Segmentation: How to Identify Your Target Audience

The only thing more important in marketing than what you are selling is who you are selling your product to and why they should want to buy it. As a result, the very first step in marketing or advertising any product is segmentation, which can be broadly understood as identifying your target audience or the group of people that will want to buy your product.

Philip Kotler of Northwestern University defined segmentation as “the subdividing of a market into distinct subsets of customers, where any subset may conceivably be selected as a target market to be reached with a distinct marketing mix.” As implied by this definition, the entire process of segmentation can be broken into three steps. These are segmentation, targeting, and positioning.

During segmentation, you need to identify your market and divide that market into smaller subsets of customers. In order to do this, you need to find measurable and distinct ways to differentiate your customers. The four common variables that can be used in segmentation are:

  • Demographic variables
  • Psychographic variables
  • Geographic variables
  • Behavioristic variables
Demographic variables are things such as age, race, and gender that we typically think of when looking for ways to divide large groups of people. You may also think of geographic variables, which measure climate, city size, and other locational factors. However, while these are easiest to measure, they are the least predictive of actual customers’ behavior. Conversely though, the variables that are hard to measure are more indicative and predictive. Behavioristic variables that measure brand loyalty, end use, and price sensitivity, and psychographic variables that measure lifestyles and motives are both examples.

After segmenting your market, you need to implement targeting. This is evaluating the various different subsets of customers to decide which group to target or focus on.

Finally, positioning begins to take place as you create a strategic marketing plan based on the selected target group. In this step, you make decisions and choose marketing strategies based on the needs and wants of that target market.

While this sounds simple, designing a marketing plan to specifically meet the needs of your targeted customer is not as easy as it sounds. However, if you are successful, you can drastically impact sales and competitiveness of the brand in the market.