Market Segmentation Strategies from a Charlotte FCMO

If you think of a successful marketing strategy like a house, market segmentation would be part of the foundation. It gives the architects (aka marketers) the information needed to build something that lasts, holding up against poor weather conditions (market changes) and time (time). 

Market segmentation is a data-driven strategy and one of the most efficient ways to learn more information about your customers so that you can create personalized product offers and marketing campaigns.

Keep reading to uncover Charlotte FCMO market segmentation techniques and how to successfully apply them.

But first, here’s Jason with what to expect when working with a fractional CMO:

What Is Market Segmentation?

Market segmentation is a type of tactical and strategic marketing that divides a general group of people into smaller groups based on a set of characteristics. It lets you know more about your customers so you can understand their unique needs and pain points.

This process also eliminates the risk of marketing your product to people outside your target market, ensuring that your product sells and provides the right value to people. By narrowing down customers to those most likely to buy the product, companies can allocate all resources to nurturing those high-value customers instead of exerting resources on broad or general audiences.

How To Identify Market Segments

Before you can start segmenting your audience, first identify which market segments are most applicable to your business.

A. Define Target Market

The first step is to define the scope of your target market. This is where you define a broader or more general audience before breaking it down into specific segments.

Local market analytics can help you narrow down data into smaller groups. While looking at people’s traits would appear to be qualitative, market segmentation techniques are ultimately quantitative. Even when looking at personality traits, preferences, and other qualitative data, tracking this is a vital part of data-driven marketing. 

B. Set Segmentation Objectives

Defined goals guide you throughout the entire segmentation process. These goals act as benchmarks that measure how successful your efforts are.

Goals should be specific and measurable (SMART goals) to give you a concrete picture of what you want to accomplish. For example, if your goal is to increase sales, determine factors like by how much and by using what methods.

C. Identify Important Variables

Variables are the set categories into which we categorize audiences. These specific characteristics help you get to know your audience better to create personalized campaigns and experiences. These variables are also important for determining the relevance and value of your products. 

• An example of variables in practice: A bank or financial institution can use a person’s age to determine if they’ll need a college loan or a retirement fund. That information can then be used to identify which email campaigns or paid ads to run, for example. 

D. Evaluate Each Segment

The next step is to evaluate each segment to determine its viability for marketing initiatives. You can create a list of questions or criteria needed to determine if each segment is feasible.

Questions on your list might look like:

• How many customers are in this segment? Does it consist of a substantial number of people in your client base?
• Is each segment accessible and reachable, given your current technology?
• Are each segment’s needs something that your product or service can address?

For more on what Charlotte, North Carolina, fractional CMOs can do for your business, check out our instructional video here: 

What Are the 7 Types of Market Segmentation?

A market can be segmented according to several different points, which makes it easier to narrow down groups further.

Listed below are seven market segmentation techniques:

1. Demographic Segmentation

This is one of the most common Charlotte FCMO market segmentation techniques. Demographic segmentation focuses mostly on surface-level information, which is easily measurable, making it practical for targeting large groups.

You can segment audiences according to details such as the following:

• Age (Baby Boomers, Gen X, Millennials, Gen Z, etc.)
• Gender
• Race
• Religion
• Education level
• Occupation
• Income level
• Family situation (Marital status, family size, family structure, etc.)
• An example of demographic segmentation in action: A company selling luxury items may target people with higher incomes. Similarly, if you’re marketing baby products, the main target market may be parents with a newborn child. 

Demographic information is easy to collect and makes it easy for advertisers to create ads that are applicable to their audience. It also ensures that you’re spending your marketing budget on audiences who are most likely to buy your product versus marketing to a wider, general audience who might not be interested.

2. Geographic Segmentation

Geographic segmentation is categorizing your audience based on their current location, from country down to the zip code. 

This type of segmentation looks at people based on factors such as the following:

• Zip code
• State/Province
• City
• Rural or urban areas
• Spoken languages
• Timezone
• Cultural preferences
• Population

Geographic segmentation is a quick and easy way to group customers as it requires fewer data points. The location is the perfect starting point to reach your target customers and offer personalized products.

