Market Segmentation & Your Small Business

It’s a term we hear a lot as marketers, but what does it actually mean?

Market Segmentation is the process of dividing your target market into groups; these groups will need different products or different types of marketing to pull them in.

How do you divide your target market into segments?

First of all, you need to absolutely know your target market or target audience. Who are they? What motivates them to buy? What are their interests etc.?

Once you know who your target market is, you can then divide them into different groups. The groups need to be big enough to give you a solid customer base.

You can use several different ways to segment or divide your market.

  • Demographics – this includes age, family size, occupation, job
  • Geographics – this is all about the location of your market – could be local, regional, nationwide or international markets.
  • Psychographics – things such as lifestyle, values and personality – for example, someone might like to visit the gym, have a Vegan lifestyle, focus on mental health, and be environmentally aware…this list is absolutely endless in possibilities – but all hangs on knowing your target market.

How to identify your segmentation groups

OK, so you know your target market – now it’s time to break that down into smaller groups.

Try and create a detailed description of your ideal client – a persona that describes them in detail.

For example is you sell children’s’ books, one persona might be female, aged 25 – 45, stay at home Mum with young children. Interested in eco products and the environment, and healthy eating for her family. Her hobbies could be reading, family time, socialising with friends and hiking in the countryside.

The questions

Once you have this persona, you can more easily target that audience with specific books that would be interesting to that target group.

You will most likely need to work on several different personas. I give each persona a name as it makes them more real for me!

Here are some questions that might help you sort out your different segments. 

  • What are your highest and lowest value customers regarding the revenue they bring to you and profitability?
  • Are there any things that your customers have in common – or any patterns of buying you notice that they have in common?
  • Can you divide your customers into demographic information – age, income, gender?
  • Can you divide them into location?
  • What interests and hobbies do your customers have?
  • Have you noticed that customers with a particular interest or value are interested in your services/products?
  • How much do your customers know about your industry, products or services?
  • Do your customers buy online? If you have several online outlets, which is the most popular?
  • Do your customers need to have a consultation before they buy anything from you, or is the purchase just a transaction?
  • From your reviews and records, are your customers more likely to be satisfied with a particular purchase, or are they likely to want to exchange or return it?
  • Do customers ever make a suggestion to improve any of your products or services? Again, look at your records to see if any have the same opinion. Maybe that’s something you can improve and then target that audience?  

The more information you can find out about your current customers, as well as your potential customers, the easier it will be for you to segment your market. You will find groups by age, which is quite a broad spectrum to target, but if you look at feedback and reviews, you may find other things that certain customers have in common. For example, it could be how they found out about you? They may have googled your products or services, or maybe had a recommendation. It’s good to know these things.

Segmentation allows you to aim at the right market for your products. It helps you to focus on the way you interact with your customers, based on their interests, hobbies and behaviours.

This article wouldn’t be complete if I didn’t give you a quick overview of the pros and cons of segmentation. This gives you lots of information so you can make up your own mind as to how you would segment your market.

The pros of segmentation

  • You can look at each segment and determine if your current offering satisfies the needs of that segment. If not, you can adapt your products/services to make sure that you do – this might involve new products/services.
  • If you have a marketing budget, knowing who you want to target and how, you can better allocate that budget.
  • Segmentation helps you to set realistic targets or goals for your business.
  • Understanding your market in more detail, can help you when looking at what your competitors do.

The cons of segmentation

The cons are around, quite simply, costs.

If you are serving several different segments with different wants and needs, you could find costs escalating due to the increased number of products or services, or product variations.

Marketing costs will also increase as you will be serving different groups of people with different marketing. If you do paid ads, you’d need to do more than one to target the different segments.

I think the benefits outweigh the downside, but you need to take everything into consideration if you’re going to go this route.

Donald Norman, an American researcher, professor and author, once said, “Market segmentation is a natural result of the vast differences among people.”

This is so true, even people with the same hobbies or interests have huge differences between them. It’s just about finding those differences and how you can use that information to your best advantage.

Seth Godin, an entrepreneur, best-selling author and speaker, has been quoted in saying, “Don’t find customers for your products; find products for your customers.”

