4 reasons to use market segmentation

4 reasons to use market segmentation

The definition of market segmentation: Market segmentation is to divide a broad population or target market into subgroups of consumers according to certain common factors. These can be based on demographics (age, gender, etc.), geography, attitudes and behavior.


But, why use market segmentation?


1. Make smart and informed strategic decisions

Once you understand who your customers are (and segment types), you can then make smarter decisions when it comes to ads and product development.

For example, imagine that you are a company that sells rubber boots. Demographic segments such as men, women and children probably have very different preferences. In the same way, geographical segmentation can show that people who live somewhere where it rains all the time – like Borås and Gothenburg – look at rubber boots in a completely different way than someone who lives in another place. In this way, you can be sure to get it right with your external communication.

2. Be more accurate in your communication in all channels

By using market segmentation, you can become more relevant in your communication in all your channels because you can plan your marketing according to factors such as tonality and message.

Why is it important to be accurate and relevant in your communication? Today we live in a constant media noise where we are met every day by between 2,000 – 30,000 ads. This has led us to develop the ability to turn off our attention and only take in what appeals to us directly – or that is relevant to us. With adapted marketing after segmentation, you as a company can then succeed in reaching out to the customer through the noise.

3. Maximize the potential among existing customers

With a clearer picture of who your existing customers are and what their life situation looks like, you can become more relevant to your existing customers and through that, build loyal, long-term relationships, so that they become as profitable as possible.


4. Find and capture new customers

In addition to maximizing the potential among your existing customers, one of the most important reasons to use market segmentation is to succeed in finding and capturing new customers so that the company can continue to grow. By knowing who your most important current customers are, you can find so-called “lookalikes”, ie other consumers whose lifestyle is like your current customers’.


Since those who are already customers of yours think that you have relevant offers, it is likely that those who are similar to these customers will also think so. You therefore reach out to new customers in a more efficient way.


Strategic Audience Map combines market segmentation with your existing customer data and site traffic.

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