The Different Types of Segmentation To Boost Your Conversions

Published on 31 August, 2022 | 631 views | 5 minutes read

Companies and corporations almost sell the same products but with different brand names to their audience. Often, only one company emerges as the victor of the business competition. Different factors such as credibility or the longevity of the company's name, earning its status among the people, may explain how a company manages to win over others despite offering the same products. But most of the time, a company becomes the winner because they are able to know their customers.

But most of the time, a company becomes the winner because they are able to know their customers. 

They don't have to know or explore them one by one, but instead, they are segmented according to different categories. This is what we call segmentation. This process is vital in the customer and marketing analytics to provide the best customer experience and innovate products that are inclusive and responsive to the needs of customers. To help you understand more, there are four distinct ways to segment the audience:

Demographic Segmentation

This process of segmentation helps you sort out your existing audiences and potential customers based on a number of areas such as:

  • age,
  • gender,
  • income,
  • educational attainment,
  • any other category that has the same nature.

Knowing the demographics of your customers helps you to understand what to do and what not to do during the creation of a new product. Age as a factor has the far-reaching potential to dictate the next move of a business. A group of audience members under the age of 20 and below may be subjected to some restrictions depending on the rules that we live by, like alcohol consumption. So, you do not want to market to them something that they will obviously not purchase. Ideally, you have to offer different products in each age bracket.

Customers' income should matter to a business as it will determine whether they have enough purchasing power to buy the products that you want to sell. A below minimum wage earner may not show interest in a thousand dollar pair of designer shoes and bags because of the obvious fact that their annual income is not enough to cater to their wants or even fully supplement their needs. These and other areas of concern are vital as they help marketers to picture who is and who is not a potential customer.

Psychographic Segmentation

Another way of sorting out your potential customers is through psychographic segmentation. Marketers use this method to know the tendencies of an individual to purchase goods or continue with their daily routines. Some areas that are within the scope of psychographic segmentation are:

  • personality,
  • beliefs,
  • opinions,
  • lifestyle,
  • any other category that has the same nature.

By now, one can say that demographic segmentation is sorting out something that we can see and notice, while psychographic requires a deeper evaluation of someone's roots and point of view to gather ideas before creating a product or improving the brand messaging. A neighborhood may have two Asian middle-aged men and still be different from each other based on personality, traits, and attitudes. They may have the same demographics, but their choices and needs based on a certain topic can still be different.

If we ask a certain population about their beliefs and opinions on the marketability of a winery, the business we would like to start, it will automatically have varied perceptions. That is when you can sort the respondents as potential customers from those who are not. Understanding people's lifestyles, where they go, how much money they spend every day, whether they are introverted or extroverted, will give us an idea of, sort of, the trends of the population, and that will help businesses to develop and come up with better products or services that are anchored to the population's perceptions

Geographic Segmentation

From the name itself, geographic segmentation sorts out the existing audience and potential customers based on the area where they are living. A country, influenced by its history and culture, may have completely different preferences compared to other countries. Although differences may occur within the country also, that is why, geographically, they are segmented to the lowest possible unit. There are also four areas of focus when using this method of segmentation:

  • region,
  • size of population,
  • population density,
  • climate.

A region is divided into country, state, city, and finally town. Each hierarchy may also have differences in purchasing decisions despite being in one large geographical location. One example of how larger corporations adjust to a country is McDonald's attempt to offer meals that are not included in the original menu and are specialty foods from the country they are planning to establish a presence. McDonald's India does have lamb burgers instead of beef because of religious practices. In McDonald's Japan, they offer the Ebi burger, which is a burger made out of shrimp, a popular seafood in Japan. The size of the population also matters when it comes to segmenting a country, as larger populations tend to have subcultural groups coexisting with one another. It is important that subcultures are acknowledged not just in literature and history but also in business.

Population density, which dictates how many people are living in rural, semi-rural, or urban areas, may determine the products that you need to sell to your customers. Of course, you do not want to sell luxury bags to a place where agriculture is the priority. Conversely, you do not want to sell a farm tractor to an urbanized area where buildings and establishments are all over. Finally, climate plays an important role in determining what you need to offer a country. For a tropical country like the Philippines, you do not want to offer thick clothing and jackets for winter as they only have two seasons. These are some things to consider when doing geographic segmentation.

Behavioral Segmentation

This process of segmentation concerns how customers behave when purchasing products on the market. Customers' behavioral patterns may determine the profitability of your products and services or may give you the right idea of what to present to the public. Behaviors may differ according to:

  • user's rate,
  • user's occasion,
  • benefit,
  • any other category that has the same nature.

Individually, customers behave differently, so sorting out customers with the same behavioral patterns of purchasing will help you find the right market for your products. How often a customer consumes a product matters. For example, some individuals may purchase boba milk tea 1-2 times a month. Some people consume boba milk tea once a week, while others consume it twice a week. The idea here is simple; the more frequently your customers buy from you, the more profitable your products are.

There are users who purchase products depending on the occasion, such as holidays, birthdays, etc. Christmas hams and turkeys reach their peak of purchase during the holiday season, especially on Christmas Eve and New Year's Eve. Promotional advertisements may be done to boost the visibility of the products in the market or sometimes it won't matter at all since these are the go-to holiday presents and foods. People will automatically buy them during the season. Users also purchase products because they acquire benefits from them. The purchase motivations become visible when marketers use behavioral segmentation. When we buy toothpaste, it is because we want our teeth to be clean and free from cavities. Some people are motivated to buy toothpaste because of the low price or special offers such as buy two for the price of one.

Last updated on: 3 September, 2022