Segmentation vs Targeting

Are they the same thing? Different? We often see the terms used interchangeably, but this is incorrect. As audience experts, we know that there is a crucial distinction, one that captures the right audience development process and embraces the overall strategy for the plan. Kris Davis, VP, Client Services, Head of Strategy, breaks down the ABCs of each and how to make sure both are working harder (and smarter) for your clients. 

Segmentation is about creating a picture of the broad consumer market and identifying existing and potential customers. Think of it as a map of the market you can classify into sub-groups based on shared characteristics. The four main types of segmentation are demographic, psychographic, behavioural and geographic. You can further refine with variables like size, category spend, values, motivations, attitudes, cultural affinities or other variables relevant to your brand or category. 

Targeting derives from your segmentation work and integrates into strategy, addressing where you will play , and who you will concentrate on. This is where you bring in the brand, what it has permission to do, what it stands for, what resources you have,; your competition, what they are doing and where they are playing, and decide who you are going to go after. It could be your loyal base, a growth segment, Gen Z’s, Boomers, or wherever you can find the right opportunity. It unpacks how you might target each of these differently. A good way to help prioritize your targeting is by using a 2 x 2 matrix with different variables. Some examples could be current vs potential customers, high vs low spend, or loyal vs occasional. 

Here is a good checklist for an effective target: 

  1. Measurable – you must be able to quantify it.
  2. Addressable – you must be able to reach them.
  3. Differentiatable – they must have distinguishing characteristics.
  4. Substantial – they must be large enough and/or important enough to drive business results.

Remember, a good strategy involves trade-offs and a focus on where you can win. This applies to your targeting strategy. You can’t always target everyone, and you can rarely target everyone well. Be prepared for discussion and debate around your recommended targeting priorities.