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.