Today we are going to learn about and conduct a target market segmentation analysis so we can find and define our target market for your business plan. Here, we are going to segment your addressed market. By segmenting your customer base you will begin to understand your customer by knowing who they are and what their needs are. This will help in focusing your marketing efforts as well as better servicing your customers.
The method with which you segment your target market depends on your product and service being provided. For example, if you had a Business to Business (B2B) service – you won’t necessarily segment your target market by age or gender but perhaps by industry type or number of employees. If your business is a B2C (Business to Consumer) then you would be typically looking at the traditional distinguishers such as age, gender and income bracket to identify your target market. For example, you would segment your market by age if you are selling travel packages to young adults, toys for babies or insurance packages for retirees. Another is gender: something to consider is not only the end user of the product – such as men’s clothing or men’s shavers, but to consider who buys the product from you. Another is the income bracket range of your market. This determines your customers’ capacity to buy your product and their propensity to buy.
Another methodology for segmenting your target market is behaviour-based segmentation. This is based on the context and values of your business’ customers. For example, for wealth protection insurance services, a young professional may seek income protection whereas a retiree will seek to insure their asset base. The context of your customers’ interaction with your business’ services and products should be viewed from the point of view of your customer. For example, for a travel agency there will be a number of customers that fit in multiple behaviour profiles: the business traveler who travels often, a one off travel plan – a person who takes that once in a lifetime trip and then you have people who love to travel annually at the same time each year.