3. Psychographic Segmentation

Psychographic segmentation is a unique type of segmentation where, instead of people’s personal information, companies group audiences according to their principles. 

This may include:

• Beliefs
• Lifestyle choices
• Values
• Interests
• Activities

This type of information is a bit more difficult to obtain because user preferences and values are deeply rooted. Despite being more difficult to acquire, psychographic segmentation gives more insights into a customer’s psychological characteristics.

In other words, this type of psychographic segmentation looks at why someone may want to buy a product. 

4. Behavioral Segmentation

Behavioral segmentation is grouping customers according to their behaviors. This is commonly seen in the online shopping industry; Charlotte fractional CMOs for eCommerce brands use this type of segmentation to track user behavior across eCommerce platforms.

This type of segmentation may cover many different actions, such as:

• Past experiences or interactions with your brand
• Purchase history
• Website or app visits
• Consumed content

Behavioral segmentation allows companies to observe where they currently stand in the customer journey. It also makes room for predictive insights based on historical behavioral data and patterns.

For example, a customer who purchases one item after another is more likely to purchase a new item sooner or later. Similarly, if a customer visits a website often, they’re more likely to make a purchase on their next visit.

This type of segmentation also gives companies a clear idea of which customers to prioritize based on their actions. This also lets them plan on how to allocate resources and budget to accommodate these customers.

5. Benefit Segmentation

Benefit segmentation is grouping your audience based on the perceived benefits they’ll receive from your product. Every customer has different reasons for purchasing a product, so this segmentation type is a way to determine the different value propositions.

Whether it’s value for money, specific features, or top-of-the-line products, marketers use this segmentation to create highly personalized marketing campaigns to convert leads into paying customers.

• An example of benefit segmentation in practice: With the help of a Charlotte fractional CMO for SaaS, you can market a specific software, emphasizing its user-friendliness and intuitive features for easy usage and increased efficiency. Such benefits may appeal to customers who require an easy-to-use platform to fulfill certain projects, such as students or beginner freelancers.

6. Firmographic Segmentation

If demographic segmentation looks at customers’ details and characteristics, firmographic segmentation looks at that of businesses. 

It’s a segmentation technique that is commonly used in B2B marketing and looks at variables like:

• Number of employees
• Company location
• Industry
• Annual revenue
• Company structure
• Business type (Sole proprietorship, partnership, LLC, nonprofit, etc.)

Firmographic data is relatively easy to collect via surveys, online databases, and even social media. This data helps marketers find the most relevant audiences for their products or services.

• An example of firmographic segmentation in practice: Startups may have different needs than large corporations. Firmographic segmentation helps tailor marketing strategies that meet those needs, leading to improved sales performance and a better understanding of a business’ audience.

7. Life Stage Segmentation

Life stage segmentation divides the market based on key life events or phases. This could mean a lot of different milestones and events in a customer’s life, such as:

• Graduation
• Starting a new job
• Moving to a new place
• Getting married
• Having children
• Retirement

Marketers use this segmentation technique to better understand what the customer is going through and what their specific needs are as they enter a new phase in their lives.

• An example of life stage segmentation in practice: To give a simple example, a real estate office could provide helpful resources for those in early adulthood looking to rent an apartment or buy a new house.

Tips: A Charlotte FCMO’s Market Segmentation Techniques

When trying to understand an audience as diverse as Charlotte’s, market segmentation is one of the best ways to gather critical information on your customers. The better you know your customers, the easier it’ll be to sell your products and make customers happy. 

Listed below are some of the frequently asked questions our Charlotte fractional experts get, plus a few tips about marketing segmentation and how to get started. 

Which Is the Easiest Method for Segmenting the Market?

Demographic segmentation is usually the easiest type of segmentation because the information you need is easily accessible. Data for demographic segmentation can come from:

• Census Data
• Public Records
• Social Media and Web Analytics
• Customer Databases (like surveys, sign-ups, and loyalty programs)

In consumer research, demographic segmentation looks at a customer’s basic information, such as their age, gender, income, and education. It’s a quick method to identify specific groups without the need for an in-depth analysis or research.

