Overview
Segmentation in marketing refers to the process of dividing a broad target market into smaller, more defined groups (segments) of consumers, customers, or leads who share similar characteristics, needs, or behaviours.
The fundamental goal of segmentation is to enable marketers to understand their audience better and to tailor marketing strategies, products, and communications more effectively and efficiently.
Let’s say, ABC Bank launches a new platinum credit card.
They want to target the existing users using the below criteria to ensure maximum conversion since users with a high credit score are more likely to upgrade to a platinum credit card, so you should target them specifically.
People who own a credit card
Have spent an amount of 20,000 in the past month (considering all the possible modes- UPI, credit/debit card, digital payment apps, etc.)
To target users via any marketing channel, a marketer must obtain information about these users from their data team and then proceed to target them and track their conversions. Often, the data is siloed and unorganized, so the users who meet the conditions will not be automatically targeted. The marketer has to retrieve the data manually each time to target new users. Due to the back and forth between the marketer and the data team, there are a lot of delays that subsequently lead to errors. You can easily automate this by creating a rich segmentation audience using the Lemnisk Marketing Automation platform.
Why is Segmentation Important?
Improved Targeting: Allows marketers to focus resources on the most promising segments, leading to higher conversion rates and better ROI.
Enhanced Personalization: Enables the creation of more relevant messages, offers, and products that resonate deeply with specific groups.
Better Resource Allocation: Helps in allocating marketing budget, time, and effort more efficiently by prioritizing segments with the highest potential.
Stronger Customer Relationships: By addressing specific needs and preferences, businesses can build stronger, more loyal relationships with their customers.
Competitive Advantage: Allows businesses to identify underserved niches or develop unique selling propositions that appeal to specific segments.
Product Development: Provides insights into unmet needs or desires within specific segments, guiding product innovation and feature development.
Common Bases for Segmentation Include:
Demographic Segmentation: Grouping by measurable population characteristics (e.g., age, gender, income, education, occupation).
Geographic Segmentation: Dividing by physical location (e.g., country, region, city, climate).
Psychographic Segmentation: Categorizing by psychological traits, values, lifestyles, attitudes, interests, or personality.
Behavioral Segmentation: Grouping based on actual interactions with a product or brand, their knowledge, attitudes, or responses (e.g., purchase history, usage rate, loyalty status, benefits sought, engagement levels, customer journey stage). This includes both historical patterns and real-time actions.
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