Market segmentation strategy

How you develop a marketing plan for your companies based on NIQ’s market research.

Market segmentation strategy is a crucial aspect of any business that aims to expand and reach a wider audience. Market segmentation strategy is a business process that involves dividing a larger market into smaller groups of consumers based on specific criteria such as demographics, psychographics, behavior, and location. Companies can tailor their marketing efforts to meet the specific needs of each group, resulting in more effective communication and increased customer satisfaction. In this article, we will delve into the importance of market segmentation analysis and how it can benefit global companies. You will find best practice examples and how you develop a marketing plan for your companies based on NIQ’s market research.

Why do Benefits Open Up when Companies use A Market Segmentation Strategy?

There are several benefits of using a market segmentation strategy. Let’s explore some of them:

Market segmentation is a big step, but an essential one. Here we list some of the reasons why your company can make better decisions thanks to a market segmentation strategy.

Improved Product Development: By segmenting the market, companies can identify the needs of specific consumer groups and develop products that meet those needs. This can lead to improved product development and increased customer satisfaction.
Effective Marketing Communication: When companies understand the needs and preferences of their target audience, they can tailor their marketing communication to resonate with that group. This can lead to more effective communication and increased sales.
Cost Savings: Targeted marketing efforts can be more cost-effective than a general marketing approach. By focusing on specific market segments, companies can reduce their marketing spend and improve their return on investment.
Competitive Advantage: Companies that use market segmentation strategy can gain a competitive advantage by offering products and services that are tailored to specific customer groups. This can lead to increased market share and improved brand loyalty.

Grow your brand by targeting the right people at the right time

Identify, understand and win your most valuable customer segments in the short and long term

Explore more

Market Segmentation Strategy Best Practices & Examples

To implement an effective market segmentation strategy, companies need to follow some best practices. Here are a few examples:

Conduct Market Research: Companies need to conduct market research to understand the needs and preferences of their target audience. This can involve surveys, focus groups, and other research methods.
Identify Market Segments: Companies need to identify the most profitable and responsive market segments. This can involve analyzing customer data, identifying common characteristics, and creating buyer personas.
Develop a Marketing Plan: Companies need to develop a marketing plan that targets each market segment. This can involve creating specific marketing messages, developing targeted advertising campaigns, and using the right communication channels.
Measure Results: Companies need to measure the effectiveness of their market segmentation strategy. This can involve tracking sales, monitoring customer feedback, and using market research KPIs.

Let’s take a look at one example from IKEA which has successfully used market segmentation strategy:

IKEA is a renowned furniture retailer that is known for its modern and affordable designs. One of the key reasons for IKEA’s success is its market segmentation strategy. IKEA’s market segmentation strategy for Austria and the Netherlands has helped the company to become one of the most successful furniture retailers in the world. By identifying its target audience and tailoring its products and marketing campaigns to suit their needs, IKEA has created a loyal customer base – from birth to retirement age. The company addresses all age groups with specific needs. Together with NIQ IKEA AT and NL have established themselves as a furniture brand with “Democratic Design Concepts” that offers exactly the right products for different phases of life – and for the respective markets.

Why do companies need to analyze market segmentations?

Companies need to analyze market segmentations to identify the most profitable and responsive segments. By doing so, they can tailor their marketing efforts to meet the specific needs of each group, resulting in more effective communication and increased customer satisfaction.

Market segmentation analysis can also help companies to:

Identify new market opportunities: By analyzing market segmentations, companies can identify new market opportunities and develop products and services that meet the needs of those groups.
Improve customer retention: By understanding the needs and preferences of their target audience, companies can improve customer retention and increase brand loyalty.
Optimize marketing spend: By focusing on specific market segments, companies can reduce their marketing spend and improve their return on investment.
Increase sales: By tailoring their marketing efforts to specific market segments, companies can increase their sales and revenue.

Which frameworks can improve the general workflow?

There are several frameworks that companies can use to improve their market segmentation workflow. Here are a few:

Geographic Segmentation

This framework involves dividing a market into different geographic regions. This can be useful for companies that sell products or services that are specific to certain regions.

Demographic Segmentation

This framework involves dividing a market based on demographic factors such as age, gender, income, and education. This can be useful for companies that sell products or services that are targeted towards specific age groups or income brackets.

Psychographic Segmentation

This framework involves dividing a market based on personality traits, values, and lifestyle. This can be useful for companies that sell products or services that are targeted towards specific personality types or lifestyles

Behavioral Segmentation

This framework involves dividing a market based on consumer behavior such as buying habits, product usage, and brand loyalty. This can be useful for companies that sell products or services that are targeted towards specific consumer behaviors.

What role do NIQ market research KPIs play for market segmentation strategies

Market research KPIs play a crucial role in market segmentation strategies. They help companies to measure the effectiveness of their marketing efforts and identify areas for improvement.

Some common market research KPIs include:

Customer Satisfaction: This KPI measures how satisfied customers are with a company’s products or services.
Net Promoter Score (NPS): This KPI measures how likely customers are to recommend a company’s products or services to others.
Customer Lifetime Value (CLV): This KPI measures the total value of a customer over their lifetime of doing business with a company.
Market Share: This KPI measures a company’s share of the overall market.

NIQ is a global market research company that can provide important assistance to companies looking to set up effective market segmentation strategies. They offer a range of market research services including survey design, data collection, and analysis.

Their team of experts can help companies to identify the most profitable and responsive market segments and develop effective marketing plans that meet the specific needs of each group.

Conclusion

Market segmentation strategy is a powerful tool that can help companies to reach specific groups of consumers and increase their sales and revenue. By analyzing market segmentations, companies can identify the most profitable and responsive market segments and tailor their marketing efforts to meet the specific needs of each group.

Implementing a market segmentation strategy requires companies to conduct market research, identify market segments, develop a marketing plan, and measure results. By following these best practices, companies can improve their marketing communication, reduce their marketing spend, and gain a competitive advantage.

Market research KPIs such as customer satisfaction, NPS, CLV, and market share play a crucial role in market segmentation strategies. Companies can use these KPIs to measure the effectiveness of their marketing efforts and identify areas for improvement.

NIQ is a global market intelligence company that can provide important assistance to companies looking to set up effective market segmentation strategies. Our team of experts can help companies to identify the most profitable and responsive market segments and develop effective marketing plans that meet the specific needs of each group.