Business owners want to stand out from the competition, and in order to do so, they are at the whim of the consumer who either finds their product desirable & newsworthy or sends it on its way to be discontinued by not liking it. While this stands as the most basic idea of how businesses thrive or shut down, business owners know there is more information that has to be looked over, and herein comes the concept of customer segmentation.

Customer segmentation is the industry speak for a business breaking down the make-up of its customer base into categories that would most likely positively or negatively impact a business. By further distinguishing these categories, businesses, in theory, have decidedly more distinct data by which to mold their product & presentation so as to maximize sales.

For example, let us say an emerging grocery store chain chose an Austin-based advertising agency to ascertain the likelihood of success near Austin, TX. The agency in question would embark on a journey to discern the grocery-related habits of Austin residents. Do Austin residents prefer farm-to-market groceries? Are they more prone to travel certain distances to the grocery store for certain produce? Do Austin-area residents have an average grocery budget that falls in line with this new store’s prices? The information collected proves vital to the grocery store owners as it would give them better perspective on whether opening a store in the are would be beneficial, and if so, they’d have a better idea how certain products & pricing would be welcomed by potential customers.

Customer segmentation, it seems, gives companies an advantage because when you have massive amounts of data broken into digestible portions, you can best look at what may work from a strategy standpoint. There is one particular question that needs to be asked – why does this matter to your business? It breaks down, in simple terms, to money. All businesses want every dollar they invest to matter. Your marketing budget, large or small, has to be on the mark often, and if you can actually pinpoint specific audiences with your message, your marketing is taking less of a “shotgun” approach.

Customer segmentation also needs to identify marketing targets that are dynamic and change with the passage of time & trends. This is harder because it can come across as the equivalent to predicting the future. Then again, if your business targets its advertising toward a single group, this would be short-sighted. Your business has to manage how a customer can be reached in both the short- and long-term.

Customer segmentation is a vital component of an effective advertising & marketing campaign. All businesses, no matter the size, want as many advantages as possible because knowing how best to approach your advertising & marketing campaign well likely leads to better ways of reaching your customer base. This, in turn, means you have a better chance of actually staying in business, and that is priority number one.