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What is a Market Segment?
A market segment is a homogeneous group of prospective buyers that have common needs and will respond similarly to your marketing call to action. You usually segment a market when different groups perceive a different value for your product or service than another group. This helps you develop your marketing activities and messages so that you do not come off as being all things to all people.
Analyzing your target market and dividing it into individual segments can offer you insight into which segments you can more successfully service based on your current resources and skills, alert you to a market segment that is losing money or one you are not capable of servicing effectively, or help you understand what you need to do to expand your business to include a particular segment. This analysis may help you determine that one particular segment is so lucrative that you only want to work with that segment even though the others are out there that you could effectively service.
In addition, market segmentation offers many benefits. You are able to be more precise in how you speak to individual prospects and which marketing efforts will be used to reach them, thereby spending your marketing dollars more wisely. It also allows you to clarify how your products and services apply to these different segments of the market, including the perceived benefits and what messages will more likely resonate to that particular segment. One potential benefit of market segmentation is that you just may find a segment that is willing to pay a premium for your products and services.
Selecting Market Segments
To segment a market, there are various attributes that you can use to paint the picture of your ideal client. For consumer markets, these variables include:
Once you have selected a segment or segments to target, you then need to determine if the segment is worth going after.
Some business owners have difficulty getting started with segmentation. Start by looking at your current client base and see if there is a pattern. Sometimes businesses just naturally attract a particular type of client. Take a look at those clients you just love to work with. What characteristics do they all have in common that you could turn into a segment?
Let's take a look at an example:
A massage therapist would start by picking their target market based on geographic location since it is more likely that their client base will come from within a 10 mile radius of your office. After a relaxing massage, most people don't really want to drive more than 20 minutes to get home. However, within that target market, you could segment even more in order to offer specific services based on physical need.Understanding what motivates these segments into booking an appointment for a massage enables you to develop marketing programs that speak directly to these people. This does not mean you would exclude the general person who comes in for a massage, but you may end up marketing your business exclusively for seniors to relieve arthritis pain or athletes who need to be in top condition for their events. The key is to explain why your service caters to their needs, especially if you make it a regular part of your health and wellness activities.
Successful marketing usually occurs when you speak precisely to your target audience. Market segmentation helps you achieve that precision. Once you go through the exercise, you may choose to market to only one segment within your target market at any one time or you may choose to reach multiple segments simultaneously. In either case, you now can develop marketing messages that speak to your target segments, activities that are geared towards these segments, and clarity around your business that attracts clients like a magnet.
Debra Murphy is founder of Masterful Marketing, a marketing coaching firm that empowers small business owners and independent professionals to take control of their marketing to get better results. She helps you change how you think about your business and put activities into motion that attract your ideal client. She started Masterful Marketing to ensure small business owners had access to the knowledge available to larger companies so they could live their dreams and build a business around their passions. Although her knowledge of marketing covers all the traditional channels, she specializes in online and social media marketing to make sense of it all to those who want to use it to effectively market their businesses.
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