Marketing segmentation is one of the more prominent strategies and concepts within the marketing world. Businesses realize the importance of promoting and advertising products in a way that only the most relevant audiences are targeted and so in turn, it allows them to meet the demands and expectations of each segmented group of the market crowd individually.
This way the company spends its resources and time sufficiently and the marketing team can effectively develop different strategies and plans for the groups that vary based on the defined qualities and characteristics.
In a digital environment, this strategy is ever so relevant as huge pools of potential consumers from distinct cultural, geographical and financial backgrounds tend to browse online for retail services and other areas of e-commerce. Thanks to the flexibility and the technology at a display on a digital platform, online businesses can capitalize on this strategy further by tweaking web designs and incorporating elements that speak out to every group differently.
Below, we’ll be delving deeper into how marketing segmentation works in the context of the internet and what makes this approach such a crucial aspect of e-commerce.
How does marketing segmentation work in an online environment?
Grouping individuals that share a common interest but belong in certain categories by default or determined, later on, retailers and business-related firms can look at each segment differently with their marketing ‘eye’.
Generally, internet traffic is segmented based on broad categories like geographic (locale and culture), demographic (age and gender), and social status (student, employee, married man etc). Some of the elements of such a strategy, shall we say that of a ‘micro-segmentation’, are reflected on a web page of an online retailer as well should you pay close attention.
To demonstrate the example, let’s take a look at the homepage of fashion e-commerce brand, Offer Factor.
The first section of the page gives you two valuable insights: First, the option to change currency to your desired one is accessible via the drop-down menu on the top-left corner. This already segments users into those working with USD and those leaning towards Euro for their purchases.
The sub-sections or sub-categories of the web also subtly segment audiences. The ‘Men’, ‘Women’ and ‘Kids’ sections already define three distinct groups of individuals that comprise of products only aimed at them specifically.
Scrolling down the page, we have three more segments, which this time doesn’t deal with genders, but rather three broad categories corresponding to three pieces of apparel: Footwear, Outerwear, and bottom wear. This can help the platform analyze which product categories attract more visitors.
Finally, we’ve got the last section of the homepage and again, we can learn two lessons of how micro-segmentation is present subtly on a webpage. The existence of social media icons for Facebook, Twitter, Instagram, and Pinterest, among other things, gives an idea to the analytics team at OfferFactor which social networking platform is the most popular destination for their own page.
Since these icons will redirect to OfferFactor’s existing pages on the social media sites, traffic can be monitored and thus segments can be created favoring the one which brings in most visitors.
Lastly, thanks to the possibility of six payment methods, purchases secured from each transaction channel can be examined so as to segment the customers accordingly. For example, PayPal users might be spending more, so it’s viable to give them priority when marketing products and rolling out loyalty-program centric goodies like vouchers and deals.
An online, large-scale retailer that covers product from all areas and not just fashion has much more categories to work with. Take Target’s example:
This will create even more varied ways for users to browse the web and thus redirect traffic.
Generally, the more sections or micro-segments there are on the web, the longer a user will stay around to check the different parts of the web especially if they are surfing. This can help companies like Target to monitor the time users spend in each category and which categories see the highest conversion rates.
Over the top of the page, an interesting three-way navigation structure is also a viable segmenting strategy which tells the analytics team what are users most interested in.
If deals are what attract the most traffic, then the marketing team will keep in mind the more lucrative and profitable option when devising their strategies for brand awareness and luring in new customers.
In such a way, e-commerce brands are always collecting data and monitoring user behavior and patterns, to help their marketing team distinguish the various segments they can end up making and the priority they can attribute to each group.
Why segment the online market? – Discussing the significance of such a strategy
If we had one word to describe the essence or the purpose of such a strategy, the one thing that it should aim for, it would be ‘personalization’.
For the consumers, they don’t see numbers, values, profits or ROIs attached to the products or services, but they just ask themselves: ‘why should I buy this product?’ or ‘why is this service aimed or tailored for me?’
This notion of being a ‘special’ customer goes a long way and very much determines how long the consumer wishes to associate himself with the brand and the number of purchases he makes.
The whole effort is reflected in important statistics as well, thanks to these numbers that we have from a survey hosted by Evergage. The platform surveyed 300 marketing professionals across 19 different industries.
- Conversion rates grew about 63%.
- There was an overall increase of 61% in customer experience.
- Engagement with visitors boosted by 57%.
Furthermore, 96% of the 300 marketers concurred with the fact that personalization plays a key role in building healthy customer relationships. Additionally, Harvard Business Review shared an important statistic that the Return-on-investment is augmented up to 8 times as much as before.
Thus, personalizing the user experience ultimately leads to what businesses strive for i.e. ensuring customer satisfaction. When you’ve made them feel ‘special’, it’s highly likely they will hold some sense of loyalty and respect for your brand on a long-term basis.
On the business side of things, it’s about discovering the needs of the customers and devising the marketing strategies accordingly. The focus of the marketing team can be divided according to these segmented groups prioritizing from groups with higher prospects to ones with lower potential of sales.
Moreover, marketing segmentation not only allows to redirect the attention of the marketing team to higher priority groups but both budget and time can be allocated accordingly in a smart manner increasing profitability all around.
Segmenting your market in an online environment remains an essential aspect of the bigger plans of an e-commerce platform which aims to communicate only the most relevant service to any user, and in the process, making it feel as personalized and ‘special’ for the consumer for long-term business relationships.
For the business, this presents opportunities to prioritize resources including capital, time and effort of the marketing team, so that the ‘big players’ among the consumers are retained and the potential ones are attracted via a strategy that always meets their expectations.
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