What IsAudience Segmentation?

Audience segmentation is a marketing practice that aims to identify subgroups within a wider target audience.

Also referred to as audience segments, these subgroups are based on common characteristics and preferences. Businesses use these market segments to come up with targeted campaigns, deliver tailored communications, and develop stronger connections with customers. Segmentation is key to maximizing the potential of a targeted marketing strategy. 

Benefits of segmenting target audiences include:

  • Providing competitive advantage

  • Building customer loyalty

  • Driving customer engagement

  • Boosting conversion rates

  • Discovering new leads

How to Segment Audiences

Collect Reliable Data

The first step of target audience segmentation involves gathering recent and reliable data. Many third-party data sources help businesses form a realistic image of their particular market, competition, and potential customer base. Having a clear idea of what data to collect is a key part of this phase. Since industry and consumer trends are constantly shifting, the data must be as relevant as possible. 

Divide the Market

Regardless of how unique customers may be on an individual level, it’s always possible to identify patterns among groups. Spotting these commonalities helps in creating market segments and customizing the communication for each. One proven audience segmentation strategy is to create a persona or a customer profile that combines these shared characteristics. This makes it easy for companies to pinpoint trends, patterns, and insights that allow them to launch clever marketing efforts and campaigns and attract valuable customers. 

Define the Competitors

Knowing who the competitors are and understanding them is an essential part of audience segmentation. It gives a clear perspective of what a company’s products or services are competing against and the segmentation strategies it takes to match up. It may be possible that one subgroup is well covered by the competition while another group hasn’t been served yet. Being aware of such details enables a business to determine which market segment is the most profitable to tap into. 

Apply the Analysis to the Segmentation-Based Strategy

After analyzing the market and figuring out which market segment has the most potential, the next step involves incorporating those segments into the business plan. Doing so allows companies to predict who will buy their products or services and detect possible peaks and drops in demand. Identifying variables that set one subgroup apart from another is key to getting familiar with the market. 

Types of Audience Segmentation 

Demographic Segmentation

The most common type of target audience segmentation is the demographic method. It involves sorting audiences according to clear-cut attributes such as age, gender, income level, and job type. The reason why demographic segmentation is popular is that it is the easiest and most effective. Combining this tactic with others allows for a more granular approach. 

For example, a first-time homebuyer in their twenties will have different needs than a retiree shopping for kitchenware. Both groups would be lucrative for a home goods store. However, segmenting text marketing campaigns by age allows the business to approach each demographic directly and address their needs separately. 

Behavioral Segmentation

Businesses use this type of segmentation to distinguish subgroups on a deeper level. This means observing what people buy, how often they buy, and why they buy certain products or services. Factors such as the audience’s search history, purchase history, and other habits come into play when compiling a customer profile that shapes the company’s marketing strategy. 

An audience segmentation example that uses this method is when an eCommerce retailer is having a sale on gaming headsets. The company can segment customers who have been on the website since the beginning of the sale and looked at a certain headset page. Sending that segment a special incentive to buy now would encourage them to take the offer since the seller is tailoring it to their interest.

Psychographic Segmentation

A more advanced tactic is segmenting audiences based on psychographic data such as values, opinions, lifestyle, and activities. Unlike behavioral segmentation, this method targets the motivation behind a behavior rather than the behavior itself. 

Psychographic segmentation is important when building a brand as it helps in forming connections with current and prospective customers. One way to obtain psychographic data is with surveys and testing what motivates the customer to make a purchase. For instance, an online store that sells animal-print socks would benefit from knowing if the customer is a cat or a dog person. 

Geographic Segmentation

This form of target audience segmentation uses data based on location. You may include information about where the customers live or work and sort by areas such as town, state, and nation. Gathering IP addresses when a customer subscribes or collecting billing addresses after they place an order are two ways to obtain geographic information. 

A company that sells outdoor activity products, for example, would use geographic segmentation. They may send SMS alerts about special discounts on ski equipment to customers living in regions where it snows. However, that would not be ideal for audiences who live in places where it’s constantly warm and sunny.