Market segmentation and its significance as a tool for leveraging business growth

If you’re in the field of Marketing and Economics, you probably know the term Market Segment. A market segment is part of a market, or more precisely, a submarket consisting of individuals, people or groups that share the same basic characteristics. Each segment takes similar actions based on fulfilling their common needs.

Every organization or business operates with a particular market in mind, which they then divide into submarkets. They do this to adapt to the needs of subpopulations which have broader effects on the upper market the business serves.

What is a Defined Market Segment?

A defined market segment is a segment of the market with consistently dominant characteristics relative to other markets. Defined market segments react well to different market stimulations, and when analyzing the needs of each segment, it is possible to intervene and shift messaging to meet their specific needs.

To adapt to the changing needs of a defined market segment the marketing professionals within the organization must first identify the market segments and then develop a strategy specialized for each segment. These segments can be classified by demographics, behaviors, psychographic data or a combination of all three.

Reaching Your Market Segments

By reaching as many focused market segments as possible, your organization will have a significant advantage over competitors. Also, by reaching these segments, you can better address the needs of your potential customers. With this in mind, you should avoid excessive fragmentation. If you are too hyper-focused on breaking each segment down, you could lose focus, and your messages will lack consistency. This could scare off potential customers and could affect your upper market as well.

Many organizations find themselves choosing certain segments over others because they are either more profitable, require less investment, or easier to target. By giving up certain market segments and instead focusing on a select few, they can ensure they are meeting the segment’s needs adequately.

Defining Market Segments

Professional marketers will use a variety of different data analysis methods to define market segments. Using the same data, professionals can also indicate the needs and behaviors of different segments as well. Keep in mind that since there are no facts or precise data, we are merely relying on methods that use statistical analysis. I often recommend that organizations divide their raw data into two separate parts.

In case the analysis results are significantly different, you should handle the results carefully. With that in mind, the information gathered from the field, from employees, service and sales personnel, etc. is incredibly vital to the success of your segmentation efforts. Also, take real-world data into consideration, so your data analysis conclusions do not contradict the situation in the market.

Collaboration is the Key

A good recipe for success, whenever it comes to managing an organization's marketing strategy, is cooperation, and teamwork among all the organization entities. This includes sharing knowledge through joint efforts to promote the organization goals.

Executing successful marketing strategies is almost impossible without full cooperation among the salespeople and other groups. Tasks such as brainstorming and market analysis take a team effort, and if your teams can't openly communicate, results will stagnate.

In a global economy, managers must think outside the box to reach their prospects and stay on step ahead of the competition. Market segmentation is just one of the many ways that they can accomplish this goal. Keep my advice in mind and ensure that you're segmenting your customers correctly for future growth and success.