What Is Market Segmentation?

What Is Market Segmentation?

In its basic form, market segmentation is dividing your target audience into smaller, more refined groups. The aim of this process is to empower brands to create highly targeted products, campaigns, and marketing messages, focusing on the specific needs of a particular segment. 


There are four main types of market segmentation:

  • Demographic
  • Geographic
  • Firmographic
  • Psychographic
  • Behavioral

Why Is Market Segmentation Important?

The importance of market segmentation can’t be underestimated. It’s a practice that enables businesses to gain a deep understanding of highly targeted groups of consumers. From here, they can use this information across the entirety of their company to create exceptional products, services, and experiences. 


Some of the benefits of market segmentation include: 

  • Product development: Segmentation helps to understand the needs of your audience, enabling you to create new products for different groups.
  • Marketing messaging: Speak directly to the wants, needs, interests, and values of your audience, and relate to them on a deeper level.
  • Identify new niche markets: Segmentation allows you to learn and discover new target audiences you didn’t know existed.
  • Increased revenue: Better-performing marketing and more desirable products lead to increased sales.


Demographic Segmentation

This categorizes consumers by demographic data such as gender, age, sex, ethnicity, income, race, religion, nationality, occupation, and more. Demographic segmentation is most commonly used, as it uses easily obtained data. Furthermore, B2C purchasing decisions are most often dictated by demographic circumstances.


Geographic Segmentation


Often used as an attribute of demographic segmentation, geographic segmentation can be deployed on its own. This type of segmentation builds a target audience group based on their geographic boundaries.


Customer interests, wants, needs, and preferences can be impacted by their location, how they’re impacted by climate, the resources they do or don’t have available locally, and more.


Firmographic Segmentation

This is for B2B companies. Firmographic segmentation looks at similar data to demographics. However, rather than for individual people, it’s segmenting businesses. 


Things to consider would be industry, company size, and the number of employees. Here, you’ll find how targeting a multinational corporation differs from a local startup.


Behavioral Segmentation

Purchases, lifestyle choices, hobbies, consumption, and usage are areas behavior segmentation seeks to create targeted groups of consumers. Here, you can use knowledge of what consumers like and consistently choose to target them more effectively.


Psychographic Segmentation

Target based on your customers’ thoughts, feelings, personality traits, values, and opinions. The fitness industry is a great example of psychographic targeting as they use targeted campaigns based on how different people feel about healthy living, eating, and exercise.


In Summary

A well-segmented target market will see you differentiate your business from the competition, speak to customers’ wants and needs, develop impactful marketing strategies, and grow your business. For an in-depth discussion on segmentation and how it can work for your business, get in touch today.