A guide on how to build a marketing segmentation and targeting framework

Segmentation is key for any business to succeed when trying to bring any product to the market. Defining a product tailored to the right audience is a key and challenging part of the marketing planning, this requires some thinking process.

Organisations that are customer focused, will at some point work on understanding and having a good definition, identification, and monitoring of the  segments their products are targeted to. These will become the clients-streams of revenue, having a good understanding of them is the base to establish a relationship that can extend over time and provide revenue to the organisation.

Reasons why we want to have a good segmentation:

• To have a customer centric business strategy
• To define a messaging plan
• To define a media channel targeting strategy
• To extend the LTV

There are different sources of data we can use to identify the segments we want to focus on, a few ideas about ways we can achieve this are:

• Surveys and market research reports – external reports
• Internal segmentation data (CRM)
• Brainstorming with internal teams

As a framework to identify and reach this segments we can use the STP process which stands for: Segmentation, targeting and positioning. Segmentation refers to the attributes that we identify and are relevant to the product or service we are working on. A big part of the success of this strategy will come from identifying well the segments and how well we understand their needs to create products that will cover them.

Segmentation

Most studies will define segmentation by using 4 main attributes:

• Geographic: countries, regions, etc
• Demographic: Age, gender, studies, belonging to groups, etc
• Behavioural: They can be grouped based on recent actions examples are: had a baby, got married, become employed, bought a specific product, searched for something online, they visited certain content or stage in the funnel.
• Piscographic: Personality, lifestyle, attitudes, etc.

To put an example that we can see in many business apply is the one that differentiates based on the relationship of the customer with the business:

• B2B (Business to business)
• B2C (Business to consumer)

This could be the case of an online marketplace, where the relationship of Supply is B2B interaction, on one side and a relationship of demand is usually an interaction B2C.

Following with the previous example and to be more specific we could talk about an online travel company. On one side online travel marketplaces have suppliers that provide the inventory, and travellers on the other hand that would buy from that inventory. The business needs to attract both segments to build a functional marketplace. Some online travel companies find convenient to further divide these in smaller segments in order to meet the needs of these in a better way:

• Business travellers
• Families
• Friends
• Couples

We can also segment users based on the stage they are in the life-cycle. To put an example of what an acquisition and onboarding strategy would look like, we could divide this in:

• Prospects: Users we have never reached out to but expect to attract
• Leads: Users from who we own their email address
• Marketing qualified leads: Users that have demonstrated interest in our products
• Sales qualified leads: Users that are willing to buy our product
• Accounts: Clients

Once we have defined these we can prioritise the efforts that we can dedicate by measuring the opportunity by sizing the value of each segment. We can use different sources of data to measure the size of each of these segments. This could be:

• Market research
• Internal CRM data or LTV (that can be used as a proxy)
• Media insights tools that would bridge the gap to let us know how many people many people fit in each segment and at what cost. The 2 most common online tools are Google (Google keyword planner and Facebook campaign planner).

Targeting

This stands for any way we define to approach to the segments, what are the combination of channels, targeting methods, messages or audiences that we will use to reach the segments. Examples of this could be for a B2C TV, display media, search engine marketing, direct mailing and for B2B sales calls, emails, etc.

We can use a user journey map and touch points to represent this in a visual way. In the user journey we can define what are the different stages the user will go through, what is the emotional state / motivations and finally what are the channels that we would use to target this user. An example of this can be seen below.

Positioning

This is the result of our marketing segmentation and targeting efforts. After running the marketing activity the segments will perceive us in a specific way and we will have built a positioning in the market.