Market Segmentation

Market segmentation is a fundamental marketing strategy that divides a brand’s target audience into smaller, more homogenous groups. This creates subsets of a brand’s wider target market based on the likes of demographics, needs, challenges, priorities, common interests, or other data—all of which can be used to tailor products and branding in a way that’s attractive to each subgroup.  

The overarching goal of market segmentation is to divide the target market into more manageable groups of people to optimize sales and marketing efforts.  Customers in each segment will share a common ground which brands can use as leverage for propelling their marketing efforts. The classic example of course is the delivery of highly targeted ads that hone in on niche customer needs or challenges.

Market segmentation also helps brands minimize their risk exposure by determining the groups who are most likely to purchase a product or service and the best way to market and deliver the product or service to them.

How to Define your Market Segments:

Market Segmentation FAQs

What is market segmentation? 

Market segmentation divides a broad consumer or business market into smaller groups of customers with similar characteristics, needs, or behaviors. This allows businesses to tailor their marketing efforts to specific segments.

What are the different types of market segmentation? 

Common bases for market segmentation include:
Demographic: Age, gender, income, education
Geographic: Location, region, climate
Psychographic: Lifestyle, values, personality
Behavioral: Purchasing behavior, usage rate, brand loyalty

What are the limitations of market segmentation? 

Market segmentation can sometimes become expensive, particularly if a brand has to create different channels and services for each segment. Producing products for each segment can also be cost-prohibitive, and targeting especially small segments can sometimes be unprofitable.