Successful marketers don’t just tell consumers to buy a product; they use brand storytelling, data, and personalization to create appeal. Instead of issuing a command, they show consumers how purchasing will solve their problems and improve their lives.
Considering why consumers buy your product is an essential part of this process. When marketers understand customer motivations, they can deliver compelling, personally relevant messages. Needs-based segmentation is the art of speaking to different audiences based on different needs, so marketing teams can tailor content to address these nuances in motivation.
Learn more about needs-based segmentation, how to identify customer needs, and tangible steps on targeting your customer base most effectively.
What is needs-based segmentation?
Needs-based segmentation is a customer segmentation strategy focused on understanding the emotional or practical needs that drive users to purchase. This approach involves subdividing consumers into groups, known as segments, based on shared needs and then targeting these smaller audiences with tailored marketing and advertising tactics.
With needs-based segmentation, marketing teams use consumer preference data to deliver personalized messages in an appealing manner. When used effectively, this approach can improve customer satisfaction and potentially boost customer loyalty.
Example of needs-based segmentation
To understand the potential of needs-based segmentation, consider the different ways consumers can use the ingredient lye. Household lye is a common cleaning solution. Cosmetic lye is instrumental to soap-making. And food-grade lye is the secret ingredient for soft, chewy pretzels. In this scenario, customers purchasing a container of lye could be motivated by a desire to clean, craft, or bake.
With needs-based segmentation, an ecommerce supplier of lye could use this information to divide their customer base into three distinct subsets. Then, the marketing team targets each group with relevant content. This content would be an engaging way to remind your target audience to whip up a batch of pretzels for the season or get ahead of holiday demand.
For example, they might choose to send the baking customers a festive fall email series ahead of Oktoberfest. They may promote winter scent combinations and gift bundle ideas for their soap makers. And when spring cleaning rolls around, they may offer discounts for people who buy their product in bulk.
Primary types of customer segmentation
Marketing teams can group customers based on factors such as identity, location, and user engagement. Learn about the four main types of customer segmentation and how a needs-based approach fits into the segmentation landscape. Businesses may use one approach or combine multiple complementary segmentation strategies:
Geographic segmentation
Geographic segmentation groups customers based on physical location. This approach could involve targeting customers in a specific state, region, or time zone. Geographic segmentation can be a good fit for businesses with specific regional offerings. For example, during winter months, an outdoor apparel company could promote snow pants and parkas to customers in northern Minnesota while serving southern Florida customers with lightweight jackets and swimwear.
Demographic segmentation
This approach segments the audience based on statistical population data. Examples of demographic customer segments include age, income level, education level, household size, and ethnicity. Demographic segmentation may be a good choice for businesses with a large, diverse customer base.
Attitudinal segmentation
Attitudinal segmentation—sometimes referred to as psychographic segmentation—centers around the audience’s emotions, beliefs, and lifestyle. Needs-based segmentation falls under this umbrella. Other related segmentation strategies include interest-based, political affiliation, and personal identity. The attitudinal approach involves emphasizing different selling points to appeal to different emotional needs.
Behavioral segmentation
Behavioral segmentation uses consumer data to form segments based on digital engagement. Commonly used behavioral data includes spending history, browsing behavior (mobile versus desktop), and website activity. Combining behavioral segmentation with another strategy, such as demographic segmentation, can help businesses identify the most effective distribution channels for reaching specific user groups.
How to implement needs-based segmentation
- Analyze consumer needs
- Integrate customer data
- Define segments
- Develop targeting strategies
- Track and refine
Trinity Mouzon Wofford, cofounder of Golde functional wellness beverages, used needs-based market segmentation to give her company a competitive advantage. Let’s dive into some of her best tips on needs-based segmentation strategies, how to segment customers based on consumer research, and how to develop tailored campaigns:
1. Analyze consumer needs
Identifying customer needs requires more than collecting simple data points; it requires deep qualitative analysis. Surveys, interviews, and customer feedback forms are valuable sources of qualitative data.
