When we scroll through social media, we see a lot of ads, but has it ever felt like those ads were directly speaking to you? Like, somehow, they knew what you were interested in or how you’re in need of some specific product or service? Well, believe it or not, they kind of were speaking directly to you, or people like you, because they targeted a group of individuals who are far more likely to purchase their product. 

This is achieved by market segmentation, and there are reliable experts who provide these market segmentation services, but what is market segmentation? How does it help grow your business? In this article, we will dive deep into just that. Let’s get started.

What Is Market Segmentation?

If you look online, there are countless complicated definitions for this term, but to make it simple, it is the practice of organising your audience into different categories, allowing you to target marketing actions for them more specifically. This segmentation is usually done in 4 categories.

  • Demographic: Demographic segmentation is where you sort the market by age, gender, race, marital status, etc. This might seem unnecessary on the get-go, but it is one of the most common types of segmentation done for marketing purposes.
  • Geographic: Oftentimes, it can be considered a subset of demographic segmentation; it basically segments where people live, specifically, without including any other factors.
  • Psychographic: Psychographic segmentation divides markets based on people's lifestyles, personality traits, values, opinions, and hobbies. It takes into account the psychological aspects of consumer behavior. For example, the fitness market sorts its customers into groups of people who care about having a healthy life and working out.
  • Behavioral: With behavioral segmentation, markets are split up based on things like buying habits, consumption patterns, living choices, and usage. For example, younger people may be more likely to buy body wash in a bottle, while older people may be more likely to buy soap bars.
  • Firmographic: While demographic segmentation looks at people, firmographic segmentation looks at businesses. It would look at things like the size of the company and the number of workers. It would show how talking to a small business is different from talking to a large corporation.

Companies that properly segment their market enjoy significant advantages. A study by Bain & Company found that 81% of leaders thought that segmentation was very important for making more money. Additionally, Bain discovered that businesses with effective market segmentation techniques generated 10% higher profits than those with less effective segmentation.

What Are Market Segmentation Services?

Carrying out the entire segmentation yourself is a tedious task, not to mention the amount of nuances that come with it, which makes it difficult for a layman to apply. That’s where market segmentation services come into play. They do this job for you, going deep into the “why” they buy what they buy, so you do not have to go through the minute details. Here’s how market segmentation services work:

Data collection and analysis

Be it surveys, CRMs, or Social media, market segmentation services go deep into data wherever they can, and why not? In order to do accurate market segmentation, you have to understand which demographics like what. For example, young people are more likely to buy fitness-related items. To come to this conclusion, data was needed, and collecting it is something market segmentation service providers begin with.

Identifying customer segments

After they have gathered data, market segmentation services will go deep into it and identify the different segments. For example, take Nataraj and Apsara. The same brand owns both pencils, but some people like dark and others like light shades. This identification of two customer segments among children helped the brand to create two distinct pencils and achieve good profits.

Customer persona development

Market segmentation services create an entire persona of the customer. What they like, what they don’t like, etc. This allows the company to tailor the products according to the likes and dislikes of the customer to keep customer satisfaction high.

Strategy recommendations

If the company is not sure how to proceed with a sales strategy, even with the customer persona, market segmentation services offer strategy recommendations as well. In short, investing in market segmentation services gives you a full package so you don’t have to worry much.

How Market Segmentation Drives Business Growth?

Now, you must be wondering. How do these market segmentations drive business growth? Well, there are many ways in which it does.

  • Better customer retention: Since you now understand your market better, you are able to retain them better, thanks to increased customer satisfaction and personalised outreach. 
  • Improved sales performance: Thanks to the personalised outreach tailored to your specific target market, your sales go up, as now you are targeting the exact market that is more likely to buy your product.
  • Optimized marketing spend (higher ROI): Since your target market, which is more likely to buy, is now seeing your ads, your marketing ROI has improved drastically. Allowing you to acquire more customers.
  • Discovering new market opportunities: It also helps you understand niche marketing groups that your customers might be ignoring, allowing you to go a step further.

Understanding With An Example

Imagine there is a fitness brand, after they have availed of market segmentation services, they end up finding two key market segments.

  • Gym beginners: (Age 20-30) This group prefers easy-to-consume content, wants to build a good physique, etc.
  • Busy professionals: (ages 35–50) Limited time, valued convenience, and preferred content providing useful, time-saving ideas defined this group.

With these insights, the brand launched two tailored campaigns. On Instagram, they posted short-form exercise videos and transformation reels for gym beginners. Professionals, on the other hand, were sent weekly email advice and provided special discounts on small-space home workout kits.

So the outcome is that in just three months, email open rates climbed by forty percent, Instagram interaction doubled, and general sales rose by twenty-five percent. By directly addressing the demands of every sector, the brand transformed ideas into powerful expansions.

Conclusion

Opting for market segmentation services is an important part of the marketing industry. It allows you to tailor your content and outreach to specific market segments based on age, gender, occupation, and other factors. It also allows you to understand which demographic likes what, so you can reach both of them, boosting the growth of your company.