Segmenting the Target Audience

Looking to achieve return in sales revenue by targeting the right customers in the right location? Robert Farrell offers a marketing guide on how to segment the target audience by customer type, geography, demographics and psychographics.

A good marketing strategy and marketing plan are designed to attract, satisfy and retain target customers while generating profit for the business. This requires a detailed understanding of the business environment, market research and the target customers themselves. Many businesses fail due to lack of planning which includes enterprises that did not fully understand their customers’ needs and so did not correctly satisfy them with their products or services.

Target customers can be broken into segments or groups that share unique characteristics such as those that shop late at night, price sensitive customers or customers who demand superior product quality and will pay accordingly. Each segment has its own wants and must be treated individually. For example, a price promotion on low/mid tier products will be more effective on price sensitive customers.

Customer Type

There are two main customer types to target:

Customers (B2C)
Businesses (B2B)

Customers may buy ordinary products/services such as toothpaste, televisions or visit the cinema. They usually buy the products to use themselves and can buy based on rational motives such as cost or utility. But they can also be moved by emotive factors such as brand attributes or elegant appearance.

Businesses can include retailers, banks or manufacturing companies etc who buy goods/services for general business use. These businesses are mainly driven by cost and performance of the product/service they buy and are less moved by emotive factors. The business buyers are usually excellent negotiators and demand a low price with high service delivery from their suppliers.

Geography

Customers can be segmented based on their location and marketing messaging activities can be targeted at these areas such as local newspaper advertisements or direct mailings. Enterprises can geographically segment target customers by postcode, county, providence, country or region. By focusing marketing activities on a segment, enterprises can avoid the cost of creating an expensive national advertising campaign that may yield little return in sales revenue. Various data sources such as national census may tell enterprises more about local population, density and demographics.

Demographics

Demographics are the biographical characteristics of the target customers such as their age, gender, level of education, job classification (blue vs. white collar), income, marital status, etc. This can help enterprises to understand customers buying behaviour, spending patterns or motivations to buy etc. For example, a premium restaurant may be unwise to set up a branch in an area where customers have low household incomes.

Business demographics are slightly different to customer demographics. Enterprises must understand the industry their business customer is in. Is it a profitable industry? How many players are in it? Is it declining? How many employees are in that industry etc.

Psychographics

Psychographics refer to psychological behaviours that influence purchasing; this can be seen in the different ways in which people shop. For example, retail reports show that right-handed people generally shop in a store in a clockwise manner. Other research shows that customers who shop in fashion retailers that play loud music are more likely to make impulse purchases.

Other factors that impact on customers buying decisions include:

Peer pressure
Brand loyalty or reputation
Product Utility (Price versus the value it returns to the customer)

Our thanks to Robert Farrell for providing this article to our readers.

For more information on Robert Farrell and segmenting customers, please contact Robert by email at robertfarrell0@gmail.com.