By Claudia Perez Riva| September, 2024

My dear owners of small and medium-sized businesses, to address today’s question, I’ve brought to our column a fascinating topic that is fundamental to better reaching our audiences.

Today, we are discussing market segmentation, which is a crucial element for marketers, especially when we want to build marketing plans and strategies.

Segmentation Concept and factors
When we talk about segmentation, we refer to the action of dividing a wide and diverse market into small, homogeneous portions of consumers who generally share similar characteristics. This segmentation can be done by taking into account a variety of factors, some of which include:
• Demographic: Based on age, gender, education level, and family composition.
• Geographic: Based on regions, countries, cities, population density, and climate factors.
• Cultural: Based on traditions, religions, and ethnicity.
• Socioeconomic: Based on social classes, purchasing power, and family income.
• Psychological: Based on lifestyle, personality, opinions, interests, and values.

We could continue grouping customers by various factors, but our space and time are limited. However, it is important to point out that when we create specific marketing strategies for each targeted segment, we are engaging in “Differentiated Marketing,” which contrasts with “Undifferentiated Marketing,” where the same marketing strategy is used to target all market segments.
Let’s move on to other important ideas.
At this point in the essay, some of you might ask: Why is this topic so important for my marketing plan or strategies? Why do I need to group people? Isn’t this just a waste of time?

Segmentation value
My dear readers, sometimes there are exercises or techniques that may appear simple or trivial, but in reality, they are of great importance. If we correctly segment the market, we can easily identify our target audience, create powerful and more effective marketing messages, and develop products or provide services that meet the specific needs of our customers. This exercise is crucial because it allows us to optimize our resources by allocating them to the most promising areas, thereby increasing our competitiveness in the market. Segmentation also facilitates the opportunity to identify new markets and to create and develop stronger relationships with our customers by better satisfying their expectations.
It’s high probably my dear readers, that some of you may be asking yourselves: How is this expressed in the real world? To answer this question, I’ve brought some examples for today’s post.

Brands segment the market to define their target audience, and often within their target audience, they make further segmentations. Let’s look at some examples that take into account the socioeconomic factor. Mercedes-Benz specializes in manufacturing luxury cars aimed at high-income consumers, but within its catalog, Mercedes offers a superior range like the S-Class model for a premium segment of its market.

Image by Claudia Perez

H&M does something similar; this brand targets middle-class consumers who seek style and sophistication. Their products offer affordable prices, but they also have more exclusive lines the H&M Conscious Collection.

L’Oréal uses demographic segmentation based on age, gender, and skin type for their products. They offer the “Revitalift” line for more mature consumers and the Garnier line for a younger audience. They also segment according to lifestyle, offering the ecological and sustainable product line “Garnier Organic” for this specific group.
Finally, Toyota has used psychological segmentation to better reach its audience. They offer models like the Toyota Camry for buyers interested in reliable family vehicles, and the Toyota Supra for those passionate about sports cars.
We can conclude that market segmentation is a highly valuable tool in today’s diverse and dynamic marketplace. If we use a well-executed segmentation, we can better anticipate market trends and secure a stronger position in our industries. Thus, my dear readers, we have reached the end of this post, which I hope has been of interest and that you have enjoyed as much as I did. I only have one question left for you: Are you, my dear readers, owners of small and medium-sized enterprises, willing to do a market segmentation exercise in your companies?