market segmentation

August 30, 2022, Comment off

What is Market Segmentation

Market segmentation refers to dividing your potential customers into manageable subsets. The division is based on priorities, requirements, demographics, shared interests, and other behavioral or psychographic aspects to gain a deeper understanding of the target audience.

This segmentation analysis can inform your marketing, product development, and sales strategies. Market groups, such as males versus females or Gen Z versus Gen X, can guide the pace at which new product offerings are created.

Benefits of market segmentation for B2B marketing

Increases revenue

Market segmentation is the simplest approach to building a customized campaign. And McKinsey estimates that personalization can increase sales by about 10%.

Promotes the growth of products

Market segmentation enables you to comprehend your main clientele. The more you understand your audience, the better equipped you are to meet their demands. Then, use that information to develop new items suited to specific market niches.

Enhances user experience

You can evaluate your UX using segmentation to see what is and isn’t functioning. For instance, you can determine where clients are most likely to churn if you construct B2B market groups based on the sales cycle. In addition, you can address frequent problems with a segment once you’ve identified them.

Aids in opening up new markets

By analyzing market segmentation data, you can find prospective B2B segments in entirely untapped markets.

Save money on marketing

You won’t have to squander money trying several tactics to see what sticks. Instead, you may develop targeted, individualized campaigns that maximize your budget with sound segmentation. According to McKinsey, personalized campaigns generate a five to eight times higher return on investment than conventional campaigns.

The basis of market segmentation for B2B Marketing

Customer needs-based segmentation

Needs-based market segmentation is one of the more well-liked techniques.

This approach categorizes several consumer categories based on what they require from a good or service. As it is based on wants and attitudes, it is more subjective than firmographics.

It’s an excellent strategy because it lets you concentrate on purchasing motives. People with comparable pain points are easier to target. Instead of grouping people by age, gender, or income, you may more easily create advertisements geared toward productive people or people on a budget.

The approach’s flaw is the difficulty in precisely recognizing the needs of various prospects. However, prospect motives can be deduced from existing customers’ demands by conducting interviews with them.

Segmentation based on behavior

Our first two approaches focused on the client’s characteristics and requirements. Next, behavioral segmentation examines their actions. You can find this information by looking at the channels prospects visit you through, how they interact with the material and the technologies they utilize.

Customer engagement with your product or service

The benefit of this strategy is that behavioral segments offer unmistakable insights into what customers want. These insights can be supplemented with firmographic information from website analytics, CRM data, or in-person interviews. The prospect’s characteristics, desires, and behavior are then combined to form the basis of the marketing strategy.

Customer sophistication-based B2B segmentation

This strategy doesn’t divide users into groups based on whether they love a good Cabernet Sauvignon or opera. Instead, it divides up businesses based on how mature and astute a businessperson they are. This grouping approach gives you the same easy customization options as other needs-based campaign methods.

But it also recognizes that not all businesses will experience or be aware of the issue. For instance, a young startup will unlikely require a CRM until its clientele expands.

Again, assumptions are the problem with this approach, but I believe we now understand that there is always a danger.

Why is market segmentation important

B2B marketing initiatives cost a lot of money to produce any results. And no company has unending resources at its disposal. You could spend millions on marketing, but if the message you’re sending isn’t tailored for a specific audience, there is no use in sending it.

The use of market segmentation in this situation is essential. Make sure you are utilizing a segmentation strategy that not only aligns with your aims but also with the sector you are working in and the kind of clients you serve.