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Market segmentation:
How to make the most of this marketing principle


From the Resene Trade blog

Market segmentation is a classic principle that can be used by any business in the world – including tradies.

Take a look at what it is, how it works and how it might benefit your marketing strategy.

What is market segmentation?

The idea behind market segmentation is to break up your target audience into smaller groups. While it may be tempting to simply hope that everyone would want to buy your service, it's unrealistic to expect high levels of demand from across the board.

Instead, study your potential audience to break it down into manageable groups. Once you have these specific groups, you're better able to create targeted advertising and marketing campaigns to appeal to each group in particular. Therefore, even though you may be advertising to a smaller group, you may be more likely to create new sales as members of that group are more interested in your service

How to segment your markets

The trick to market segmentation is deciding where to draw the lines between groups. This will be unique across different industries, so it's important to think carefully about how you create yours. Many companies will use geography as a segment, dividing markets between cities or even countries. If you're a trade painter working in a specific town, it doesn't make as much sense to divide that way as it would for an online retailer.

Instead, create segments from customer characteristics.

For example, you could divide potential customers into a group of those who are renovating a home, another for those who are building fresh, and another for those who need services for their business. These groups clearly have different needs and priorities, so separating them out and advertising in different ways to each one may help you attract their attention in turn. This type of division is known as ‘behavioural', as it relates to a customer's purchasing behaviour.

Other ways of grouping your segments include:

  • Demographic (divide by age, gender, income etc)
  • Distribution (how they purchase your service, such as through you directly or through another company etc)
  • Psychographic (cultural and lifestyle groups)

You know your audience, so you may be best to make your divisions from your own knowledge. Keep in mind that you can always experiment with different groups to see which ones are most interested in your service

Making the most of your market segments

Once you have your segments, you can begin planning ways to get in touch with them to best market your services.

Perhaps you can look to specific magazines or websites to buy advertising space on. For example, a website targeted to home builders could be the ideal spot to promote business in that area, whereas a renovation magazine could see you pick up new customers there. If you do decide to segment your market geographically – for example by rural and urban, or by suburb – you may be able to research local newspapers and flyers that offer ad space in those specific regions. If you are keen to help those moving homes, you may be able to partner with a local real estate agent for referrals.

You might even segment your market to include a group for past customers, in which case you may be able to contact them directly via email or in the post with a special deal for repeat business or with a special offer if they refer to you their friends and family

May 2019


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