To sell effectively, we need to define a target, i.e. the group of people (or companies) to whom we are going to address our offer, and a positioning (i.e. the image we want to give to our offer). To do this, we use a 3-stage approach (SCP approach): segmentation, targeting, positioning.

The first stage of the SCP process is segmentation. This involves dividing a market into groups of individuals (in a B2C market) or companies (in a B2B market). To achieve this segmentation, you need to use criteria.

Poor segmentation will inevitably lead to commercial failure (or to missing a commercial opportunity).

We’ll show you how to do it successfully. 👇🏻

Why segment?

To sell well, you can’t sell to everyone. When you want to develop an offer, you’re going to target just one part of the population, excluding another. It’s better to sell well (with a margin and with the least effort) to a smaller target than to try to sell in greater quantity but with poorer quality (less margin, more effort).

To sell well, you don’t have to sell to everyone.

Segmenting is essential because you can’t address everyone in the same way. So you need to group together individuals who have the same expectations, who will behave, consume and react to a marketing offer in the same way. This is what segmentation is all about: dividing the market into homogeneous sub-groups.

In other words, groups are defined and, within each group, individuals behave in a similar way.

For example, a company selling beard shavers will target only men over the age of 14. To do this, it has divided the market according to two criteria:

men > 14
women< 14

Considering that the reaction of these groups to the offer would be different (a child aged <14 will not be interested, we can be 90% sure of that. The same goes for a woman). We have therefore

  • segmented the market (i.e. divided it up)
  • targeted a segment (i.e. chosen a segment to which we will propose our offer).

We have therefore defined groups that will behave fairly similarly to our offer. Our target (men >14 years old), on receiving our offer (an advert, a flyer, etc.) will say to themselves « Why not? in short, they will be interested (even though they may already have a product they like, or don’t need at the moment, or don’t like our brand, etc.).

Segmenting groups of individuals in marketing
To achieve this segmentation, we use segmentation criteria:

  • Examples of B2C criteria : age, gender, location, family situation, etc.
  • Examples of B2B criteria : company size, business sector, etc.

You need to choose the right criteria.

B2C segmentation criteria

There are 3 main types of segmentation criteria used in B2C marketing:

  • Socio-demographic, geographic and economic criteria
  • Behavioural criteria
  • Desired benefit criteria

Socio-demographic, geographic and economic criteria

These are the most commonly used criteria.

Geographic criteria

Country, region, town, climate.

Example: a swimming pool or air conditioning salesperson will target the hottest regions.

Socio-demographic and economic criteria

  • gender (male / female),
  • age
  • household size,
  • family situation (single, couple, married, children),
  • religion,
  • income,
  • level of education (primary, secondary, higher, etc.)
  • occupations (blue collar, white collar, intermediate occupations, higher intellectual occupations, retired, not in the labour force).

Example : insurers and banks use these criteria extensively.

Physical criteria

Type of skin, hair, height, weight.

Example : Capel offers clothing to a specific group: tall men.

Behavioural criteria (RFM segmentation)

This involves segmenting the public on the basis of observable behaviours or actions. These criteria are widely used on the Internet, for example (e-commerce).

The most commonly used behavioural criteria are

  • user status
  • loyalty
  • role in the purchasing process (buyer, seller, consumer, prescriber),
  • quantities consumed
  • modes of consumption and situations of use.

RFM, a widely used behavioural segmentation

  • recency: when was the last purchase made?
  • frequency: how often does the customer buy products?
  • amount: what is their average basket?
The example of an IT service company
An IT services company sorts its customers according to
>> recency : have they bought in the last 12 months,
>> frequency : do they buy regularly?
>> amount : how much do they invest?

For example, they could use this segmentation to launch a promotional campaign. Probably by targeting people who haven’t bought any equipment in the last 3 years (the probability of having to buy a new tool is fairly high) and those who buy the most expensive products. The campaign will be profitable.

Advantage criteria

This is a segmentation that no longer focuses solely on the intrinsic characteristics of the consumer, but takes into account the advantage sought by the latter.

The example of mineral water

We can take the mineral water market as an example, which can be divided into three segments with three different desired benefits:

>> Health : consumers are looking for a benefit for their body: lightness, energy, better digestion: Hépart, Contrex brands, etc.
>> Pleasure : consumers are looking for organoleptic pleasure (taste, sensation of bubbles, etc.): Badoit and Vittel brands.
>> Nature/well-being : consumers are looking for a natural product: Evian, Valvert brands.

Good practice when segmenting

Segmentation should not exceed 3-4 criteria

An important key to effective segmentation is to prioritise. We generally recommend choosing between two and four segmentation criteria. If we exceed this figure, we will probably end up with ineffective over-segmentation: a sort of gas factory that is completely unusable for our business.

