market research and segmentation

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Market Segmentation

What is market segmentation?

The benefits of market segmentation, the basics of segmentation in marketing, types of market segmentation, how to get started with segmentation, market segmentation strategy, market segmentation use case examples, ensuring effective segments, common segmentation errors, qualtrics solutions for market segmentation, see how qualtrics strategic brand works, market segmentation: definition, types, benefits, & best practices.

21 min read Market segmentation helps you send the right message, every time, by efficiently targeting specific groups of consumers. Here’s how it works.

By understanding your market segments, you can leverage this targeting in product, sales, and marketing strategies . Market segments can power your product development cycles by informing how you create product offerings for different segments like men vs. women or high income vs. low income.

Read on to understand why segmentation is important for growth and the types of market segmentation to use to maximize the benefits for your business.

Free eBook: How to drive profits with customer segmentation

Companies who properly segment their market enjoy significant advantages. According to a study by Bain & Company , 81% of executives found that segmentation was crucial for growing profits. Bain also found that organizations with great market segmentation strategies enjoyed a 10% higher profit than companies whose segmentation wasn’t as effective over a 5-year period.

Other benefits include:

• Stronger marketing messages : You no longer have to be generic and vague – you can speak directly to a specific group of people in ways they can relate to, because you understand their characteristics, wants, and needs.
• Targeted digital advertising : Market segmentation helps you understand and define your audience’s characteristics, so you can direct your online marketing efforts to specific ages, locations, buying habits, interests etc.
• Developing effective marketing strategies : Knowing your target audience gives you a head start about what methods, tactics and solutions they will be most responsive to.
• Better response rates and lower acquisition costs : will result from creating your marketing communications both in ad messaging and advanced targeting on digital platforms like Facebook and Google using your segmentation.
• Attracting the right customers : targeted, clear, and direct messaging attracts the people you want to buy from you.
• Increasing brand loyalty : when customers feel understood, uniquely well served, and trusting, they are more likely to stick with your brand .
• Differentiating your brand from the competition : More specific, personal messaging makes your brand stand out .
• Identifying niche markets : segmentation can uncover not only underserved markets, but also new ways of serving existing markets – opportunities which can be used to grow your brand.
• Staying on message : As segmentation is so linear, it’s easy to stay on track with your marketing strategies, and not get distracted into less effective areas.
• Driving growth : You can encourage customers to buy from you again , or trade up from a lower-priced product or service.
• Enhanced profits : Different customers have different disposable incomes; prices can be set according to how much they are willing to spend . Knowing this can ensure you don’t oversell (or undersell) yourself.
• Product development : You’ll be able to design new products and services with the needs of your customers top of mind, and develop different products that cater to your different customer base areas.

Companies like American Express , Mercedes Benz , and Best Buy have all used segmentation strategies to increase sales, build better products, and engage better with their prospects and customers.

Understanding segmentation starts with learning about the various ways you can segment your market as well as different types of market segmentation. There are four primary categories of segmentation, illustrated below.

With segmentation and targeting, you want to understand how your market will respond in a given situation, like what causes people to purchase your products. In many cases, a predictive model may be incorporated into the study so that you can group individuals within identified segments based on specific answers to survey questions .

Demographic segmentation

Demographic segmentation sorts a market by elements such as age, education, household income, marital status, family size, race, gender, occupation, and nationality. The demographic approach is one of the simplest and most commonly used types of market segmentation because the products and services we buy, how we use those products, and how much we are willing to spend on them is most often based on demographic factors. It’s also seen as a simple method of predicting future behavior, because target audiences with similar characteristics often behave in similar ways.

How to start demographic segmentation

Demographic segmentation is often the easiest because the information is the most readily available. You can send surveys directly to customers to determine their demographic data, or use readily available third party data such as government census data to gather further information.

Geographic segmentation

Geographic segmentation can be a subset of demographic segmentation, although it can also be a unique type of market segmentation in its own right. As its name suggests, it creates different target customer groups based on geographical boundaries. Because potential customers have needs, preferences, and interests that differ according to their geographies, understanding the climates and geographic regions of customer groups can help determine where to sell and advertise, as well as where to expand your business.

How to start geographic segmentation

Geographic segmentation data again can be solicited from customers through surveys or available third party market research data, or can be sourced from operational data such as IP addresses for website visitors.

Firmographic segmentation

Firmographic segmentation is similar to demographic segmentation, except that demographics look at individuals while firmographics look at organizations. Firmographic segmentation would consider things like company size, number of employees and would illustrate how addressing a small business would differ from addressing an enterprise corporation.

How to start firmographic segmentation

Firmographic segmentation data can be found in public listings for companies and information that the business makes available, as well as trade publications. Again, surveying existing and potential customers can help to build out this data.

Behavioral segmentation

Behavioral Segmentation divides markets by behaviors and decision-making patterns such as purchase, consumption, lifestyle, and usage. For instance, younger buyers may tend to purchase bottled body wash, while older consumer groups may lean towards soap bars. Segmenting markets based on purchase behaviors enables marketers to develop a more targeted approach, because you can focus on what you know they are looking for, and are therefore more likely to buy.

