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Aloysius Boh Mar 15, 2022 1:09:18 PM 3 min read

What is NOT market segmentation?

Proper market segmentation is an important skill in marketing, but it can also be an abstract exercise — so let’s rewind time a little.

You are in high school, and you lay eyes on the most attractive person ever. You want to attract the attention of this person at all costs, and you start putting a plan into action. You notice which classroom they go to, which classmates in that classroom appear to be their good friends, what clothes they are wearing, and so forth.

About 10 minutes before lunchtime, you take the longer way to the school canteen: a purposeful detour whereby you stroll past your crush's classroom. As you approach the classroom, you slow down to eavesdrop on the nascent chatter — but you fail to catch their name. You kneel to untie and re-tie your shoelaces as slowly as possible. Your crush finally exits the classroom with some classmates (who all happen to be exactly your type). You stand up to follow, trailing behind by about two meters. You prick up your ears when they mention the word “Instagram.” By chance, they are talking about following one another on Instagram — you are almost at your goal. Finally, you overhear an Instagram handle. You check that Instagram profile on your smartphone, and note with a mental sigh of relief that the stated name reflects an actual person's name. Thus, your endeavour into market research is a success!

Four Types of Market SegmentationSegmentation

Traditionally, market segmentation (especially as we understand it in B2C marketing) is an abstract exercise. It is what happens before you actually target people with advertisements. Like a teenager trying to learn about their crush, you divide all possible customers into groups based on variables: age, gender, hobby, lifestyle, country, city, recent purchases, time-on-page, etc. Each group is structured around a combination of such variables, with the group’s members — your hypothetical customers — having their membership determined by whether or not they fit those variables. Such a group is a market segment: a top-down classification of hypothetical customers.

Four common types of market segmentation in B2C are demographic, geographic, psychographic, and behavioral. These mental constructs apply to hypothetical people whom you imagine to be customers that are hiding somewhere in the world, waiting to be found through targeted advertising.

While these segmentation principles can improve targeting for B2C marketing, they can simply be ineffective when applied directly to the B2B world. Because if you're targeting the right person at the wrong company, then you're still targeting the wrong person.

So, what is not market segmentation? Or let's rephrase the question in a normative way:

What should market segmentation be for B2B?

B2B marketing is a different world; so your approach needs to be different to thrive. Like the (creepy) high-school scenario, you should start from a tangible and very specific place: concrete data. First, you must find your Ideal Customer Profile (ICP). By identifying the right account-level segmentation first, you can then focus your efforts on the right contacts or personas in those accounts.

This approach is known as Account-Based Marketing (ABM): a B2B go-to-market strategy that inverts the pyramid of the traditional marketing/sales funnel. By starting with identification of specific companies (i.e. accounts) that would be high-value customers, ABM implementers stand on solid ground for their eventual courting of those deep-pocketed, ideal clients.

Following identification, there would be B2B desk research into the major decision-makers at those companies. Here, LinkedIn is a good source of publicly available information on those decision-makers. Assuming that these people keep their LinkedIn profiles up-to-date and publicly visible, you would have the informative means to target them on the platform with thrifty yet telepathic LinkedIn advertising campaigns. By prioritizing and pursuing important people at important companies, you optimize the sales potential of your business product or service.

At Ocean.io, we think traditional market segmentation is dead: The groundwork it lays for B2B targeting is too general for reaping high-quality conversions in a predictable and scalable way. Instead, we use advanced algorithms that classify companies based on their own public descriptions on their websites. Resultantly, our AI-powered data platform empowers you to swim against the tide with an ABM mindset, and then harpoon big fish with razor-sharp targeting.

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Aloysius Boh

Having his feet on the ground, Aloysius loves diving into the sea of information — past schools of fishy facts — to get to the bottom of things, and unearth pearls of wisdom.