Each group is called a “segment.” By understanding what differentiates them, marketers can tailor messaging, products and experiences that speak directly to their needs. Nike’s strategy proved to be successful, as the company has become a leading player in the Chinese sportswear market. In 2021, China accounted for over 20% of Nike’s global revenue (Ko & Zhang, 2022).
Customer Journey Stage
Geographic segmentation targets customers based on a predefined geographic border. Differences in interests, values, and preferences vary dramatically across cities, states, and countries, so it’s important for marketers to recognize these differences and tailor their advertising accordingly. Segmentation isn’t just about organizing your audience; it’s about improving performance across every stage of the customer journey. When done well, it helps brands build relevance, reduce wasted spend, and create experiences customers actually want to return to.
With a needs-based analysis and market segmentation approach, marketers can deliver messaging that resonates with their audience on a much deeper level. When done correctly, needs-based segmentation often results in higher audience engagement, conversions, and customer retention. Life stage market segmentation is the process of dividing your market based on the life stage of your target audience. For example, someone married with five kids may respond well to an emotional advertisement about convertibles during their midlife crisis. Market segmentation is the process of dividing your audience into distinct groups—by demographics, behavior, location, psychographics, or other shared traits—so you can tailor your messaging to resonate with each one. Done well, it leads to better conversion rates, smarter ad spend, and stronger customer retention.
Using first- and third-party data, intent segmentation helps you see what prospects are researching your brand, topics relevant to your business, or competitors’ offerings. With market segmentation, you can spend money on promoting products to segments that are more likely to buy from you. For example, if your product is expensive and designed for business users, you may not want to invest your budget in social media channels that appeal to teenagers.
Netflix has transformed the way the world consumes content, earning millions of customers worldwide. They consider the attractiveness of each segment based on several factors, including size, profitability, accessibility, and the company’s ability to serve the segment effectively. Beyond global commitments, Coca-Cola tailors its sustainability efforts to local communities, reinforcing trust and engagement. What started as a simple name-customization campaign quickly evolved into a data-driven marketing phenomenon. The Share a Coke campaign, first launched in 2011 in Australia, featured popular first names printed on Coke bottles, encouraging consumers to find and share a drink with their friends and loved ones.
This type of segmentation calls for in-depth data analysis to pinpoint ideal candidates for the target audience. Much like firmographic market segmentation, technographic segmentation only applies to B2B audiences. Instead of categorizing consumers based on age, location, income, etc., firmographic segmentation categorizes companies based on industry, annual revenue, job function, company size, location, status, performance, etc.
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Nike also encourages employee participation in professional development activities and encourages networking opportunities. As recently as 2021, consumers were showing a significantly higher preference for the taste of Coke compared to Pepsi, which necessarily impacts Pepsi vs Coke sales. Master the art of strategic leadership in a fast-changing, disruption-driven world. Discover advanced frameworks, real-world case studies, and practical tools to drive long-term growth. This implementation breaks down the journey into five manageable phases spanning 26 weeks, taking you from initial research through market entry to sustained growth. While the market is small compared to mass markets, the focus is on quality over quantity.
Traditionally, brands use the 4Ps framework to define how they create, distribute, and promote their offerings. However, Coca-Cola has elevated this model by integrating real-time data, experience-driven design, and global coordination, making it far more dynamic and responsive to market shifts. It’s not just about selling a drink; it’s about creating experiences, evoking emotions, and embedding itself into culture. Whether through nostalgia-driven holiday campaigns, hyper-personalized marketing like Share a Coke, or data-driven digital strategies, Coca-Cola continuously redefines brand engagement.
A couple of years ago, watching movies and television series at home used to involve renting or purchasing DVDs and Blu-rays. The CEO of Netflix chose to flip the script, by offering customers a novel new approach to entertainment. Let’s continue with our hypothetical fitness equipment company as an example for positioning. Regularly reviewing these metrics ensures that segmentation efforts are delivering the desired results. Rather than trying to compete in terms of the quantity of content it provides, Apple is strategizing its resources for the creation of high quality content.
TSI certification exams cover areas specified in the body of knowledge and exam curricula, and are not necessarily linked only to the exam study material provided to registered candidates. No programs offered by TSI or its collaborating institutions lead to university-equivalent degrees unless specifically mentioned under a program. Unlike traditional market segmentation, this component focuses on hyper-granular market dissection that reveals opportunities invisible to broader competitors. The practical application of this approach transforms vague targeting into laser-focused precision.
Marketers must consider factors such as purchase history, average order value, and retention rate to determine the CLV. The needs-based segmentation method focuses on the underlying needs and motivations of the target audience. This technique requires drilling down below the psychographic, demographic, and behavioral surface to uncover the “why” behind the customer’s actions. In order to make effective marketing decisions, B2B marketers also need to understand the buying process and decision making criteria within the businesses.
