How to Create Your Own Audience Segments: Dividing Up the Market
An owner of a shoe repair business was asked once, “Who are your customers?” He answered, “Everyone. Who doesn’t wear shoes?” On the surface, he makes a point. The problem is, few businesses have the budget or staff to effectively promote their product to everyone. That’s why they go after sections of the market instead. It’s called audience segmentation – dividing consumers into groups based on their similarities, then marketing to a select number of segments. Here are two ways a small business owner can divide their markets into more manageable parts and learn more about their customers in the process.
Customers By the Numbers
One way to segment a market is by numbers or demographics. These are statistics on observable characteristics like occupation, education, ethnicity, family structure and the following:
- Age/generation – Age groups are often used here. For example, Baby Boomers, born between 1946 and 1964, are nearing retirement so they may look for downsized housing. On the other hand, Millennials, born between 1982 and 1996, may be interested in larger homes for their growing families.
- Income – This can relate to a group’s buying power. Individuals with higher incomes may have more disposable income to spend in gourmet restaurants. Those with lower incomes might be more interested in daily specials that help them stretch their wages.
A great source of this information is the U.S. Census Bureau’s American FactFinder. It helps you find free, demographic information about the area where you market. For example, a search of Rio Rancho, New Mexico indicates that 16 percent of the population are veterans. Knowing that information, a small business might target that segment with discounts to those with a military ID.
Customers by Feeling
Small businesses can also segment by psychographics – feelings or behaviors. This can add depth to your customer profile. It helps you identify specific activities, interests or opinions your customers may have. For example, your demographic analysis might tell you that your market is women ages 30 to 45. But psychographic information may tell you that they are very concerned about environmental issues. A gift store owner could use that information to offer items made from recycled materials.
There aren’t as many public sources for psychographic information, but here are some options:
- External Sources – There are several companies that will provide psychographic information for a fee. Some examples are VALS and MyBestSegments. Each can identify the interests and lifestyles of specific segments.
- Internal Sources – You can informally gather information using your daily interactions with customers. Listen to them describe their day. What bumper stickers do they have on their cars? Social media sources, like Facebook and Pinterest, can also give you clues to their buying motives and behaviors.
Make the most of your marketing efforts by identifying specific segments to target. It will help you learn more about your customers so that you can speak their language and better meet their needs.