A business can have an amazing product or service, but its marketing efforts may not be successful if the company does not understand who actually needs it. One of the most important parts of developing a marketing plan is identifying the target market. Rather than attempting to market an offering to everyone, segmentation allows marketers to divide a larger market into groups with similar characteristics, behaviors, needs, or preferences. Two tools that can be particularly useful when defining these groups are Esri Tapestry Segmentation and market research surveys.
Esri Tapestry Segmentation
One useful tool for identifying potential customers is Esri Tapestry Segmentation. Tapestry organizes U.S. households into market segments using demographic, socioeconomic, and geographic characteristics (Esri, n.d.). Marketers can use this information to develop a clearer picture of the types of consumers living within a particular market.
This type of information is valuable because demographics alone do not always provide enough information to understand a consumer. Knowing someone’s age or income can be helpful, but marketers also need to understand factors such as lifestyle, interests, behaviors, and location. Market segmentation can incorporate geographic, demographic, psychographic, behavioral, and benefit-related characteristics to identify groups of consumers who may respond similarly to an offering (Corporate Finance Institute [CFI], 2020).
For example, a business considering expansion into a new geographic area could use segmentation data to determine whether consumers in that area match its desired customer profile. A company selling a premium service may discover that one area contains more consumers who have both the purchasing power and lifestyle characteristics associated with its offering. That information could influence decisions about advertising, pricing, positioning, and even where the service should initially be offered.
Surveys and Consumer Research
Another valuable tool is conducting consumer surveys and analyzing market research data. While tools such as Tapestry can help marketers understand who consumers are, surveys can help explain what those consumers actually want and why.
Surveys can collect information about customer preferences, attitudes, purchasing behaviors, needs, price sensitivity, and problems they want a product or service to solve. Sawtooth Software (2024) explains that effective segmentation can use demographic, geographic, behavioral, psychographic, and needs-based information. The company also notes that marketers can create customer profiles using factors such as demographics, preferences, needs, price sensitivity, and behavioral characteristics.
This information can be especially useful when developing a new offering. A company may believe it understands its target consumer, but research could reveal that customers value different features than the company originally expected. For example, consumers might care more about convenience and accessibility than having the lowest possible price. That discovery could completely change how the business positions and promotes its product.
Turning Segmentation Into a Marketing Plan
These tools become even more valuable when marketers use them together. Esri Tapestry can provide information about potential consumer groups and where they are located, while surveys can provide deeper insight into their motivations, preferences, and behaviors. Together, the information can help marketers determine which segments offer the greatest potential.
Sawtooth Software (2024) explains that segmentation can influence the marketing mix, including product, price, place, and promotion. Once marketers understand their target audience, they can determine which product features to emphasize, establish an appropriate pricing strategy, choose the best distribution channels, and create promotional messages that are more likely to connect with consumers.
Ultimately, defining a target market is about more than determining basic characteristics such as age or income. Marketers need to understand who their customers are, what they value, where they can be reached, and what motivates their decisions. Using tools such as Esri Tapestry Segmentation and consumer research allows businesses to make marketing decisions based on evidence instead of assumptions. That can lead to stronger positioning, more efficient use of marketing resources, and an offering that provides meaningful value to the consumers it is intended to serve.
References
Corporate Finance Institute. (2020, June 25). Market segmentation and targeting. https://corporatefinanceinstitute.com/resources/management/market-segmentation-and-targeting/
Esri. (n.d.). Tapestry segmentation. https://doc.arcgis.com/en/esri-demographics/latest/regional-data/tapestry-segmentation.htm
Sawtooth Software. (2024, February 13). Market segmentation best practices: Tips for accurate audience identification. https://sawtoothsoftware.com/resources/blog/posts/market-segmentation-best-practices
Leave a Reply