For example, customers can easily group customers according to age groups like 18-34, 35-54, or 55 and older. Similarly, it’s easy to categorize customers according to income level, such as low, middle, or high income.

How Do You Evaluate Market Segments?

Evaluating market segments involves looking at specific criteria needed to determine if each segment is viable enough for marketing activities. 

This can be done in several ways, such as the following:

• Segment size: Consider the size of each segment to determine its potential for profitability and growth. Does each segment have a large enough audience to drive meaningful sales growth?
• Accessibility: It’s crucial to have an easily accessible segment. Being able to stay in contact with them maintains customer engagement and builds strong relationships.
• Profitability: What is the project profitability of each segment? This will help assess the customers’ purchasing power and potential to generate long-term revenue.

What Is Generally the First Step in Market Segmentation?

The first step to market segmentation is to define the scope of your market. You can start by developing a clear picture of your product or service and determining the ideal audience.

Once you’ve defined the broader market, start narrowing down your audience into specific segments, whether by location or age group. This often entails gathering data on your customers via surveys or online databases.

How Do You Improve Segmentation?

Market segmentation will not always be perfect or exact (people are simply too complex to distill into hard data), but it can be improved with the right tactics. 

Three ways to improve segmentation efforts include:

• Leverage data-gathering tools: Useful tools like CRM software and automation help streamline the data-gathering process, making it easier to analyze customer information with minimal human error.
• Stay up-to-date on market trends: Customer preferences may change at any time. It’s important to stay flexible and adaptable to these market changes to stay competitive and continue to give customers what they need. While adapting to market changes is vital, keep messaging consistent to build trust (and make your brand distinct and memorable).
• Gather customer feedback: Your customers provide valuable input on how you can better respond to their needs. Gather feedback from surveys or interviews to get insight on how you can improve and what areas need adjusting.

Have questions about data-driven marketing? Our Charlotte FCMOs are here to help:

Case Studies: Market Segmentation Strategies from a Charlotte FCMO

Market segmentation is an effective strategy and we at Digital Authority Partners have the success stories to prove it. 

Below are two of the companies that we’ve helped with our segmentation efforts:

DecisionLink

DecisionLink is a SaaS company that provides software-enabled customer value management. DAP used segmentation to improve the company’s website analytics.

One of our solutions for low website conversion rates and traffic was to segment the audience by demographics, behavior, and location. This was supported by strong monitoring of high-value segments and analysis of each stage of the customer’s lifecycle.

This solution led to a 200% increase in sales-qualified leads and a 178% increase in organic traffic within just one year.

Trivia Nation

Trivia Nation is an entertainment company that hosts live trivia nights and game shows in bars and restaurants. This kind of industry is dependent on acquiring the right people to participate, which DAP was able to help with.

Market segmentation allowed Trivia Nation to attract high-quality leads by tailoring marketing strategies to different buyer personas. This was able to help them reach new markets and gain new leads from additional market segments, such as hotel event organizers, country clubs, and corporate sponsors.

Get More Market Segmentation Strategies by a Charlotte FCMO

Market segmentation gives you a clear grasp of the market by breaking it down into clearly defined segments. You’re no longer marketing to a general audience but to specific audiences for whom your product benefits the most.

If you want to talk about your market segmentation strategies or if your type of business can benefit from a Charlotte FCMO, Digital Authority Partners is here to answer your call (or email)!

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Sources:

Personalization Done Right | Harvard Business Review 

The Power of a Digital Customer Journey Map | Wake Forest University

Qualitative vs. Quantitative Research: What’s the Difference? | Grand Canyon University

Hit the mark when you set SMART goals | Yale

What is predictive analytics and how does it work? | Google Cloud

What Is B2B? How it Differs from B2C and DTC | Business News Daily

Market Segments - Doing Consumer Research: A Resource Guide | Library of Congress