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Determining Market Segmentation to Be More Effective in Advertising

Determining Market Segmentation to Be More Effective in Advertising | Market segmentation is one of the most efficient tools for marketers to recognize and serve their target market groups. This makes it easier for marketers to personalize the campaigns they make, focus on what is needed, and group consumers who are similar in targeting certain audiences at a more cost-effective manner. Looks simple, right? Although it seems simple, market segmentation is very important to form various marketing plans. You can see more details in the discussion that we have summarized as below.
Determining Market Segmentation to Be More Effective in Advertising

What is Market Segmentation?
Market segmentation is a research conducted to determine how your business divides customers or consumers into small groups based on various characteristics such as age, income, and behavior. This segment can later be used to optimize the right products and marketing strategies for each different customer.

According to Pride and Ferrel, market segmentation is a system used to divide the market into potential customer segments with similar characteristics that indicate the similarity of consumer behavior.

While market segmentation according to Philip Kotler and Gary Armstrong is the division of a market into several different groups of buyers, where each group can be targeted to market the product according to the desires, characteristics, or needs of buyers in the market group. Assumptions from several marketing experts above can be used as our reference.

In essence, market segmentation or market segmentation is an action to divide the target market into more specific groups. This segmentation creates a set of market parts based on demographics, needs, priorities, and other psychographic or behavioral criteria used to better understand the target audience.

Why Should Applying Market Segmentation?
  • Increasing Competitiveness and Expanding Markets
  • Increasing Time and Cost Efficiency
  • Improving Better Relationship and Customer Retention
  • Increase profits
  • Implementing the Right Target and Business Plan

Here are some reasons why you should apply market segmentation to your business:

1. Increasing Competitiveness and Expanding the Market
By focusing on certain prospects, the competitiveness of your business in that market segment will naturally increase. If you focus on one particular market group and you allocate most of your time or resources into it, the brand identity will also increase.

Focusing on certain market segments can also increase market share. For example, with a geographic-based market strategy, you can start providing services in Jakarta, then a wider area and finally all of Java and so on from time to time.

No matter how superior the product you make, without knowing who the segment will be targeted, your business fails !.

2. Increasing Time and Cost Efficiency
Launching a marketing campaign specifically designed for different groups allows you to prioritize customer segments that are more potentially involved and convert. So by focusing conversion efforts on certain groups, instead of spreading resources evenly across all segments, the time and cost you use will be more efficient.

3. Increasing Better Relationship and Customer Retention
The market segmentation process revolves continuously to better recognize your customers, so that you can better present products or services to their needs. Where the more you know them, the stronger your communication and brand relationships will be with them.

A good relationship with customers then makes it harder for them to turn away from you (market retention). When you use this segmentation of customers to follow their changing circumstances, such as changing jobs, aging, developing new interests, changing purchasing patterns, etc., you can continue to market your product to them properly.

By marketing products and services that appeal to customers at various stages of life, you can keep loyal customers who can switch to competitors.

4. Increase profits
Companies that segment the market correctly tend to enjoy significant benefits. According to a study conducted by Bain & Company, 81% of executives found that segmentation is very important to increase profits.

In addition, Brain & Company also found that companies with great segmentation strategies enjoy 10% higher profits compared to companies whose segmentation is ineffective over a period of 5 years.

5. Implementing the Right Target and Business Plan
After understanding the market segments and their characteristics, you can evaluate marketing activities that have been done before. In this case you can find out whether the marketing strategy that you are implementing is in line with your target or vice versa. The results can then be used as a reference to make your next business and marketing plan more appropriate.

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