Skip to content Want to sell more products? Turn market shifts into a competitive advantage? Get customers coming back time and time again, and spending more as they do? You need to define who you’re targeting, why you’re targeting them, and what they want. A transformational segmentation doesn’t just bring clarity on who to target, but why you are targeting them, so different teams can focus on target segments and refine what to target each of them with.
If you don’t understand your audience, there’s no way you’ll be able to engage them effectively. How large is it? What kinds of people are in it? How can you best engage them? Not everyone in your audience will be the same, and each segment will need different products, marketing and messaging to be engaged successfully.
In times of change, companies that deeply know their customers can adapt quickly, turning market shifts into growth opportunities while competitors struggle. By understanding how consumers think, feel, and behave, you can react to changes in the market quicker than your competitors.
In this guide, we’ll show you, step-by-step, how you can define your audience, break it down into segments, target those more effectively, create messaging, branding and offerings that are personalised to their needs, and use your segmentation to monitor and drive results.
But first of all, let’s go over the basics.
Segmentation means breaking your commercially-addressable audience into smaller groups (typically 5-8, but this can vary, depending on your needs), each of which is united by shared characteristics, like attitudes, demographics, needs and behaviours.
Instead of treating everyone the same, segmentation allows for marketing, products and messaging to be tailored to meet these different audience needs.
Defining your organisation’s commercially addressable market is the first, fundamental step to a transformational segmentation. This covers everyone who could possibly consider buying or using a product or service of yours, even if they don’t do so currently. Another term for this is “non-rejector” – basically everyone who won’t not buy from you, if you’ll excuse the double-negative.
Segmentation is a powerful tool to identify where to play and how to win.
Looking at multiple layers of information informs the decisions you make around which segments would be best to target.
By looking at the value of existing customers (segment size, average order value and lifetime value) you can pick out financial targets. These are the segments that would generate the most revenue for you if targeted effectively.
By assessing the value of potential customers:
Segmenting your audience and identifying who to target is just the start. The next step is determining what to target them with.
This could take different forms:
Refreshing your brand positioning, or refocusing your brand message to address a particular need of a target segment.
Brand and product portfolio strategy – understanding which of your brands or products are most aligned with your key targets and highlighting them.
Innovation and NPD, whether that be adapting your service, reworking an existing product, or developing a new offering that meets the unmet needs of your target segment.
Acquiring a competitor or adjacent brand to obtain a relevant value proposition.
Making your brand and products more relevant to your key targets is important, but you still need to engage with them and deliver their desired experiences.
So, you’ve decided who to target and why. The profile of the segments (e.g. their motivations, their needs, or their expectations) has helped you choose what to target them with. Now you need to use your segmentation to identify where and how to build those targeted relationships:
Ready to use segmentation to drive business growth? Enter your details below to receive your free eBook to learn how to create transformation segmentations and implement a winning strategy.
Subscribe
Get the latest market research news and insights delivered directly to your inbox. Subscribe to the STRAT7 newsletter today.
