What Is Market Segmentation?

Market segmentation is a form of marketing research that divides a large market into smaller groups to develop more targeted products and services. However, it also increases the risk of making incorrect assumptions about market characteristics and identifying specific needs.


Different market segments respond differently to your marketing message. Knowing what factors influence their buying decision helps you design and deliver targeted messages.


Market segmentation is an essential part of marketing that identifies potential customers for a business. This type of marketing focuses on the needs and preferences of the target audience, allowing businesses to create marketing campaigns that are more relevant and effective. It also helps to improve customer satisfaction, increase sales, and gain a competitive advantage.

Demographic market segmentation involves identifying the characteristics of a specific audience, such as age, gender, income, ethnicity, occupation, family structure, and language. These variables can be used to determine which products or services are most appropriate for each group. The goal is to identify a specific audience that has the greatest interest in your product or service and tailor advertising campaigns to meet their needs.

One of the most important demographic variables is age. Different age groups have varying needs and purchasing habits, making it vital to develop targeted marketing campaigns that are relevant to each group. Gender is another important factor, as women and men typically have different interests and buying habits. Lastly, marital status is an important variable because it affects purchasing decisions.

Using this information, you can develop and implement targeted marketing strategies that will improve your chances of success. This will lead to better return on investment and help your business grow. Demographic market segmentation requires that you collect data about your audience, but the good news is that this type of market segmentation is often easy to do.


There’s so much more to know about your customers than just their age and location. Demographic and behavioral information can tell you where they live and what they like to buy, but it doesn’t tell you why. That’s where psychographic segmentation comes in.

Psychographic market segmentation divides customers into groups based on their personalities, lifestyles, social status, interests, and opinions. This type of segmentation allows businesses to develop a deeper understanding of their customer base and tailor products and services to meet their needs.

One example of psychographic market segmentation is the use of buyer personas. Buyer personas are fictional profiles of potential customers that include their title or role at work, personal preferences, and challenges. They’re an excellent tool for marketers to use when developing campaigns.

Another type of psychographic segmentation is activities, interests, and opinions (AIO). This can help you understand what your customers are interested in and how they spend their time. For instance, you might find out that your target audience enjoys watching stand-up comedy or binge-watching popular television shows such as Wild Wild Country or Narcos.

Another way to segment your market is by generation. This involves looking at the differences between generations such as Gen Z, Millenials, Generation X, and Baby Boomers. This can be useful for business-to-business marketing as it allows companies to create targeted campaigns that resonate with each generation.


Behavioral segmentation is an excellent way to narrow down your client base to those most likely to purchase your goods or services. It is more effective and efficient than simply catering to all prospective clients at once. By dividing your customer base into distinct groups with comparable traits, you can provide more relevant messaging to increase conversion rates.

This type of segmentation focuses on the shopping habits, interactions and interests of your audience to target marketing initiatives accordingly. For example, footwear giant Nike keeps track of when shoppers buy shoes and uses data analytics to send customers relevant messages offering a discount or new styles that might interest them.

The other subcategory of behavioral market segmentation focuses on the frequency with which a consumer uses a particular product or service. Power customers who are heavy users of your products or services deserve more attention and a special loyalty program than those who only make occasional purchases. This type of behavior-based segmentation can also be useful in identifying trends like seasonal buying patterns that could help your business plan its inventory and production schedule more effectively.

Finally, a company can use behavioral segmentation to identify dissatisfied customers who may be open to suggestions for improving their experience or even switching brands. This type of feedback can be collected through surveys or direct messaging, which could lead to a higher level of customer satisfaction and potentially better sales.


Market segmentation involves identifying groups of prospective buyers who perceive the full value of your product differently from one another. It helps you minimize risk by determining which products are most likely to win a significant share of the market and determining the best ways to deliver them to that market. There are many different ways to perform market segmentation, including geographically, demographically and behaviorally.

Geographic segmentation is a key component of marketing strategies, particularly for international organizations with diverse customers around the globe. It allows marketers to send more targeted messages that are relevant to the specific location of the audience. Geographical segmentation can include factors like time zones, climate, local styles and fashions, language, distribution differences, channel availability and cultural preferences.

Using geographic segmentation can help businesses increase sales and sustain growth by targeting the right audience with the right message. It also provides a powerful backdrop for overlaying other types of market segmentation, such as demographic and psychographic, to further refine the effectiveness of your campaigns.

For example, if you sell winter athletic apparel in Michigan and Alaska, you might want to consider offering a sale on your heavy jackets in those areas to drive sales. You could also use your geographic data to determine where your larger target audiences live and focus more of your advertising dollars on those locations.