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So you have spent countless hours designing and creating your perfect product. You have even made a few bucks from your e-commerce store. But are your sales not taking off as as you expected?

If this is your situation, then it’s time to consider if you really know your customers. Ask yourself the following questions:

• Do I know what their fears and motivations are?

• Where do they look up for information?

• Who they trust for recommendations?

If you can’t answer these questions, then you are not even halfway to targeting your customers. Even the best product or service out there cannot remedy that. But, if you use what we call “market segmentation” (or slicing and dicing that market), you can reach your customers in the most cost-effective way.

Without understanding and targeting a niche market, even the best products can fail-but no need to fret. By using market segmentation, you can reach your most profitable customers more cost-effectively.

What is Segmentation?

In essence, segmentation is the process of dividing a large market into small groups of people who share similar characteristics.

You can imagine the process as filtering the market through a funnel that has a wide opening and narrow end. A large group goes in and only a few come out on the other end. Marketers analyze these few peoples’ shared traits to create a unique strategy to reach and influence them.

How to “Filter” Your Market:

You can segment based on customers’:

– Demographics, like age, gender, or parental status;

– Geography, such as neighborhood or country;

– Psychographics such as attitudes and beliefs;

– and behaviors, like shopping habits or product usage patterns.

This post will give you more details on each of the segmentation methods.

At this point you may be asking, “so how do I find all this information and how can they drive sales?” One of the best ways is through personal interviews and analyzing your customers’ behaviors.

The Case for Using Behavioral Segmentation

Let’s say you are selling young women’s clothes online. You have specified that your customers are 18~25 year-old females living in a city and are interested in fashion. These are demographic, geographic and psychographic traits, respectively. Yet this information is not enough to help you sell.

Why? Customers’ buying decisions can vary widely. For instance, an 18-year-old college student will shop differently than a 25-year-old who works at a corporate company. You might also want to consider their purchasing power; i.e., a working woman would have more budget for shopping than a dorm-living college student.