Why Small Is Good in Segmentation

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What is Segmentation?

Market segmentation is a marketing concept which is fairly easy to understand, just imagine an orange. The orange represents the entire market of potential customers, but within that orange there are various segments which basically divide those customers into smaller groups. Let’s take an example of a designer of women’s shoes. The shoes produced can be sold to any women, yet not all women will be the target market of the product. The style of shoes will appeal to a different age group, from different geographical locations each with different lifestyles. Instead of marketing the shoes to the entire orange, break down your target market into smaller segments to enable more effective and relevant communications.

Micro-Segmentation & Measurement

Micro-business and SME’s can make market segmentation a little easier by applying micro-segmentation. This is simply identifying your market (entire orange) then the individual segments (single orange segment) such as age, sex, address and lifestyle. Then you should analyse each segment in more depth where you can now target a certain age group in a smaller geographical area who share similar interests. Back to shoes for a moment, the shoe designer could target women age 20-30 within 5 miles of a city centre whom are all working professionals.

Measuring the effectiveness and ROI of a marketing campaign is much easier and more cost effective if you apply the concept of micro-segmentation, especially when advertising on social media. Take Facebook advertising as an example, if your target market is in Edinburgh; don’t launch an advert aimed at the entire population of Edinburgh. Launch more adverts aimed at a smaller micro-segment rather than launching an advert aimed at a wider market segment. Believe me, micro-segmentation is far easier to manage and most importantly measure the effectiveness of your marketing activities. Change each individual advert also, use a different picture, change the wording of your adverts or change the types of products/services being offered in your advert.

Applying Micro-Segmentation

All too often I see small businesses citing every single product and service they offer in a single advert by trying to be all things to all men, DON’T! If you want to measure the effectiveness of your marketing you must firstly address the issue of testing. Think about it, if your advert was sent out to everyone in Edinburgh then how do you know the breakdown of who your customers are and exactly where they live? Instead of sending an advert to a higher number of people, send a higher volume of slightly different adverts to micro-segments. For example if you send an advert to women age 20-25 within 1 mile of the city centre, and a similar advert to women aged 25-30 then you can now measure the impact and ROI of your marketing in more detail. Figure out what works and what doesn’t work and alter your marketing efforts accordingly.
Understanding the composition of an entire orange can be confusing, split your audience into micro-segments to gain a deeper understanding of your customers and the effectiveness of your marketing efforts. When it comes to segmentation – Small Is Good.

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