Whether you’re selling toothpaste or museum memberships you need to balance brand/product differentiation and segmentation strategies. They are complementary and interdependent strategies and can work together to create a clear fit between your organization and your market. But they are different.
Brand or product differentiation is about communicating what makes your organization, cause, or services unique and the benefits they offer that make them stand out from your competition. Essentially a “better or different than” strategy. Differentiation can be based on various attributes relevant to your category like the art or design focus, acttvities, hours of operation, fees or costs, your cause or those you serve. The goal is to create a value proposition that appeals to your target market.
Marketing segmentation is the process of dividing a broad consumer or business market, normally consisting of existing and potential customers into sub-groups based on shared characteristics. The goal is to get the largest possible group with homogeneous attributes. Segments should be created from research and should reflect the attributes of your particular market; so, segments could be based on demographics [education, income, age, gender] common interests, lifestyles, or psychographics.
The overall aim of segmentation is to identify high-yield segments: thos those that are likely to be the most profitable or offer you the most growth potential. It could be high net worth individuals, individuals identified as most passionate about your cause, or age or generational segments of future growth.
The difference between brand/product differentiation and market segmentation is that the former focuses on the supply side, while market segmentation focuses on the demand side. Essentially, brand/product differentiation is about what you offer to the market while market segmentation is about who you offer it to.
It’s important that your segmentation be based on objective, professional-designed and conducted research. If your starting point is your assumption of current member demographics and psychographics every decision thereafter could be flawed. Let the market define themselves and their interests based on the design of your research, not your assumptions. Your current members or donors can serve as a proxy for future members and donors.
Market segmentation can also provide a unique set of target market descriptors or labels that act as shorthand in your internal discussions. But, more importantly they are a crucial ingredient in creating customized, personalized communication, and that is the key to incremental donation and membership growth.
Contact Renee Miller at The Miller Group for more ideas on how to grow your membership or donor base through segmented communications.