Speaker 1: Hi there. Today we're going to talk about market segmentation. So we will explain what it means and how you can segment your target audience with an example. And that's to make sure you're ready to apply the concept to your business. Imagine you're throwing a party to everyone you know, from your grandmother and your college friends to colleagues and exes. Now, you would neither have the same setup nor play the same music for your grandmother as you would for your college friends, right? You would tailor your party to the likes and interests of your guests because what's suitable for your grandmother probably will not be suitable for your college friends. And that's essentially what marketing segmentation is all about. From a business point of view, most businesses have a variety of products and services that suit a variety of customers. And each of these customers have their own unique needs, preferences, and behavior. And so it's not practical or effective to market the same product or service to everyone in the same way. And that's where marketing segmentation comes in. It's like dividing your large party, which represents your total customer base, into smaller themed parties or segments. And these segments could be based on a number of factors like age, location, buying habits, interests, and many more aspects. For instance, you might have a group of customers who love outdoor adventure, another group who are tech enthusiasts, and another who are stay-at-home parents. Now, each of these groups have different needs and will be interested in different products or messages. And by segmenting your market, you can tailor your marketing strategies to match the needs and preferences of each group. This is much like tailoring the food, music, and decorations for your different parties. This makes your marketing efforts more efficient, more relevant, and ultimately more successful. Now, when we're meeting with clients during discovery calls, we often ask the dreaded question, who is your target audience? And most of the time, we would get very general answers like, our products are suitable for small businesses, or our products are suitable for women above the age of 40. While this could work as a headline or in business terms, the main target market, the right approach to market segmentation should be a lot deeper than that. So how can you do a proper segmentation for your target market? The first step is to define your main target market. This is the one that we just talked about. Your target market is the broad group of people or businesses that you aim to sell your products or services to. It's important to have a good understanding of your overall target market before you can begin to segment it. This step typically involves determining the type of people or businesses that have a need for your product or service, and they're more likely to purchase. Next, you will need to identify the criteria that you will use to segment your target market, and these criteria should reflect the different needs, preferences, or characteristics of your target market members. Common segmentation criteria include demographics like age, gender, occupation, income, education, and even family status. For instance, a clothing retailer might segment its market by gender and age. So they would target women aged 18 to 24, or men aged 35 to 50, and so on and so forth. There's also geographic criteria, and those are factors like location, climate, country, or even city. A business may target urban customers differently than rural ones. Another important criteria is the psychographics, and the psychographics relate to the lifestyle, attitudes, beliefs, values, personality, and interests of your customers. For example, a fitness gym could target people who value health and regular physical activity, regardless of their age. The fourth criteria is behavioral, and those are factors like brand loyalty, usage rate, benefits sought, and readiness to purchase. A software service provider, for example, might segment its market into frequent users, occasional users, and non-users. The third step is to start segmenting your market. Now, using the criteria identified in the previous step, divide your target market into distinct segments. Remember that a market segment should be homogeneous, meaning that its members share similar characteristics, and they're different from other segments, but sizable enough to be worth targeting. The fourth step is to evaluate the potential of each market segment. Now, not all segments are equally valuable, so you need to assess the size, profitability, stability, and accessibility of each segment. For instance, a segment might be large and stable, but very difficult to reach due to geographical location or other factors. So, this is one segment that you can eliminate from your market segmentation exercise. The fifth step is to select the target market segments that you want to choose. So, based on your evaluation, select the segments that align best with your business's capabilities and goals. You might choose to target a single segment or multiple segments, depending on your business vision. The sixth and final step is to develop a marketing strategy for each selected segment. Now, you need to develop tailored marketing strategies for each of your chosen market segments. This might involve creating different marketing messages, or choosing different marketing channels, or maybe even offering different products or services for every segment. By following these steps, you can ensure that your marketing efforts are more targeted, more relevant, and more likely to succeed. Remember that the aim of market segmentation is not just to sell products, but to meet customer needs more effectively than your competitors. Now, let's apply this market segmentation exercise to ProfileTree as an example. So, as a digital marketing agency targeting small and medium-sized businesses in Northern Ireland, the market can be segmented in various ways. So, here's how we do it. So, starting by the first step, which is to define the main target market. ProfileTree's target market is small and medium-sized businesses operating in Northern Ireland. These businesses come from various industries and have different marketing needs. And so, in this case, we will need to do the next step, which is identify segmentation criteria. And in this case, ProfileTree will consider segmentation criteria such as industry type, size of the business, digital readiness, and specific marketing needs. Then, based on the identified criteria, we can divide the market into three segments. Segment A is small retail businesses that have physical stores and require help with an online presence to support their brick-and-mortar operations. They need services such as website development, SEO, and social media management. Segment B is small hospitality businesses. So, those are businesses such as restaurants and B&Bs who need to boost their local online presence. They would benefit from local SEO, social media marketing, and online reputation management. Segment C is medium-sized manufacturing companies looking for B2B clients. And they would need professional website design, SEO, and LinkedIn marketing services to reach potential clients. Now that we've created three segments that we would want to target, it's time to evaluate the potential of each market segment. So, we will assess the size, potential for growth, competition, and profitability of each segment. For instance, while medium-sized manufacturing companies, segment C, might be fewer, they may be willing to spend more on specialized digital services. So, based on the evaluation, Profile 3 will choose to focus on one or two segments where we believe we can deliver the most value and where the potential for return is the greatest. The last step then is to develop a marketing strategy for each selected segment. And that means that we will tailor our services and marketing messages to each selected segment. For segment A, which is the small retail businesses, this could mean offering affordable packages that include web design, SEO, and social media management. While for segment C, the medium-sized manufacturing companies, we will focus on providing more specialized digital services like B2B content marketing, lead generation, and conversion rate optimization. Remember that the end goal of this process is to enable the agency to deliver the most relevant services to each segment. And that helps us meet their specific needs and maximize our potential for success. Thank you very much for watching that video. We hope you now understand how a market segmentation is done. And if you have any more questions, feel free to drop us a comment and we'll get back to you.