Market segmentation involves dividing the overall market for a product or service into distinct subgroups or segments based on characteristics that influence consumer behavior and decisions. Conducting thorough segmentation research is crucial for any branding project to ensure the brand strategy is targeting the right audiences. Here are the key steps to take when conducting segmentation research:
Define your target market and goals. Start by clearly defining the overall target market you want to reach with your brand. Consider factors like demographic characteristics (age, gender, income), geographic location, needs, interests, attitudes, usage rate, and loyalty. Having clear goals for your brand will help guide the segmentation process.
Gather secondary research. Secondary research involves reviewing existing data sources to help identify potential segments within your target market. Analyze industry reports, customer databases, census data, and more to uncover trends. Look at segmentation used by competitors to note similarities and differences in your audiences.
Identify variables. Determine the key characteristics or variables that influence how customers relate to your brand and category. Common variables include demographic factors, geographic location, psychographic traits, behaviors, benefits sought, usage rates, and brand loyalty. Consider both qualitative and quantitative variables.
Develop profiles. Take the variables identified and start mapping out profiles of different customer types within your target market. Create detailed portraits describing characteristics, needs, attitudes, pain points, preferences, media consumption habits, and more. Give each profile a simple, descriptive name.
Primary research. Conduct surveys, focus groups, interviews, and other forms of primary research involving real customers to gain insights into how they perceive your variables. Ask questions to understand how and why customers make purchases within your category. Validate any secondary research findings.
Analyze results. Analyze the results of all your research both qualitatively and quantitatively. Look for patterns in how customers cluster into distinct groups based on the variables. Identify the segments that can truly be treated distinctly for marketing purposes in terms of needs, motivations and reactions to your brand’s messaging and offerings.
Test hypotheses. Take the segments identified and hypothesize how each might respond differently to your marketing, branding, messaging, products, services, and channels. Test your hypotheses by engaging representative customers from each segment either with surveys, focus groups or A/B testing. Refine your segments based on the real-world feedback.
Name segments. Give each validated segment a concise yet memorable name that captures its essence. Names could be based on dominant traits, values, lifestyles or other characteristics revealed in the research. Example names include “Affluent Professionals”, “Value Hunters” or “Trendsetters”.
Develop profiles. Create detailed profiles for each of the named segments describing their demographics, behaviors, beliefs, needs, pain points, media habits and anything else that provides a rich understanding of their makeup. Include representative customer quotes or personas.
Create a segment matrix. Develop a segmentation matrix charting segments against all key variables considered. This allows easy comparisons between groups to identify patterns and distinctions that form the foundation of tailored targeting strategies and messaging.
Measure performance. Establish key performance metrics to monitor how effectively you are reaching and appealing to each segment through branding, PR and campaigns. Analyze metrics like awareness, perception, purchase intent and loyalty over time. Refine segments as markets evolve.
With research conducted in thoroughness using both primary and secondary sources, brands can have high confidence that their segmentation strategy accurately reflects reality and identifies groups that truly behave differently. By deeply understanding each segment, brands can then develop highly tailored messaging, products, promotions, partnerships and more through their branding efforts to stimulate resonance and results. Regularly reviewing and updating segmentation keeps it optimized over time. Conducting excellent market segmentation research is essential for developing brand strategies that effectively target validated audience subsets.