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In our previous blog, we discussed how to identify ideal market segments and target audiences for your business. While evaluating and selecting market segments it is also important to consider the overall industry attractiveness (Porter’s Five Forces) and company objectives and assets.
In this blog, we will discuss the strategies or the different approaches you can take to segment your customers. Below we have the main four segmentation strategies.
Levels of market segmentation: full market coverage, multiple segments, single segments and individuals as segments
This approach applies a single marketing mix to the entire market. It is when a business tries to serve all consumer groups with the products or services they might need.
In the undifferentiated segmentation strategy or mass marketing, a company goes after the whole market with one offer, ignoring segment differences. Such a strategy requires huge capital and usually, only large corporations can achieve it (Microsoft, General Motors, Coca-Cola).
A full market coverage approach is appropriate when consumers’ preferences are not so relevant and the industry doesn’t manifest natural segments. It leads to standardisation which in turn determines lower costs or higher margins. However, the increasing proliferation of marketing communication channels makes it difficult and expensive to reach a mience.
A business may specialise in a product or service while targeting multiple segments that have similar traits. For example, smartphone companies don’t target only those who need to communicate (make calls and send messages), but also photography and music enthusiasts as they integrate more powerful features into their smartphones.
Companies can also specialise in a market serving multiple needs of a specific group of people.
A multiple segment specialisation approach allows businesses to diversify risks. That’s why it can be called a differentiated segmentation strategy: each single market segment has its marketing mix.
In this approach, businesses target a single market segment and establish expertise in that industry. They conduct good market research and apply a single marketing mix to a given segment: a concentrated segmentation strategy.
An organisation gathers extensive knowledge of consumers’ needs and naturally gains a strong market presence. Marketers can also divide the industry into sub-segments and aim for a specific niche.
Thanks to Artificial Intelligence (AI) and Machine Learning, it is possible to create personalised purchasing experiences. For example, HubSpot’s clients can create tailored web pages according to the specific prospect who is visiting the website at a certain time.
Organisations can also create tools, platforms or interfaces that users can use to personalise their products or service.
Nevertheless, customization is very difficult to achieve for complex products or services and may raise the price by more than the customer is willing to pay.
Sometimes, digital marketers don’t understand the value of personalization. This is the reason why we want to end with a quote:
“Personalization - It is not about first/last name. It’s about relevant content.”