Your Guide to Segmentation Analysis

When you created your business plan or established your first product launch, you probably had an idea of your overall market – but, it’s important to know exactly who your buyers are. If you know the overall market your brand could succeed in, you’re a step ahead.Once you have a specific market in mind for your service or product, you must break down that large group into sections, or segments. The act of segmentation analysis takes a look at each of those smaller sections and finds the unique consumer needs within each segment.

On paper, this sounds pretty straightforward – but there’s a bit of data to discover, harvest, and then analyze with a fine-toothed comb.

Understanding Your Overall Market

While an understanding of your market is crucial in your brand’s earliest stages, having a grasp of who your buyers are at any stage in the customer journey is competitively crucial. It doesn’t matter if you’re looking for another round of funding, reviewing your current strategies, or you have a new product or service in development – it’s necessary to analyze your market frequently to better understand your audience. You can accomplish this by:

  • Profiling customers
  • Discovering strengths and weaknesses amongst competing brands
  • Analyzing your potential market risks

If you can dedicate time to segmentation analysis and analyzing your market, you can segment it properly and better optimize your current efforts.

Types of Market Segmentation

All products and services attempt to address a certain need, desire, or problem. Any person who has the need or desire you’re trying to fulfill, or the problem your product or service seeks to solve, has customer potential. This group of potential customers is your market, and each person is different – but, they all have certain things in common, such as age, location, and preferences. These commonalities allow you to separate potential customers into groups.

One of the most common marketing pitfalls is improper, or lazy, segmentation. For instance, if you’re attempting to capture as much of the market share as possible, you could be putting too much, or too little, attention where you shouldn’t. Instead, prioritize certain segments over others. This is the best marketing strategy overall because it causes you to focus your marketing investment effectively and maximizes conversions.

But, how do you begin the segmentation process?

Approaches to segmentation analysis

You’ll segment your audience once you’ve identified shared characteristics among your target consumers. Knowing these characteristics and how they apply to your product or service allows you to tailor your message to each segmented audience. It’s important to note that these shared characteristics aren’t relevant if they aren’t related to purchase motivation. Segmentation is the act of categorizing your audience based on their buying behavior.

You can use just one method or a combination of methods to better understand your target market. In fact, really great marketers try a whole slew of different methods and method combinations to discover the right mix for their brand. It’s good to keep in mind that the consumers making up your target market evolve – needs change, wants change – and that means your segmentation approaches also need to roll with the changes.

In your search for just the right segmentation method for your market, you may try implementing everything you learn. Tenacity is great, but sometimes less is more. You can certainly segment your target customers with every method you learn, but remember – you must analyze each type of segmentation for the data to be worth something.

Types of segmentation analysis may include:

  • Demographic – age, gender, career
  • Geographic – location, weather
  • Psychographic – interests, opinions, lifestyle
  • Behavioral – usage, attitudes, loyalty

It’s important to distinguish between behaviors and their motivators. For instance, certain individuals may have very similar purchasing behaviors, but they fall within different segments, such as:

  • Two people purchase the same video game – one to ease boredom on the way to work, the other for something to do with other gamer friends
  • Two people purchase the same shampoo – one because they needed shampoo, and any shampoo will do, the other because they always buy that brand of shampoo

How to do Market Segmentation Analysis

“How will I ever discover all this information about my potential customers?”

The trick is to start small.

Segmenting your market doesn’t have to be difficult. It’s simply a process that takes research, dedication, and time. Performing this research, in the beginning, is important if you really want your segments aligned with your marketing efforts.

Follow these rules when segmenting your market:

  • Don’t create broad segments – your competitors may have narrower targets, which allows them an easy “in” with consumers
  • Organize your brand around your segments – develop dedicated teams whose only jobs are to focus on their specific segment
  • Manage your segments on a global scale – again, your competitors could blindside you later if you’re only focused on a specific area or region
  • Actually, do the research and perform analyses regularly

What are the Steps of Market Segmentation Analysis?

There are five main steps in market segmentation:

Design buyer personas for each segment you’ve chosen

The most time-consuming part of market segmentation is designing your buyer personas. But after you’ve completed this step, your team that’s responsible for crafting personalized messages will have a much better understanding of the content they need to create.

Think of your marketing segmentation as if it’s a pyramid. At the base, you’ve got your entire audience. As you move up the pyramid, your audience becomes more and more focused based on the various segmentation techniques you employ. To build your buyer personas:

Segment your broad audience by demographic

Begin with researching the existing customers you have and identify those who are most apt to buy your next product or service. Consider the pyramid example above – you may create several personas, and each will have its own “block” in the pyramid based on identifying characteristics, such as age, location, career, etc.

