2.04 – Scaling Your Market Segmentation Strategy
Growing a Market Segmentation Strategy
A successful market segmentation strategy goes beyond simply sorting customers into groups and building marketing around specific personas. It involves understanding psychological influences and producing relevant content for each segment simultaneously, ensuring consistent sales rather than periodic spikes.
Effective segmentation can be based on various criteria, making sense of how people make buying decisions, past transactions, attitudes, and how you can reach each segment efficiently. Digital asset management platforms play a crucial role in this by allowing you to create and release content for all channels simultaneously, enhancing communication efficiency across segments.
Step One: Content Marketing System
The first step in a segmentation strategy is to establish a robust content marketing system. This system should automatically adapt digital and print marketing materials for each segment, enabling you to launch all versions in the market simultaneously. This approach prevents delays in sales promotions and contributes to overall success.
Advantages of Segmentation Strategy
Segmentation allows you to tailor your product and marketing efforts to a clearly defined group with specific characteristics. If one segment consistently outperforms others, consider adopting a niche strategy. By focusing all resources on this segment, you can offer more customized and personalized service, helping you compete with larger businesses through specialization.
Customer Segments
One proven segmentation strategy is based on RFM—recency, frequency, and monetary value of customers. This method helps identify customers with the highest potential for repeat sales and profitability. Other segmentation criteria include:
- RFM
- Products purchased
- Transaction value
- Frequency of purchase
- Generational attitudes
- Trust equity in brand/category
- Emotional selling proposition (ESP) profiles
- Conversion channel (social, web, retail, referral)
- Purchasing and browsing patterns
- Demographics (education, gender, income)
- Geography
- Relationship with brand (warm lead, cold call, established customer)
With strong database programs and analytics tools, you can learn about your current customers and build segments to capture growth trends or nurture future leads. For instance, if a subset of customers is growing faster than others, consider specializing in that type of customer to gain more business. Adjust your product, pricing, promotion, or distribution plans for each segment and adapt your marketing content accordingly.
Adding New Segments
If your customer base is shrinking or your current segments aren’t responding as expected, consider adding new segments. For example, a consulting firm specializing in coaching healthcare executives might expand to offer similar services to nonprofits, thereby broadening its market base without changing core competencies or investing in expensive new product development.
Niche Marketing
Specializing in a specific market segment can provide the momentum needed to surpass competitors. The niche strategy might be suitable if:
- Profitability: Specializing in a narrower segment could be more profitable.
- Competition: The broader market has too many competitors, making it hard to establish a stable customer base.
- Strengths: It leverages your core strengths.
- Size: Your business is too small to lead the overall market but can dominate a specific segment.
By carefully evaluating and implementing these strategies, you can effectively scale your market segmentation approach, driving growth and enhancing profitability.
