4.03 – Building on Your Market Segmentation Strategy

A market segmentation strategy is more than just sorting customers into groups to build marketing campaigns around specific personas. It involves creating distribution strategies to reach your primary segments first and then trickle down to your secondary segments.

If your sales are strongest among millennials, for example, prioritise sales channels that reach them easily. Similarly, if your products perform best in warm climates, consider reducing efforts in colder regions where sales may be seasonal, despite year-round costs for shelf space.

The advantage of a segmentation strategy is that it allows you to tailor your product and marketing efforts to a clearly defined group with uniform characteristics. If one segment consistently outperforms others, you may want to consider a niche marketing strategy, focusing all your resources on that segment and dropping less productive ones.

Niche marketing makes sense in a world seeking more customised and personalised service. It allows you to better compete with larger businesses by specialising and personalising in ways they can’t.

With a robust customer database and accurate market analysis tools, you can gather information about your current customers and identify hot markets with look-alike audiences. If a subset of your customers is growing faster than the rest, adjust your marketing resources to reach more consumers like them instead of trying to reach many groups you may never convert. Adjust pricing and distribution to cater to your best consumer groups rather than trying to appeal to everyone, a strategy that often fails.

If your customer base is shrinking or your current segments aren’t responding as desired, consider targeting a new segment. For example, a consulting firm specialising in coaching healthcare executives might start offering similar services for nonprofit leaders, expanding its market base without changing core competencies.