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The 7 rules of creating market segments

IBF Entrepreneur Online –

August 10, 2019

In order to make better use of your marketing dollars, we recommend that you narrow down your market into specific customer groups (anywhere from one to four groups) that will be most profitable and accessible to target.

Our rules for creating customer segments? Glad you asked. Essentially, your segments should be basically different from one another, but members of each segment should be basically the same.

Understanding your target market

When visualizing your target market, consider the following main elements:

Demographics – Age, income, gender, education, family status, income level, occupation, social class, ethnicity.
Psychographics – Lifestyle, personalities, attitudes, opinions, values.
Geographics – Cultural, climate, regional and national differences, population density, population growth rate.
Behaviours – Buying patterns, usage rate, price sensitivity, brand loyalty, benefits wanted.

The 7 rules of customer segmentation

Rule #1 Each segment should be measurable; you should know how many potential customers you have.
Rule #2 Each segment should be large enough to be profitable.
Rule #3 Each segment should be basically different from other segments; they should be unique.
Rule #4 Members of a segment should have common, unsatisfied needs.
Rule #5 Each segment should have strong growth potential.
Rule #6 Each segment should be suited to your company’s goals and capabilities.
Rule #7 Each segment should be accessible through communication and distribution channels; you have to be able to reach them with your message.

Source: GoForth Institute

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