Doing Market Segmentation the Right Way - A Comprehensive Guide

Here’s the life story of every second app in the world of mCommerce -

1. App X is a customer-focused eCommerce mobile app.
2. It has a wide variety of products.
3. It enjoys thousands of downloads every month.
4. The owners even run massive sales and marketing campaigns targeting all their target audiences in one go.
5. But it had very few orders!

So, where did app X go wrong?

The problem lies in point number 4. The owners had a single campaign and a single message for all their customers.

They wanted to appeal to everyone and created a one-size-fits-all campaign. And expected that everyone would buy from them.

A rookie mistake.  

A one-size-fits-all approach never works in any business. The mobile app you are going to build is no different. You need to tailor your messages to focus on every different type of user you plan on targeting.

This is where market segmentation helps.

What is Market Segmentation?

Market segmentation involves dividing your target audience into groups and targeting them with a more personalized approach. Segmentation can be done based on a variety of criteria. Here are they -

1. Demographic segmentation - This is probably the simplest and most common type of segmentation out there. In this, you segregate customers based on their age, occupation, gender, income, etc. For instance, your app might be selling different cosmetic products for men and women. A single campaign targeting both of them might not be very effective.
   
2. Geographic segmentation - This can be considered a subset of demographic segmentation. In this, you segregate customers based on their location, culture, climatic preferences, etc. For instance, if you are selling sports goods and your primary target audience is in the United Kingdom, you can target customers through different cricket campaigns. But baseball might work better in the USA.
   
3. Psychographic segmentation - This is also called lifestyle segmentation. In this, you segment customers based on parameters like personality traits, interests, beliefs, values, attitudes, etc. These parameters are harder to determine than demographics but can be very useful to improve sales. For example, if your target audience is environmentally conscious, it is helpful to promote ‘how eco-friendly your products and practices are’ to them.
   
4. Behavioral segmentation - This is becoming increasingly popular among businesses of all sizes. By tracking customer buying patterns and website behavior, you can customize recommendations and discounts to these audiences. For example, if you notice most of your app’s visitors are active on weekends, then you can give weekday discounts to use your app on weekdays.
   

Now that you know what market segmentation is, let us go through some battle-tested tips to get your market segmentation right while building your mobile app.

4 Tips to nail your market segmentation while building an app

Research your existing customers

If you already have a business(through other channels like the web), then you already have a set of existing customers. Understand them thoroughly. Send them emails asking for information or even visit them directly to understand more about them. Some of the questions you need to ask them -

• What is your age?
• What is your education level?
• Where do you live?
• What is your profession?
• What is your household income?
• What is your household size?
  

This process will help you identify trends that exist within your current customer base. You can even use analytics tools like Google Analytics to find out more details about them. Use the information you collected to create different segments.

Note:  If interviewing customers is tough, simply ask your sales team. They spend a lot of time with your customers and know a lot of useful information about them.

Have an optimal number of segments

It is so critical to have the right number of market segments for your app. Too few, you will end up focusing on a very small set of customers. This, in turn, can take a toll on your revenue. Too many can also turn counter-effective; managing so many customer segments and personalizing the experience for all will never be easy. You need to find the sweet spot.

More importantly, you need to ensure that all the segments are unique. For instance, having a segment called women and another one called working women might not be very useful while crafting personalized experiences.

Choose the right criteria

At the beginning of the post, you had seen 4 types of criteria to carry out market segmentation, viz. Demographic, Geographic, Behavioral, and Psychographic. It is obviously impossible to select all the criteria to determine your market segments. Instead, choose the ones that are closely related to your buyer’s journey and the ones that could affect the purchasing decision.

For instance, say you are building an app that sells swimwear. Now segmenting your market by gender makes total sense in this scenario. However, segmenting by gender might not be the best option if you plan to sell air conditioners.

Name the segments correctly and at the right time

Never name the segment unless and until you fully understand the differentiators. For example, imagine that you are selling furniture through your app, and you have a segment called millennials. Now it might tell you the age of this segment, but not their buying patterns. Instead, if you name the segment as ‘Millenials who shop on weekends, it might help to target them better. And remember - once you name a segment, it tends to stick.

Wrapping Up

Market segmentation has a vital role to play in your app-building process. It helps to understand your users better and offers personalized services and tailor-made messages when they land in your app. You will no longer waste money or time on ineffective marketing strategies.

And if you have already completed the market segmentation process and looking to build an app, then you can consider Vajro. We will help you build your app in just a few hours, that too, without writing a single piece of code. Sounds incredible, right?

Book a demo with us to see how that’s possible.