Explain how a company selects a segmentation strategy to identify the unique characteristics of the population segment most likely to need and purchase its offerings.

Expert Answers

An illustration of the letter 'A' in a speech bubbles

Businesses utilize segmentation strategies so that they can categorize their customers and develop appropriate marketing that will appeal to their interests and lifestyles. The categories implemented vary from one company to another depending upon what products or services they offer and what type of people comprise their audiences.

The first step in segmentation strategy is to conduct research and find out details about the company's target audience. To uncover precisely who uses their products and services, businesses conduct polls, send out surveys, and interview their customers on a one-to-one basis. This provides them with background data that is useful in uncovering trends. They consider demographics, location, behavior, and other criteria to isolate key segments among their customers. These segments may be based on age, education, income, family size, behaviors, interests, and geographical positions.

Once companies have divided their customer base into important segments, they often create buyer personas. These are imaginary customers that represent the attributes of people in core segments. These buyer personas help marketers visualize the subgroups towards which they want to focus their advertising. When companies consider where to channel the bulk of their marketing, they look at the profit potential inherent in each segment.

After businesses have segmented their customers and analyzed their data, they prioritize certain segments that seem most lucrative and develop strategies to market to them. They monitor the effectiveness of their marketing and make appropriate adjustments so that their strategies remain relevant over the long term.

Last Updated by eNotes Editorial on