This absolutely puts it all into perspective. If you can work out exactly what your customers want and work to improve or change your products/services to meet their needs, you’re there! Customers always buy for their own reasons, not ours!

What does it mean to be goal oriented?

If you are goal oriented as a person, it means you are focused on achieving a specific objective or to accomplishing a given task.

It can also refer to your business or marketing plan…or even a project plan – you can make your targets goal oriented, which means they are designed to achieve the results you want.

As Albert Einstein once said, “If you want to live a happy life, tie it to a goal, not to people or things.”  I agree with this to a certain extent, but I do also think that people, such as family also contribute to helping you live a happy life, but I get where he was coming from!

You can apply goal setting to all parts of your life, not just to your business objectives. It just means that you set yourself targets and objectives that will help you make progress. For example, if you join a gym, you can’t expect to be lifting the heavy weights or running for 20km, the minute you step into the gym. You have to build up to that in small steps…or goals. The same could be applied to losing weight… you might have to lose 52lbs, but that isn’t going to come off in a couple of weeks, you need to have a plan with set goals (or little milestones) to get you there. Your first goal might be to lose 7lbs in one month – that’s easier to achieve as it’s realistic and specific. No matter what your goals are for, whether for you in your general life, for your health or for your business, your goals should be SMART goals.

For the purpose of this article, I am going to focus on being goal oriented for your business.

Habits determine whether you will achieve your goals

Many of us ponder the question, “How can I be more successful?” What we don’t realise is that we all hold the tools to become successful inside us, we just need to bring them out. Successful people are where they are because of the habits they adopt. Habits determine our behaviour. If you create good habits and adopt positive behaviour, you will have the ability to be successful.    

A goal driven person will work much harder whenever there are deadlines to be met. If you have a goal in your sights, plan how you are going to achieve it – have a clear idea of all the steps needed to get to that goal, breaking it all down into manageable chunks. You may not achieve parts of your goal first time around, but it’s about being focused on that end result and recognising all the steps in between.

What can you do to motivate yourself to achieve?

One of the key things that will help you achieve your goals is motivation. How do you stay motivated to achieve your goals? This is not always easy.

  • Make sure that the goals you want to achieve are really YOUR goals. You have to absolutely want that goal to be able to achieve it, so don’t look at what other people do and want out of life, look into yourself and what it is that you want – what is important to you?

    We sometimes think we want something, just because one of our friends or business colleagues talks about it. For me, a good example is Instagram and getting a good following. I’m still in the early stages of this, but at the very beginning, I was really hung up on how many followers I had, compared to others. So I did all the wrong things to get followers – one in particular, was the ‘follow for follow’ mentality, (or on Facebook, the ‘like for like’ mentality). For a start, after you have done the initial follow or like, several people will unlike or unfollow you and this is depressing when you see your follows going down instead of up. It’s because these followers aren’t the right people for your business. You need followers to follow you because they GENUINELY like your content, or are genuinely interested in your business. The same applies the other way around – only follow or like the businesses that you absolutely feel a connection with or are genuinely interested in their products or services. The follow for follow people will never become your customers.  
  • Money… Lots of people feel that money alone will be enough to motivate them…and maybe for some it does, often to the detriment of everything else. Obviously all of us who are in business for ourselves have money in our minds…we need to pay bills, we want to buy nice things and to do that, you need money. But it’s not a good idea to let it control your every move and fill your every waking thought. You still need some downtime to pursue a hobby or to be with your family and friends. It’s important to still have a life outside of work and making money.
  • Motivation also comes from the people around you. It’s important to be able to bounce ideas off like-minded people, so it’s good to surround yourself with positive thinkers who emanate positive vibes. We’re human and most humans give and receive energy and inspiration, so make sure you are receiving as much as you are giving away.
  • Self-awareness. Some of your goals may need you to understand what your strengths and weaknesses are in order for you to achieve the end result. You may need to learn new skills or get someone who has those skills to help you. 
  • Be organised! It’s very easy when you’re focusing on a particular goal to let your thoughts and ideas run away with you. Sometimes your energy and motivation can be seriously damaged by over-stimulation or a cluttered mind, because you just have so much going on in there!

