One purpose of marketing is to identify customers’ needs and consequently determine the best way to meet those needs. It is nearly impossible, though, for organizations to satisfy every customer’s unique needs. Instead, it is more efficient to allocate resources to target specific groups of customers. Because customers’ needs vary, marketers must identify common needs within similar groups of customers and recognize distinctive needs between different groups of customers. This understanding of the market is the basis of our Growth PlayBook.
Proper market segmentation creates efficiency – in your growth strategy, your product development, and your communications. By identifying the right target markets, marketers deploy their resources most effectively.
When conducting primary market research, analytical techniques can be used to identify target groups based upon attitudinal or socioeconomic variables. Data mining, an analysis of your existing customer data, also helps to identify your best customers and purchase patterns (when customers buy your services).
Potential market segmentation variables include the following:
Once you have defined your target market segments, you can match them to databases to generate maps for site location or mailing lists for direct response mailings. Market segmentation also provides a means to identify and prioritize marketing opportunities.