Identify needs, wants, and habits

Based on these personas, you can discover what each specific persona needs and wants any challenges each may face during the customer journey, and any pain points. What is each persona trying to find? What problems do they need to solve that your product or service can fix? Other factors influence their purchasing behavior? The answers to these questions help you further narrow your segments, as in placing the next, smaller block atop the pyramid.

Create profiles based on behaviors

Finally, further, narrow these personas by their typical behavior while online. How does this specific potential customer begin researching their purchases? Where do they look to make their purchase? You’ll glean detailed information for each type of customer you’re targeting, the best content that will speak to them, and where to visibly promote that content.

Create personalized messages for those segments

And speaking of content, content isn’t just king – it’s the whole royal court.

It’s not just about the actual text of your message. Content involves everything from font and color to images and text placement. If you’ve been sending the same emails and showing the same ads to everyone in your market in hopes of nudging sales up a notch – it hasn’t been working as well as you’d hoped, is it?

When you apply the information you learned from segmenting your audience, you’ll see there are different ways to speak to each segment that actually gets through their already cluttered inbox. An informal tone with a youthful vibe and brighter colors can convert the younger buyer, whereas a married college professor with grown children might find the email or ad copy doesn’t speak to their lifestyle at all.

Nurture your leads

Your marketing tactics are providing you with more leads every day. The brand’s sales team is ready to charge full speed ahead. But – where exactly is each lead in the customer journey? Is this their first interaction with you? Are they tired of your competitor and looking to switch? More than likely, those leads are at the very beginning of the journey and not yet ready to speak to sales representatives. They’re still figuring things out – in fact, making a purchase might not be that important to them – yet.

This is where lead nurturing comes in. Lead nurturing is much more than eye-level product placement – you want to create a two-sided dialog. What expectations do your potential customers have? Meet each of those expectations and the hand-off to your sales department will be perfectly timed.

Reward loyalty

By this point, you’ve put in your research, created clean messaging that results in conversions, and you’re able to tweak your personas based on newly gleaned behavioral information. Now you’re able to see what messaging combinations have worked and for which segments, and you’re left with a handful of return customers. The game-plan now? Nurturing never ends!

The more you get to know your buyers, the more detailed and crafted your messaging should become. Offer discounts to consistent buyers and extra rewards for referrals and continued loyalty. When your buyer perceives your company as a friend who solves their problems first time every time, they’ll continue to look to you – and they’ll tell their friends.

Is it Possible to Perform Segmentation Research Incorrectly?

Your research should highlight a large share of profitability potential, and it should be easy to see based on the data returned from that research. If your research doesn’t meet these requirements, then you’ve done something wrong along the way. Reconvene your market research team, outline their goals with clear definitions, and illustrate what information they need to gather.

It can feel defeating when you’ve put so much time into a project only to see poor results. Prior to beginning your segmentation research, consider hiring a team of marketing professionals to do your research or educate yourself regarding clearly defined segments and how best to market to each. You can get a huge jump on your competition if you can identify segments they’re unaware of, and this should be one of your major goals.

The Steps of Segmentation Analysis

After you’ve compiled all of your market research, it’s time to begin analyzing your data to implement the best segmentation plan. The four crucial stages of segmentation analysis are:

  1. Goal setting – Decide on the objectives of your segmentation and what end goals they should realize. Don’t forget to take into account any potential variables. Create a hypothesis.
  2. Identify segments – Decide on the type of research you’ll perform. Collect the needed data. Follow up with an analysis of the data, which should provide segment identity, and then validate your results.
  3. Develop a strategy – Choose your target segment and identify implications from the research validation process. Decide on tactics based on recommendations from the data.
  4. Execute your launch plan – At this point, you’re ready to identify stakeholders. Decide how you’ll communicate each step and subsequent finding. With input from stakeholders, develop your launch plan. When ready, execute the launch plan and monitor results.

The best marketing strategies include covering each step before moving to the following step. Most teams tend to rush through the first two stages, but this can be harmful. You’ll discover your most important information (on which you’ll base your plan) in those first two stages.


Using the above techniques, the segments you uncover can help boost your current revenue numbers. Perfect your approach to your target base and you can enjoy watching your revenues climb incredibly.


Comments are closed