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Market segmentation is the process of dividing a market into smaller groups of consumers with similar needs or characteristics. It allows businesses, particularly small and medium-sized enterprises (SMEs), to tailor their marketing efforts and products to specific groups of customers.

By identifying and targeting specific segments, SMEs can effectively compete with larger companies and increase their chances of success in the marketplace. In this case study, we will explore the benefits of market segmentation for SME businesses and provide tips on how to effectively segment a market.

There are several methods for effectively segmenting a market. Some of the most common include:

  1. Demographic segmentation: This involves segmenting the market based on characteristics such as age, gender, income, education, and occupation.
  2. Geographic segmentation: This involves segmenting the market based on location, such as by region, city, or neighborhood.
  3. Psychographic segmentation: This involves segmenting the market based on lifestyle, personality, values, and interests.
  4. Behavioral segmentation: This involves segmenting the market based on consumer behavior, such as purchasing patterns, brand loyalty, and usage rate.
  5. Benefit segmentation: This involves segmenting the market based on the benefits that consumers seek from the product or service.

When selecting a segmentation method, it is important to consider the specific goals and resources of the business. Additionally, businesses should use multiple segmentation methods to gain a more comprehensive understanding of their target market.

Once the market has been segmented, businesses can then develop targeted marketing campaigns and products to appeal to each segment. This can include tailored advertising, promotions, and pricing strategies. It is also important for businesses to continually monitor and evaluate their market segments to ensure that they are still relevant and to make adjustments as necessary.

The key to effective market segmentation for SME businesses is to understand the specific needs and characteristics of different groups of customers, and then to develop tailored marketing strategies to appeal to each segment.

Market Segmentation – Case Study

Product Range Had Grown Over 25 years

Manufacturing client who had been producing various ranges of products for over 25 years. The product portfolio had grown to a level where it was causing a variety of  issues from stock control through to extended lead times, ultimately affecting customer satisfaction and profitability.

No formalised marketing / sales strategy

Fundamental to the business challenge was the fact that the company didn’t have a formalised business plan or any sales and marketing strategy. Working with the senior management team we helped facilitate challenging discussions to re evaluate which product segments and which customer segments the business should prioritise and focus on.

All business functions contributed

With the focus on sales and marketing a wide range of other challenges were identified. Through a structured process we were able to develop a robust plan that all functions within the company brought into. Work completed under a non disclosure arrangement so unfortunately exact details cannot be showcased.

marketing niche products Market Segmentation Blue Dolphin
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Years Trading
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Organisational Departments Involved
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Marketing and Sales Strategy Created

To find out more about how targeted marketing can become an effective way of generating sales.

Call 01733 361729 or email solutions@bdolphin.co.uk 

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Alternative Approaches To Marketing Segmentation

In addition to market segmentation, there are several alternative marketing approaches that businesses can use to reach their target market. Some of these include:

  1. Mass marketing: This approach involves using a single marketing strategy to reach a broad audience. This can be effective for businesses with a strong brand or a product that appeals to a wide range of consumers.
  2. Niche marketing: This approach involves focusing on a specific subgroup of consumers with specific needs or interests. This can be effective for businesses with a unique product or service that appeals to a specific group of consumers.
  3. Relationship marketing: This approach involves building long-term relationships with customers through personalized communication and tailored products or services. This can be effective for businesses that rely heavily on repeat customers or customer loyalty.
  4. Guerrilla marketing: This approach involves using unconventional and low-cost marketing methods to reach consumers in unexpected ways. This can be effective for businesses with limited resources or for those trying to stand out in a crowded market.
  5. Influencer marketing: This approach involves partnering with well-known and respected individuals within a particular industry or community to promote a product or service. This can be effective for businesses looking to tap into a specific market segment and gain credibility.

It’s worth noting that some of the above-mentioned strategies can also be used in combination with market segmentation for a more comprehensive and effective marketing strategy.

Example of tailored marketing developed by marketing segmentation

An example of tailored marketing developed by market segmentation would be loading shovel manufacturer that wants to increase sales by targeting specific market segments.

The loading shovel manufacturer starts by segmenting their market based on demographic and behavioural characteristics. They discover that their target market is composed of three main segments:

  1. Agricultural: This segment is primarily composed of farms who are looking for a quick and convenient coffee option on their way to work.
  2. College students: This segment is primarily composed of students between the ages of 18 and 24, who are looking for a affordable and convenient coffee option near their campus.
  3. Coffee enthusiasts: This segment is composed of coffee enthusiasts of all ages, who are looking for high-quality, specialty coffee options.

Based on this segmentation, the coffee shop decides to develop tailored marketing strategies for each segment.

For the young professionals segment, the coffee shop decides to offer a loyalty program for frequent customers, and to promote a “coffee to go” option through social media and targeted advertising near office buildings.

For the college students segment, the coffee shop decides to offer a student discount and to promote a “coffee and pastry” combo deal through social media and targeted advertising near college campuses.

For the coffee enthusiasts segment, the coffee shop decides to offer a rotating selection of specialty coffee options and to promote their unique roasts through word of mouth and social media.

The coffee shop also tracks the results of their marketing efforts and adjusts as needed. Over time, the coffee shop sees an increase in sales and a broader customer base, as a result of their tailored marketing strategies and their ability to appeal to the specific needs and interests of each market segment.

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