Understanding Target Market Segmentation

2 June, 2016

Target market segmentation is important for entertainment companies to consider and take into account when making strategic decsions, to ensure that they truly stand out in today’s digital ecosystem.

Do you know your customers? More importantly, do you know who the best customers for your products or services are? Do you understand the demographic breakdown (such as age, gender, geography, income and education) of your target audience? How about their lifestyle (such as personal preferences, hobbies, cultural practices and political beliefs)?

With the emerging popularity of social media, the maxim “know your customers” has become paramount. After all, social platforms are all about people. Luckily, now it is possible to know more than just the top line product’s buzz. Demographics and lifestyle insights allow companies to find out more and actually get closer to the people behind this buzz. Big or small, companies want to know more about their target audience in order to engage the best customers for them.

Broadly speaking, knowing your target market can help companies in three ways: first, it can help improve a product or services; second, this information can be extremely useful to launch effective marketing and promotion campaigns; and third, it can help companies expand their customer base.


Target market segmentation can be based on features belonging to one of the following two categories:

Demographic Segmentation

It is well understood that customers’ preferences do vary according to their age, gender and background. Demographic analysis requires the use of data science tools to measure the dimensions and dynamics of customers’ universe. Demographics also involve tangible information about customers individually or collectively as a segment. Demographic indicators include age, gender, marital status, size of households, number of kids, occupation, income level, ethnic Identity, education, geographic location and so forth. Getting demographic data might be easy for some companies but interpreting the demographic information in a meaningful way and utilizing it to go hand-in-hand with business decisions is generally considered as the “missing piece” of the puzzle.

Lifestyle Segmentation

Lifestyle information takes the understanding of target market a step further. Essentially, the way people live affects their preferences. Lifestyle information can be helpful to interpret the impact of a customer segment’s interests, opinions and activities on the choices relating to spending time and money on various products or services including over-the-top (OTT) streaming.

Interestingly, lifestyle information includes those intangible traits that make customers unique. There are various types of lifestyle indicators such as

  • Psychographics – linked to a personality and emotional behaviour of customers
  • Social/cultural practices – refers to recreational preferences of customers, their hobbies, vacation preferences, entertainment and other out-of-work activities
  • Beliefs and values – indicate cultural, political, religious and national beliefs and values of customers

Demographic information defines well-bounded bins for customers. Lifestyle information adds another level of granularity to the customers’ segmentation. Consider for instance that Jason and Flavio are two US-based TV viewers belonging to a demographic bracket Male [35-44]. This information tells little about their cultural background. However, the fact the Flavio is a binge watcher of Spanish content makes him unique from Jason’s preferences, and points to the importance of cultural background.

Lifestyle segmentation can also be beneficial in understanding the reasons behind the changes in customers’ preferences. One brand can be relevant to a variety of customers but they could be interested in or like to talk about completely different things. Capturing lifestyle choices of different tribes could be extremely useful in understanding their true needs.

Why Market Segmentation is useful?

  • Not all customers have the same product experience. According to market research, about 20 percent of your customers produce 80 percent of your sales. Analyzing demographics and lifestyles of this 20 percent customers’ segment can help companies save time and expand their customer base via advertising to people with similar traits.
  • Market segmentation can be helpful in driving growth. It could be based on a number of demographic or lifestyle factors such as age, gender or family size. Each segment will have different needs and is likely to respond to different stimuli and campaign approach. Ideally, companies should aim to customize their campaigns so they resonate with the needs of each unique segment.
  • Market segmentation analysis can be helpful in revealing under-represented customer groups. By focussing on the needs of these segments, companies can generate more and good will which translates to bottom-line performance.
  • Market segmentation could also be used to reduce churn. Essentially, understanding the dynamics of existing customers can result in improved user experience which is intangible but leads to reduced churn rates and higher brand satisfaction.

Use Case

In the media and entertainment industry, TV and Film audiences are the “Target Market”. Dividing this market into segments can help media companies understand their customers better thus generating more revenue and goodwill. The entertainment industry has a very dynamic ecosystem where content buyers and sellers make high stakes decisions based on potential demand of their niche market (a subset of market on which a specific product is focused on) — content consumers or audience in this case. Audiences’ perspective is taken into account right from a pre-production stage up to the distribution and marketing decisions. The atomic product of media industry, in particular TV, is a series targeting a specific audience. Thus identifying demographic and lifestyle traits of different audiences is the key to the success in the content universe.

Some applied scenarios where a target market segmentation analysis can play a critical role in the success of content transactions are as follows:

  • Target market segmentation could guide the process of pre-production and post-production of media. For example, understanding the kind of series a niche audience would like to watch in a particular market. What demographics would binge watchers of a new comedy series belong to, if it aired during prime time on weekdays or weekends?
  • Target market segmentation of linear TV audiences can be very impactful in advertising brands to the right niche at the right time by identifying the audience demographics of, for example, prime time shows. It would also make sense to advertise, let’s say, a female brand during a show which primarily attracts female audiences. Certain demographics such as females and children are easier to identify and connect with as compared to other segments. Comparatively, it would be useful for credit card and money lending companies to know that a particular show has “life battlers” as its primary audience. Similarly, big brands would go for shows watched by more affluent people.
  • OTT content buyers such as Hulu and Netflix can identify their niches by looking at the demographics and lifestyle information of their audiences. This could help them expand their content catalog based on the needs of their primary customer segments to increase the retention and satisfaction of existing customers. They can also address the needs of underrepresented audience segments by on-boarding shows most-in-demand by a specific segment.
  • Global audience demand measurement data arms content sellers with market-specific audience profiles which allows them to fetch the highest price in a market they are selling to. After all, all that they are doing is offering the most valuable content to an audience that would appreciate it the most. Inefficiencies in the market are reduced.


Companies of all sizes are increasingly focusing on target market segmentation in order to refine their product and tailor their offerings to the best customer segments. However, it is also important to focus on detailed needs of each and every target audience in order to unlock long-lasting value.

By Shahida Jabeen, Data Scientist 

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