So far we have covered geographic segmentation and needs-based segmentation. As we move through our series on the types of segmentation, this post will cover demographic and firmographic segmentation – in short, who are your customers? I’m not being any more technical than understanding which consumers and businesses your targets are. Let's take a look at both.
Demographic Segmentation – Consumers
Companies that count consumers as their primary customers should already know this. Before you can target customers, you have to know who they are. Some key demographics:
- Family structure (married/single, kids/no kids, etc.)
Some of these are likely slam dunks depending on your product. In most cases, however, there are decisions to be made that might not be so obvious:
- Gender: Unless you are selling product targeted toward a specific gender, you still need to know the likelihood of each gender to consume your product. Understanding likely volumes of women and men will help you target sales and marketing messages to the correct audience.
- Age: This one can be tricky, because even if your product is targeted toward use with a specific market, caregivers and family members may also be a target. Baby products are geared toward a younger audience (so-called child-bearing years). Products for geriatrics might be targeted both to older people and those who care for them. You have to understand both the intended audience and the potential caregivers to this audience to market effectively.
- Income: Is your product a premium product that will only appeal to higher income individuals? If it is intended to be universal, you need to know what income group is most likely to want to buy your product. There may not be a defined group (or groups), but there may be. If you don’t know you might be missing an important piece of the puzzle.
- Profession: Are there specific job types that might benefit from your product? Or perhaps a specific industry? You need to validate these assumptions, both among those who are your hypothesized targets and other groups who are not. You need to understand the size of the group to properly adjust expectations. You may also be missing a group that you had not considered before.
- Family structure: Married people may respond to certain products better than single people, and vice versa. Obviously, having kids plays a huge role in purchase habits. It is important to know, however, how important your product is to those who may not be your primary target.
Firmographic Segmentation – Businesses
If your company markets to businesses, there is a separate set of data that you need to understand. Some of these are related to demographics, but some are unique and can vary greatly depending on the industry or industries you work within.
For example, we have a robust practice in the dental field. Our clients market to dental practitioners, competing with numerous companies for a piece of their adhesive or filler business. They need to understand:
- The size of the practice (larger practices tend to purchase more and more often)
- Geographics (some companies own the market in a part of the country, making competition tougher)
- Technical or product sophistication of the dentist
- The primary influencer in the practice (dentist, hygienist, etc.)
- Current usage rates and reasons for use/non-use
- Age of the dentist (for newer products – see #3 above)
The firmographics that you need to know will vary greatly depending on your product. For every product, and every company that makes it, other information is more important to understand. The key, however, is to include as many pieces as you can to either validate your current hypothesis or open new revenue doors.
Whether You Think You Already Know or Don’t, You Need to Ask
The key to all of this, no matter how elementary it seems, is that it is very important to quantify your customers using either demographics or firmographics (or both). A few things may happen:
- You will verify your hypotheses about your customers.
- You will quantify who they are and how to reach them.
- You may uncover other customer groups that you did not think existed.
- You may narrow your marketing to more specific targets.
There are myriad other possible outcomes as well. Either way, you will have more information from which to market effectively and will give your sales people additional information from which to target better. The key is to ask questions, including as many demographics/firmographic questions as you can so that you can effectively market to your customers.
We Know How to Ask the Right Questions
Actionable Research has been performing segmentation research for the past 2 decades. We can help you define your customer groups and give you the necessary information to market effectively. Give us a call and let us help!