Market Division Criteria
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Market segmentation is a crucial strategy for businesses to better understand their customers and tailor their marketing and product strategies effectively. By dividing a broad consumer or business market into subsets of consumers or businesses that have common needs, interests, and behaviors, companies can create targeted and personalized marketing campaigns.
There are various criteria for customer profiling in market segmentation, each aiding in building comprehensive, differentiated customer segments. These criteria include:
- Demographic: Age, gender, income, education, occupation, company size, industry, annual revenue
- Psychographic: Values, lifestyle, personality
- Behavioral: Usage habits, brand interactions, loyalty, buying journey stage, product or service usage patterns
- Geographic: Location, region, postcode, country, cultural profile, time zone, climate zone
- Needs-based: Specific product or service needs, pain points, preferences, or requirements that distinguish groups, such as dietary restrictions or feature needs
- Technographic: Customer familiarity and comfort with technology, types of technology used, especially relevant for software or tech products
Different businesses may emphasize certain criteria more strongly depending on their market and objectives. For instance, a B2B SaaS company might segment primarily by industry and company size, while a retail consumer brand might focus on psychographics and behavior.
The goal is to identify distinctive, relevant groupings that allow for targeted and effective marketing. For example, a company selling umbrellas would focus on geographic and seasonal needs-based segmentation, while a restaurant might segment based on psychographics and behavioural criteria, with some focusing on fancy dining experiences and others on casual pizza options.
In summary, market segmentation involves understanding the demand patterns of products and profiling customers based on various criteria. This knowledge helps businesses target their marketing efforts more effectively, improving their chances of success.
For further reading, check out our series on Segmentation and the beginners guide to Market segmentation. You can also watch a video by Marketing91 for a more in-depth understanding of Market Segmentation.
- By analyzing the financial aspects of potential customers, a B2B finance company could use demographic criteria such as income, occupation, and company size to effectively target businesses that are likely to invest in their services.
- An entrepreneur launching a retail business focused on eco-friendly products could utilize both psychographic and needs-based criteria by targeting customers with values that prioritize sustainability and lifestyle preferences that align with eco-friendly choices, in addition to addressing the specific need for environmentally friendly products.