The example of Compte Nickel

The Nickel account is a real-time bank account, accessible to everyone, that can be opened in 5 minutes at the tobacconist’s.

The most important point is that it is accessible to everyone, regardless of income. Opening an account gives you access to a bank card, a payment card and the ability to withdraw cash. However, overdraft facilities are not permitted and no cheque book is issued. The cost of opening the account is €20.

The initial target is people with excessive debt, people who have been banned from banking, people excluded from the banking system and people on the Banque de France register. But this target quickly expanded to include other consumer groups who saw other advantages: students or foreigners living temporarily in France, for example.

The Nickel account will have 3 million customers by the end of 2022.

Segmentation must be effective

The segmentation criteria must be clear enough for an individual to belong to one segment and one segment only. Otherwise, the criteria have not been chosen correctly.

Identical behaviour must be observed within the same segment (To do this, you need to check that the chosen criterion is relevant.

Does the individual behave differently depending on whether or not it is respected ?

For example, if I send an email to a car dealership to promote large family cars, I choose to target prospects aged over 30. This is because people under 30 are very unlikely to need a family car. There are exceptions. But you have to think in terms of the market and ask yourself how 90% of people are going to behave.

You have to think in terms of the market and ask yourself how 90% of people are going to behave.

The segment must be profitable
The size of the segments must justify the cost of a marketing policy. Profitability is calculated by measuring

number of individuals in the target segment x target turnover per customer.

What is the purpose of segmentation? 🤔

Segmenting (then targeting), makes it possible to offer the same product to a large number of individuals/companies (economy of scale) and to offer different products, tailored to the needs of each group.

You can’t offer the same products to everyone, and you can’t target everyone in the same way. So we need to group together individuals who have the same expectations, who will behave, consume and react to a marketing offer in the same way. This is what segmentation is all about : dividing the market into homogeneous sub-groups.

Let’s take the example of an airline like Air France, which will offer different classes to ensure that each type of passenger is satisfied.

The idea is to group together a set of consumers with identical behaviour or similar characteristics in a given market.

The challenge is to propose the right marketing mix for each of these segments: the right product, for the right consumer, through the right distribution channel, at the right price, using the right communication.

Segmentation is particularly useful when the market is mature: when, faced with numerous competitors, the company has to choose which segments to target.

How do you set up segmentation?

You need to gather data on consumers. This may be

  • Observed data (purchase history, loyalty, average basket, etc.)
  • Data declared voluntarily in a survey
  • Probabilised data : for example, predicting a customer’s due date based on the date of pregnancy declared on a monitoring application.

These customers then need to be divided into separate groups. Customers in one group must be differentiated from customers in other groups.

Segmentation is essential. It avoids having a general product that, in trying to suit everyone, suits no-one.

The different types of segmentation

Initial market segmentation

The following segmentation method can be used for initial segmentation.

  • Absolute non-consumers
  • Relative non-consumers
  • Competitor’s customers
  • My company’s customers

The total market can be a geographical market: the French market, for example.

Absolute non-consumers

Absolute non-consumers are individuals who do not consume certain products and will never consume them, whether for ethical reasons (purchase of weapons), health reasons (allergies), religious reasons (meat consumption), ideological reasons (vegetarianism) or personal taste.

Relative non-consumers

Relative non-consumers are individuals who do not consume certain products but who might do so one day. Their current non-consumption may be due to a lack of interest in the product or a lack of purchasing power.

Competitors’ customers

Competitors’ customers consume the product in their category, but not those of my company. For example, a consumer buys a laptop but has bought it from a competitor, HP.

My company’s customers

My company’s customers are individuals (B2C) or organisations (B2B) who have already purchased one of my products.

How can I use this segmentation as a marketing manager ?

Segmentation will enable the marketing manager to deliver a message that is tailored and personalised to each segment.

Absolute non-consumers

This lack of consumption is due to obstacles, physical or ideological constraints, so trying to get these individuals to consume would be futile.

Relative non-consumers

We need to set up communication campaigns to turn them into consumers and get them to try the product. This phase will be preceded by a discovery and analysis phase to understand why these individuals are not consuming these products at the moment, and what their barriers are.

For competitors’ customers

Understand why they consume our competitors’ products, what attracts them to them or, on the contrary, what repels them from our offer.

To my company’s customers

Keeping a customer (offering promotions to thank them for their loyalty, a voucher to apologise for a mistake) costs seven times less than acquiring a new one. It is therefore essential to question current customers to find out how to satisfy them even better in the future, in order to avoid customer flight to the competition.

Resources related to segmentation

👉🏻 Find out more about our guide to targeting

👉🏻 Read our guide to creating your positioning

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