And the Answer is…Segmentation

In business school, I had a marketing professor who said, “If you don’t know the answer, raise your hand and answer segmentation.” Segmentation is the process of defining and subdividing the market into clearly identifiable segments of similar needs, wants, or demand characteristics. While this seems like an over-simplified answer to every question, from our experience, it really does underscore every marketing decision. Let’s see how this holds true in the world of branding.

Gathering Robust Consumer Insights

An effective brand strategy starts with consumer insights. Regardless of our objective: to battle competitive brands, raise awareness, increase familiarity of our products and services, or increase performance rating, we need to start by understanding the people we serve. However, simply gathering insights into the general market isn’t enough. Segmentation allows us to understand the difference between the people who make up our customer base. In-depth segmentation (latent class segmentation as we refer to it here), provides information on more than just demographics; it provides insights into what is most important and least important to each group of consumers and how that drives their decision-making. The answer to robust consumer insights: segmentation.

Creating a Bigger Brand Impact

Once you’ve defined the different segments that make up your target audience, the next step is piecing together each segment’s journey. How do they interact with your brand? When, where, and why? What touchpoints are the most relevant to the different stages of their journey? The key is to find overlaps between the segments, illuminating areas where brand can be the most impactful. This information not only helps you better serve your customers but also helps you maximize the dollars you spend. Marketing dollars can then be reallocated to other functional areas of the organization, e.g. human resources to train employees to deliver on the brand experience. The answer to happier customers and a bigger brand impact: segmentation.

Delivering Better Business Results

Our brand can’t be everything to everyone, and it shouldn’t be. By understanding the differences in audience mindset and demographics, segmentation allows you to determine the business potential for each group of consumers. Although your market may break down into eight segments, only four may be worth investing in. Those consumers who are aligned with your brand positioning and product offering, and are willing/able to pay, are more likely to become brand loyalists and advocate on your behalf. The segments that are less likely to convert, or less likely to become loyal, are worth less brand/marketing spend. The answer to greater return on marketing investment and buy-in from leadership: segmentation.

While not an exhaustive list of examples, we can start to see how segmentation is the answer to delivering a strategic, impactful, and cost-effective brand strategy. Does your organization have questions about how to bolster your brand and marketing efforts? It could be time to use segmentation to find the answers.

Tracy Schrauben is a Senior Consultant, Strategy at Monigle.
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