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Why Segmenting your Target Audience Is Essential

Why Segmenting your Target Audience Is Essential
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You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

The age of digital is all-encompassing and one needs to get the sharpest bird’s eye view from fifty thousand feet above before investing in e-commerce and social media. These days, it is not enough to just create exclusive content and depend on push strategies while you wait for your brand to sail through and improve rankings. Online segmentation plays a key role in helping you streamline your target audience. It is necessary to have a well-defined segmentation and targeting strategies to help you create a dialogue between the merchant site and the visitors so as to improve the 360 degree shopping experience.

We often take segmentation to be a thorough catalog of consumers who visit our sites, but there is more to it than meets the eye. The right form of segmentation should emphasize on a qualitative basis and not just numerical recordings. It should thus focus on demographic, behavioral and historical contexts of each visitor including the generic, numeric data - such as age, gender, geographic location, the device used and whether one is a repeat visitor or not. One needs to be adept at identifying the purchase intent of a consumer in the space of online shopping. One can also keep a close watch on competitor brands and their websites to gauge potential consumers, and what they are looking to use. Visitors may be encouraged to buy more products when the brand resorts to the upselling game by offering lucrative and unique complimentary offers. 

Segmentation strategies help brands detect whether a consumer is a first-time visitor, a repeat viewer, or a customer who has accumulated points on the account of loyalty. One of the biggest challenges for online retailers lies in being able to convert casual visitors to buyers. Market segmentation, whether online or offline, is at the heart of content marketing and therefore it requires a holistic understanding of customer behavior. An interesting trend being noted by many is that people like to keep tabs on offers and discounts on their smartphones but make their purchases through their laptops. Probably the reason why most brands haven’t taken the jump to app-only. Categorizing consumers based on these insights help brands to understand the motivational drivers behind customer actions, device preferences, visit time, and campaign responsiveness.

It’s imperative to know that segmentation, targeting, and positioning are the main tools for modern, scalable advertising and communication. In a study conducted by Yahoo, it was calculated that personalized advertising is 50% more effective than normal advertising. Collaborative filtering is a method of making automatic predictions about the interests of a user by collecting preferences from users, usually with the help of cookies. Let us take a look at Amazon’s collaborative filtering – say, a user looks for ‘To Kill A Mockingbird’ but does not buy it, Amazon keeps targeting the user with several offers, not just about the same book, but also relevant classics that come in the same league. Tesco is one of the biggest examples of foolproof segmentation and customer relationship management that can serve as inspiration.

Segmenting your market divides the infinite pool of potential clients into smaller, better defined, and more manageable groups. iPhones are a great example of market segmentation with the 5C being marketed to a relatively younger crowd (read college-going youth) while the 5S was marketed to the more affluent, mature audiences.

You may have high-end products on your website which may enjoy a good click-through rate but a poor conversion rate due to the exorbitant pricing. While it looks good for your portfolio, over time, these clicks result in a waste of spends and drag down the efficiency of the account. You can improve product performance by removing items from your shopping campaign that carry low ROI. When you have exclusive shopping campaigns, you can promote your online inventory of products by matching search queries to ads featuring these products, which in turn may appear in Google search results.

When your focus narrows down, so do your channels of distribution. It might seem counter-intuitive that when you decrease your market size effectively by segmenting it, you are able to increase distribution. Once you figure out the high-density areas of customer interest, you can eliminate ineffective distribution channels and use these new, freed-up resources to pump those outlets that receive the greatest amount of traffic.

Every aspect of your company and its products can be tailored to meet the customers’ demands: design, customer service, price, quality, etc. By creating a well-thought-through framework of segments, you will improve sales and boost your target audience.

Edition: December 2016

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