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Database Marketing

How to Segment your Target Market

Target market segmentation describes the process of separating your lead base into smaller groups with similar needs. It provides organizations with a more organized format for sending specific marketing messages to targeted lead groups than the traditional mass marketed email or voicemail message. Successful target market segmentation can result in increased marketing response rates, improved lead conversion rates, and reduced marketing expenditures.

Common B2B Market Segments

Before you can begin to segment your target market, you need to clearly identify the characteristics of both your current customer base and those of your idea lead.

Some of the common characteristics used to segment B2B markets include demographics, operating variables, purchasing approaches, situational factors (sizes of orders, urgency of ordering, anticipated product applications) and the specific buyer’s personal characteristics. Most marketing experts recommend applying these segment criteria in a hierarchical fashion, beginning with the organization’s demographics, moving to the operating variables, then the purchasing approaches utilized and finally to the personal characteristics of the buyer.

The characteristics of the organization are considered macro in nature, defining the type of company that you are targeting in terms of size, location and even SIC code. The characteristics of the purchaser are considered micro in nature.

If you choose to segment the organization based upon its purchasing characteristics, be sure to consider their individual buying criteria, how they complete purchases, the organizational structure of the respective buying unit and the perceived importance of the products or services you are selling.

Common Segmentation Strategies

Now that you know how to characterize your target market’s characteristics, consider the following segmentation strategies:

  • Group Similarities and Together– Group together potential customers that share similar interests and needs. This is one of the most common segmentation strategies within the B2B marketplace.
  • Priori- Pre-determine your ideal market segments then fit all of your prospects into the one they most closely match. You can define segments by demographics, customer size or even industry using SIC codes.
  • Ad-Hoc- Gather information about your current active customers then divide into like sub-groups for lead segmentation. Organizations that are seeking to clone their top clients often utilize this segmentation strategy, basing their target market’s ideal characteristics upon those of their top clients.

As you consider the above mentioned segmentation strategies, keep in mind that it is always better to divide customers by their behaviors rather than their descriptions.

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