Segmentation based on demographics (B2C) or so-called “business” criteria (B2B) is no longer sufficient. Behavioral segmentation is out of the question if you can’t outline the context to support your user actions. According to Altimeter’s report, traditional segmentation methods have been replaced by hybrid ones that consider customer motives and context, online behavior, and purchase history.
Segmentation based on age, gender, and location is insufficient. You can’t improve your product or its performance if you only know a 25-year-old Mary purchases it. She could work as a customer service representative or a marketer at a language school. She could look into live chat opportunities (conversation history, channels, notes, and agent templates) or lead generation and qualification tools.
Jobs to be Done is a popular idea. Companies as diverse as Twitter, Nestlé, Clorox, and Cisco have used the theory to increase customer-centricity. This development is exciting given that I co-wrote one of the leading books on the subject. However, I’m disappointed to see how people struggle to use the market segmentation framework. They tend to oversimplify market segmentation, define segments around universally important jobs, or frame the analysis from the wrong starting points (e.g., what people are buying today). There is a far superior method.
For market segmentation, Jobs to be Done can be used as follows:
Determine how you intend to use the segmentation
To create new card types and loyalty programs to attract high-spending cardholders.
Identify your independent and dependent variables (i.e., the causation you want to investigate)
• Dependent variables – credit card spending, interest in loyalty programs
• Independent variables – Customer tasks to be completed and contexts with a robust statistical relationship to the dependent variables
Undertake The Jobs-Based Analysis
Context – the significance of jobs varies greatly depending on the context. In general, three contexts were meaningful. Some high spenders wanted to live well, as evidenced by research interviews and the types of stores they frequented. Another significant group was business travelers, who spent disproportionately in a few travel-related categories.
Jobs to be Done – Of course, the people who lived well cared about many things, but the quest for prestige and the need to feel confident in purchases were fundamental to them. Business travelers prioritized quick resolution and making the most of their time at home when their travel plans went awry. Small business owners often spent less time traveling but constantly worked and needed ways to relieve the stress of their responsibilities.
Determine which variables are helpful based on having enough data
You haven’t included the dozens of other variables we considered because a short piece like this requires simplicity. In practice, you’ll have to deal with a lot of variables. Consider what is truly important.
Develop a method for clearly framing the market
Determine the implications –
It had a significant impact on Jobs, and those Jobs directly impacted product definition. As a result, the segments can be defined in terms of contextual dimensions. This isn’t always the case. In other cases, a wide range of contexts may be related to a small set of very different Jobs to be Done, in which case those Jobs should take precedence. In this case, the context-based segments have specific product and loyalty program feature requirements based on their Jobs to be Done.
How to market analysis work
A company divides the target market into segments based on various criteria in market segmentation analysis. These criteria could include, among other things, consumer characteristics or preferences in products and services.
Businesses can more easily monitor the market once it has been segmented. They can quickly identify different types of consumers and assess their purchasing habits. Companies will also find it much easier to identify trends based on these segments and observations.
As a result, they can better tailor their products, services, and marketing strategies to their target market.
Demographic Segmentation
Age, gender, household income, education, occupation, family size, and ethnicity are considered in this segmentation type. Customer segmentation is a fundamental marketing strategy. Customers are first influenced by their demographic background, followed by other factors.
A female college student of 18 years old may have very different needs than a 40-year-old male employee. Women will be more interested in makeup and other beauty products than men. Athletes are more likely than teachers to purchase sports equipment. A family van would appeal more to a middle-class family than a luxury car.
Demographic segmentation enables businesses to understand the fundamental factors that shape consumer demands.
Geographic segmentation
Geographically grouping customers entails determining where they live and understanding their corresponding needs.
A customer from a tropical country would not be interested in purchasing an air conditioner with heating capabilities. People who live near the beach will buy more surfing equipment than those who live in mountainous areas; using this type of segmentation, businesses can reasonably predict whether their products or services will be successful enough given the current environmental factors.
Psychographic segmentation
This focuses on the behavioral characteristics that define consumer purchasing habits. Lifestyle, interests, personality traits, attitudes, and values are all considered in this type of segmentation.
Psychographic segmentation can be complex because these orientations are not readily apparent. Regardless, it is a primary interest in businesses that cater to lifestyles, such as those in the health and fitness industry. Identifying the types of people who are more likely to sign up for fitness programs will allow them to direct their promotional efforts more effectively.
This type of segmentation also attempts to determine the consumer’s motivation for purchasing a product or service. It will be helpful for tourism companies, for example, to understand the purpose of a customer.
Price segmentation
Under the income category, price segmentation is an offshoot of demographic segmentation. It delves deeper into a person’s income.
Those with higher personal incomes are more likely to purchase luxury items and engage in pricey recreational activities such as dining at high-end restaurants and attending concerts. On the other hand, those with a lower income will be more practical in their purchases and avoid expensive hobbies.
Businesses can determine which customers will likely use their products and services by determining their ability and willingness to pay.
Time segmentation
Although less common than other types, time segmentation can be highly effective in some cases. During the holidays, for example, stores can open earlier and close later because more people are likely to visit and buy.
Businesses can also provide seasonal products and services. During the holiday season, one example is selling greeting cards and giving gift-wrapping services. Travel agencies can also capitalize on school vacation seasons such as summer and winter breaks by expanding their travel destinations.
Conclusion
Your prospective clients are all very different. They differ not only by age/gender/location (B2C) or business segment/company size/traffic/revenues (B2B); the distinction is more significant:
They hire your product to solve different problems; they all live in different contexts; they are looking for different things; they have different purchasing power, and some will take more time than others.
It is not a good idea to speak to your customers similarly. They all have their quirks and issues. Segmentation allows you to identify shared characteristics, group users into segments, and personalize communication.
You should be cautious because your competitors are already segmenting their customers. According to Altimeter’s research, only 2% of businesses do not segment their customers.