Table of Contents
What is Audience Segmentation
Audience segmentation is the process of dividing a broad target population into smaller, meaningful groups based on shared characteristics. Segmentation helps marketers, retailers, product teams, and policymakers identify which groups they want to reach – and tailor offerings, messaging, and experiences accordingly.
Audience Segmentation helps answer questions such as:
- Are my customers more likely to be vegetarians or meat-eaters?
- Which advertising messages will resonate with my target audience?
- Which retail sites are most likely to attract families with children?
- Do my locations draw visitors from higher-income neighborhoods?
- When do Gen Z vs. millennials visit a downtown area?
- Does my trade area include book lovers? How likely are they to visit?
- Does my grocery store capture more gym-goers than competitors?
Key Types of Segmentation (and Why They Matter)
There are several common ways to slice an audience – each yielding different insights. Many strategies combine several methods for more refined targeting.
| Segmentation Type | Audience Characteristics | Typical Use |
|---|---|---|
| 1. Demographic Segmentation |
|
Good for broad-stroke segmentation, such as:
• Targeting young families vs. retirees • Comparing low- vs. high-income neighborhoods |
| 2. Psychographic Segmentation |
|
Helps build emotionally resonant messaging, for groups such as:
• “Eco-conscious shoppers” • “Fitness lifestyle” • “Luxury-lovers” |
| 3. Behavioral Segmentation |
|
Highly predictive and useful for:
• Identifying loyal customers • Understanding peak shopping periods • Mapping brand affinities and cross-shopping behavior |
All audience segmentation requires reliable, current data in order to generate actionable insights.
Leveraging Location Intelligence for Offline Segmentation
Historically, understanding who visited a physical location meant relying on imprecise tools like focus groups, surveys, or observational research. These approaches produced small samples and limited audience insight.
Today, advanced location intelligence offers clear visibility into offline consumer behavior at any scale – similar to the analytics available for online traffic.
When this behavioral data is layered with demographic, psychographic, and geosocial datasets, organizations can build precise, highly relevant audience segments that reflect real-world patterns.
How do Businesses Understand their Audiences?
In the past, businesses had to rely on audience segmentation based on a defined distance, drive time, or walk time from the property. But location intelligence allows businesses to segment their audiences based on True Trade Area – a visual representation of the census block groups (CBGs) that actually generate visitation to the property, and defines the property's current addressable market. This trade area type is considered the most accurate.
Captured vs. Potential Market Analysis
Trade areas can be viewed based on Captured or Potential Market, each of which provides unique insight into a chain or property’s audience.
Potential Market
Represents the population living within a venue’s trade area. The demographic and psychographic characteristics of each CBG are weighted by the size of its population.
Captured Market
Represents the visitors that actually visit the chain or location. The demographic and psychographic characteristics of each CBG are weighted according to its share of visits to the chain or venue in question.
Why the Comparison Matters
Comparing a business’s potential and captured markets shows:
- Which audience segments exist within a trade area
- Which audience segments are over-represented or under-represented among visitors
Potential and captured market comparisons reveal how effectively a business attracts certain audience segments and highlights others it has yet to reach, signaling opportunities for growth.
Four Use Cases for Offline Audience Segmentation
The importance of offline audience segmentation – and the advantages of using foot traffic data to analyze captured and potential markets – can be illustrated with a few concrete examples.
1. Marketing & Advertising
Segmentation enables more effective promotions and messaging.
Example:
A bakery chain planning experiential events (e.g., cupcake-decorating nights) can use location intelligence to:
- Understand psychographic and demographic traits of of each location’s visitors
- Tailor events to families with children, college-aged singles, or dietary-specific groups
- Allocate ad spend to zip codes most likely to convert
2. Merchandising & Assortment
Analyzing captured vs. potential audiences reveals product gaps.
Example:
A grocery store’s potential market has a large share of fitness enthusiasts, but its captured market contains a smaller share. This suggests:
- Fitness-oriented products are understocked or underpromoted by the store
- Current promotions may not be appealing to fitness enthusiasts
- Adjustments in assortment or marketing could close the gap
Conversely, if fitness fans are over-represented in the chain’s captured market, the store may expand health-oriented items such as protein snacks or supplements.
3. Retail Site Selection
Segmentation helps evaluate new store locations by revealing whether surrounding consumer profiles match target audiences. Visibility into audience compatibility drives better market entry decisions.
Examples:
- A luxury apparel brand might prefer malls with wealthy visitor psychographic segments such as “Midas Might” or “Exclusive Exburbs”.
- A Gen-Z-oriented off-price retailer may prefer centers attracting “Adulting”, “Rising Professionals” or similar geosocial segments.
4. Commercial Real Estate (CRE)
CRE professionals use segmentation to:
- Select locations for new developments
- Adjust tenant mix
- Understand a commercial property’s audience and evolving demand
Example:
- If interest in wellness is growing in the trade area of a shopping center, vacancies can be filled with yoga studios or juice bars.
- Cross-shopping data can support a mall’s bid for a yoga studio by showing the share of the studio’s visitors that frequent current mall tenants.
How Placer.ai Powers Audience Segmentation
Using a location intelligence platform like Placer.ai enables businesses to easily conduct thorough audience segmentation. Placer.ai leverages a panel of tens of millions of devices and utilizes machine learning to make accurate estimations for foot traffic across the country, from specific POIs, to chains, markets, and regions. Visitation data is enhanced with Placer Marketplace 3rd party datasets that further describe businesses, audiences, and markets.
Insights into how audiences and places interact are presented via an intuitive UI, data feeds, or the Placer API. Placer.ai’s dedicated support professionals and best-in-class research team are also available to deliver expert analysis and strategic guidance.
Whether you’re looking to understand your target audience or the consumers within a market, Placer.ai provides the data and insights to inform your strategy.
Key Takeaways:
- Location intelligence enables accurate offline audience segmentation by combining foot traffic behavior with demographic, psychographic, and geosocial datasets to create high-resolution consumer profiles.
- True Trade Area and captured vs. potential market analysis reveal audience gaps, showing which segments a location attracts effectively and where untapped or under-developed opportunities exist.
- Offline audience segmentation drives better decisions in marketing, merchandising, retail, and commercial real estate by aligning strategy with real-world consumer behavior and local market demand.