    Instead of trying to keep it all in and wing it, sit down and take time to put all your ideas onto paper (or on a word doc) and make a list. Talk it through with someone who understands where you’re coming from and talk out your ideas – they might suggest some solutions. Put your ideas into specific tasks and allocate a time period. You will feel so much better for it.

    Whilst on the subject of being organised, it’s also crucial to work in an uncluttered and organised space. If your desk space or work area is cluttered and untidy, it will affect the way you work.
  • Keep your eye on the bigger picture. When you’re working on some of the more menial tasks in order to reach a particular goal, you might be tempted to cut corners or not bother with some elements. But if you keep that end result in mind, it will help you stay on track.
  • Time management is also crucial to achieving your goals. Each goal, or each part of a goal should have a clear deadline so you are accountable for making progress.  
  • Sometimes things will go wrong – it’s inevitable that it won’t all be plain sailing. To keep yourself motivated during these moments, it’s important to remember that things do go wrong and sometimes it’s completely out of your control. Take the Covid-19 virus for example. None of us could predict that a virus that would affect the whole world…just come out of nowhere and stop many businesses in their tracks. But it did, and it is still affecting many businesses, including mine. But we have to keep believing that it will pass and things will slowly get back to normal. It might be a different kind of normal, but we will get there. And we have all adapted and thought of other ways to get our business moving and still try and achieve our goals.
  • Finally, try and be consistent. If you want to get to that goal, you have to do something towards it every day. Some days you might not feel like doing anything…and you should have at least one day off a week, when you can switch off and be with your friends or family and relax. But, on your work days, if you’re feeling a bit lethargic, just do something small towards your goal – speak to your positive friend; write a social media post; make a new list with smaller, more achievable chunks.

It’s also good to be process oriented

Being goal oriented is nothing new. Whether you realise it or not, you are set goals from the minute you’re born. Your parents or guardians encourage you to take a bottle, to crawl, to walk, to talk, to use cutlery…the list is endless. But these are all goals that you are encouraged to achieve and you are rewarded if you achieve them.

I remember my Mum taking me to a birthday party and she put me in knickers instead of a nappy for the first time out of our own house. All the way there, she reminded me to ask if I needed to use the bathroom and what a good girl I was, and how clever I was. And, if I managed to do this all afternoon, she would take me to the toy shop and I could have a new dolly….and there you have it…I had a goal to work for. The goal was getting the dolly….the process was that I asked to use the bathroom and didn’t pee my knickers!  Needless to say, I got the dolly and I was so proud that I’d achieved my goal!

So, setting your goals is good but achieving them is also about the processes you go through to get there.  

If you’re setting goals, then you need to have an action plan in place to describe the process you will go through to get the end result. And you need to make sure it is the right process.

Make the process enjoyable and rewarding

None of us can do something we don’t like doing for very long. For example, if you have decided you will follow a particular fad diet for the next six months, it is unlikely you will get to the six month point. Fad diets tend to include things we don’t like eating, or don’t like doing, so it makes it harder to stick to, than a sensible eating diet where nothing is forbidden, it’s just that certain foods are limited.

You need to wake up every morning, looking forward to going to work so you can start work on the next part of your process to achieve your goals. If the process you have chosen is unworkable, you won’t stick with it. Both the goals you want to achieve AND the process must both be rewarding. If the processes you choose are ones you like, they become part of the goal in that they lead you there. And if there is a process you don’t yet understand, take the time to learn about it and always be on the look out to learn new skills.

I love writing, so any goal I set for my business always includes a large element of writing, as that is what I enjoy and it makes my goal feel closer. When you can find the right process for you, you’ll love working on them and you’ll most likely not only achieve your goals, but surpass them!

Conclusion

It’s good to set goals for your business, so you are working towards making your business a success. However, don’t let your goals rule your life or ruin your life! Make sure you strike the right balance and still live a little, spend time with your family and enjoy some rest and relaxation. Work is not the be all and end all for a happy life!

Ensure your goals have a process to get you there that you will enjoy. It will of course, involve hard work and dedication, but if you can make the process rewarding by incorporating things you like to do, you’ll enjoy the journey and it won’t be so stressful.  

If you have any comments or more ideas, please feel free to comment below.