customizing message, image and offer. Cristina Caligiuri and Ben Jones of Google’s Unskippable Labs have run experiments in testing how much you should customize in video ads. Across all forms of content be sure to follow best practices for content writing and design. Then run with it!
Measure results and optimize.
Going through this process you will most likely end up with many possibilities. Keep in mind that it is probably not worth segmenting messages to them all. Not every additional segment you create will produce significant improvements.
That is why you must measure results and optimize along the way. If the segment doesn’t increase conversions, stop using it and try something else.
The amusement park may discover conversion on targeting multi-day trips to high school/college students over 100 miles away is too low. Instead they might try targeting adults 25-34 without kids for overnight park and concert trips.
How can you segment your target audience for improved results?