Trinity uses several of these techniques to inform segmentation at Golde. “Surveys are the best for getting a nice chunk of information, because you can really match things up,” she explains. “We use that a lot for things, but I also really like to do customer interviews to walk through the customer journey.”
Trinity recommends using interviews to ask consumers exactly why they bought your product, how they use it, and what it helped them accomplish. “That way you get the story and the why,” she says. “With the survey, you get very good, hard data points, but oftentimes I find that the richest insights come from interviews.” These help you identify consumer needs by looking at themes, such as common pain points, in customer responses.
2. Integrate customer data
Segmentation uses data to understand and predict customer behavior. Effective segmentation requires high-quality data, often with several different types of data stored across multiple platforms. This process works best by establishing a centralized data management system—such as a customer data platform, data warehouse, or customer relationship management (CRM) system.
A small business, for example, may access purchase history data in a point-of-sale (POS) platform, demographic info within a CRM, and engagement statistics from a web analytics platform. Unifying all of your data in one place, applying a consistent format, and eliminating any duplicate datasets ensures a more accurate interpretation for you to act on.
3. Define segments
Apply your preferred model to process the data and group customers into segments. Then, create a buyer persona for each needs-based segment, which includes an in-depth description of their motivations for purchasing, their wants, values, and everyday problems. This information will help teams craft relevant messaging.
Over time, Trinity discovered that consumers purchased her products for different reasons than she had first expected. “We learned that most of our customers do not identify as ’wellness warriors,’” she explains. “We found one of the big reasons why customers use our products, beyond the fact that they are looking for the benefit, is that they love the ritual.” Matcha did not just represent antioxidant superpowers; it represented meditative mornings and a sense of peace.
4. Develop targeting strategies
Consider how to target different segments with marketing strategies designed for their unique needs. This can involve tailoring content and trying different distribution techniques—for example, some segments may be very active on social media, while others stick to email. Personalizing elements such as delivery time, distribution platform, media format, and creative assets can help brands reach the right customers with the right message at the right time.
Trinity started by honing in on the emotional elements of the matcha-making experience to best resonate with her customers. She explains, “What really differentiates our brand offering, I think, is that you end up creating this very personal ritual experience [about taking time for yourself].” She used this information to develop self-care-inspired creative messaging, which she found to be very impactful.
5. Track and refine
Keep track of campaign performance for each segment. Maintain up-to-date customer profiles by consistently refreshing data. Look for opportunities to enrich buyer personas or adjust segments based on new customer insights.
The segmentation process at Golde naturally grew more sophisticated as the team evolved. After their initial research, they doubled down on their efforts. In Trinity’s words, “We got a little bit more data-driven. We said, ’Let’s dig into this with targeted customer surveys and customer interviews and let’s really understand where this product fits into this person’s routine.’” Trinity’s deepened understanding of the nuances within her target audience gave her the most important realization of all: “Why they keep choosing us.”
Needs-based segmentation FAQ
What is needs-based segmentation?
Needs-based segmentation is a type of customer segmentation that focuses on the emotional need or psychological motivation that drives customers to purchase. This approach involves grouping similar customers together into defined audience segments and targeting them with personalized advertising and marketing messages.
What is the difference between needs-based and value-based segmentation strategies?
Needs-based segmentation is concerned with both practical and emotional needs, which can encompass morals, beliefs, and social convictions. This contrasts with value-based segmentation, which is primarily focused on potential financial value. This approach segments customers based on the value you can expect them to bring into your business, on their willingness to spend, and on the potential long- or short-term financial returns for your company.
Which is an example of needs-based targeting?
To practice needs-based segmentation, a toothpaste company could subdivide consumers based on their primary dental hygiene concern. The company might form one customer segment for users interested in cavity prevention and a second for those focused on whitening. The marketing team could then target customers in each group with personalized communications.
What are the four types of segmentation?
The four primary types of customer segmentation are geographic, attitudinal or psychographic, demographic, and behavioral. These methods use different types of consumer information to understand purchasing behavior and inform marketing efforts. Geographic segmentation is concerned with physical location, psychographic segmentation focuses on what customers feel and believe, demographic segmentation prioritizes population data, and behavioral segmentation is based on consumer actions.