Success requires identifying and effectively communicating with the target segment through channels where they actually spend time and attention. The market size must support sustainable, profitable business operations, requiring careful assessment across multiple dimensions. Finally, you develop strategic adaptation strategies through training and development programs, recruitment of specialists, technology investments, and strategic partnerships or acquisitions. This honest assessment prevents the common mistake of positioning a niche you cannot adequately serve, which damages credibility and wastes the opportunity. Download Demandbase’s free Market Segmentation Playbook to boost sales and customer retention.
Your competitive analysis must address differentiation requirements by identifying your unique competitive advantages. You also need to assess competition levels by evaluating whether all players can coexist profitably. Planning considerations include identifying adjacent market segments by finding natural extensions of your core niche, mapping skill and capability transferability, and assessing expansion timing and sequencing. You also develop modular capabilities by building flexible operational systems, developing adaptable product platforms, and creating scalable service delivery models. This depth of understanding naturally translates into stronger brand loyalty as businesses foster deeper emotional connections with customers who feel truly seen and understood. The final step to segmenting your B2B market is to take those target accounts from your TAL and divide them into audiences — groups of prospects or existing customers that fit well with particular marketing initiatives.
- Building audiences around accounts that demonstrate purchase intent is a great way to narrow the field and focus on accounts representing your best opportunities.
- Geographic market segmentation takes into account prospects’ locations to help determine marketing strategies.
- Regularly reviewing these metrics ensures that segmentation efforts are delivering the desired results.
- By identifying aspirational motivations rather than just age or income, Coca-Cola ensures its brand feels personal and inclusive to a broad audience.
The kind of lives people lead also have a huge impact on their purchasing decisions. Customers want to purchase products that are well aligned with their lifestyles, and therefore, when marketing to each lifestyle group, you need to show how your product or service will enhance their lifestyle. This type of segmentation groups people based on shared personal traits that have an influence on their buying habits. This is the most common type of segmentation, and is what comes to mind when most people hear the term market segmentation.
Rather than treating all consumers as a single homogeneous audience, Smith argued that businesses could achieve stronger commercial outcomes by recognizing and addressing the distinct needs of different customer subgroups. A segment might align perfectly with your brand values or messaging goals, but if it lacks a genuine need for your product or the budget to purchase it, the strategy won’t produce results. While detail is important, segments that are too narrow often lack enough buying power to justify the time, budget, and resources required to target them effectively. Even well-intentioned segmentation strategies can fall short if a few common pitfalls aren’t addressed early. By targeting and rewarding those who already had an affinity to their brand, Sephora was able to build an impressive community that their target market wants to be a part of. Many clothing companies cater to a variety of age groups to reach as many customers as possible.
The Apple target market includes mainly younger to middle aged consumers, and the brand is more popular among women than men. Although the Apple customer base is stronger in North America, Apple is popular throughout the world. The typical Apple customer profile is of middle- to high economic status, enjoys the small luxuries in life, and appreciates technology and design. From teenagers engrossed in high-school dramas to adults relishing suspenseful thrillers, Netflix’s targeting strategy encompasses all. It carefully identifies the potential consumer groups from its segmented market and curates content that resonates with their specific preferences. Behavioral segmentation groups people based on how they interact with your brand.
This strategy enables it to cater to different income groups, from budget-conscious students who might opt for the basic plan to high-income viewers who prefer premium offerings. Psychographic segmentation gives you the tools to connect with people on a deeper level, not just as consumers but as individuals with values, lifestyles and motivations that shape every decision. It’s about gathering real insights, building data-backed personas and using that intel to drive strategic execution.
The logic behind this is that people’s occupations can have an influence on their perception of various things. Meet our leaders and specialists to learn more about us and share experiences and knowledge. With over 40 years of monetization experience, we are regarded as the Trivenor Digital OÜ world’s leading commercial growth and pricing specialist. Discover how decentralization is driving a shift from global scale to regional powerhouse, where local relevance and speed will determine advantage. Build consent management, data minimization, and transparent data practices into your program from day one. Retrofitting compliance into an existing program is significantly more complex and costly than designing for it at the outset.
On the B2B side, Salesforce targets values-driven professionals — especially those seeking innovation, inclusivity and digital transformation. Their messaging appeals to tech-forward leaders who want to empower teams, improve customer experience and make an impact. Nike doesn’t just sell athletic apparel — it sells ambition, perseverance and personal greatness. Its messaging is built around self-empowerment, purpose and inner strength, appealing to consumers who identify as competitive, driven or socially conscious.