How to start behavioral segmentation

Of all the types of market segmentation, behavioral segmentation is likely best started with the information you have on an existing customer base. Though it can be bolstered by third party market research data, the information you already have on customer purchase and usage behavior will be the best predictor of future behavior.

Psychographic segmentation

Psychographic segmentation considers the psychological aspects of consumer behavior by dividing markets according to lifestyle, personality traits, values, opinions, and interests of consumers. Large markets like the fitness market use psychographic segmentation when they sort their customers into categories of people who care about healthy living and exercise.

How to start psychographic segmentation

Pychographic segmentation relies on data provided by the consumers themselves. Though market research might provide insights on what particular segments are most likely to believe or prefer, psychographic segmentation is best completed with information direct from the source. You can use survey questions with a qualitative focus to help draw out insights in the customers’ own voice.

On-demand webinar: How to drive product design and profits with customer segmentation

There are five primary steps to all marketing segmentation strategies:

• Define your target market : Is there a need for your products and services? Is the market large or small? Where does your brand sit in the current marketplace compared to your competitors?
• Segment your market : Decide which of the five criteria you want to use to segment your market: demographic, firmographic, psychographic, geographic, or behavioral. You don’t need to stick to just one – in fact, most brands use a combination – so experiment with each one to figure out which combination works best for your needs.
• Understand your market : You do this by conducting preliminary research surveys, focus groups, polls , etc. Ask questions that relate to the segments you have chosen, and use a combination of quantitative (tickable/selectable boxes) and qualitative (open-ended for open text responses) questions.
• Create your customer segments : Analyze the responses from your research to highlight which customer segments are most relevant to your brand.
• Test your marketing strategy : Once you have interpreted your responses, test your findings by creating targeted marketing, advertising campaigns and more for your target market, using conversion tracking to see how effective it is. And keep testing. If uptake is disappointing, relook at your segments or your research methods and make appropriate changes.

Why should market segmentation be considered a strategy? A strategy is a considered plan that takes you from point A to point B in an effective and useful way. The market segmentation process is similar, as there will be times you need to revisit your market segments, such as:

In times of rapid change: A great example is how the Covid-19 pandemic forced a lot of businesses to rethink how they sell to customers. Businesses with physical stores looked at online ordering, while restaurant owners considered using food delivery services.

If your customers change, your market segmentation should as well, so you can understand clearly what your new customers need and want from you.

On a yearly basis: Market segments can change year over year as customers are affected by external factors that could alter their behavior and responses.

For example, natural disasters caused by global warming may impact whether a family chooses to stay living in an area prone to more of these events. On a larger scale, if your target customer segment moves away from one of your sales regions, you may want to consider re-focussing your sales activities in more populated areas.

At periodic times during the year: If you’ve explored your market and created market segments at one time of the year, the same market segments may have different characteristics in a different season. Seasonal segmentation may be necessary for better targeting.

For example, winter has several holidays, with Christmas being a huge influence on families. This holiday impacts your market segments’ buying habits, how they’ll behave (spending more than normal at this time than any other) and where they will travel (back home for the holidays). Knowing this information can help you predict and prepare for this period.

When considering updating your market segmentation strategy, consider these three areas:

• Acknowledge what has changed: Find out what has happened between one time period and another, and what have been the driving forces for that change. By understanding the reasons why your market is different, you can make key decisions on whether you want to change your approach or stay the course.
• Don’t wait to start planning: Businesses are always adapting to long-te r m trends , so refreshing market segmentation research puts you in a proactive place to tackle these changes head-on. Once you have your market segments, a good idea is to consider the long-term complications or risks associated with each segment, and forward-plan some time to discuss problem-solving if those issues arise.
• Go from “what” to “why” : Why did those driving forces come about? Why are there risks with your target market? At Qualtrics, we partner with companies to understand the different aspects of target markets that drive or slow success. You’ll have the internal data to understand what’s happening; we help unleash insight into why with advanced modeling techniques. This helps you get smart market segmentation that is predictive and actionable, making it easier for future research and long-term segment reporting.

Where can you use market segmentation in your business? We’ve collected some use case scenarios to help you see how market segmentation can be built out across several departments and activities:

Market and opportunity assessments

When your business wants to enter into a new market or look for growth opportunities, market segmentation can help you understand the sales potential. It can assist in breaking down your research, by aligning your findings to your target audience groups.

For example, When you’ve identified the threats and opportunities within a new market, you can apply your customer segment knowledge to the information to understand how target customers might respond to new ideas, products, or services.

Segmentation and targeting

If you have your entire market separated into different customer segments,  then you have defined them by set criteria, like demographics, needs, priorities, common interests, or behavioral preferences .

With this information, you can target your products and services toward these market segments, making marketing messages and collateral that will resonate with that particular segment’s criteria.

Customer needs research

When you know a lot about your customers, you can understand where your business is connecting well with them and where there can be improvements.

Market segmentation can help with customer needs research (also known as habits and practices research) to deliver information about customer needs, preferences, and product or service usage. This helps you identify and understand gaps in your offerings that can be scheduled for development or follow-up.

Product development

If the product or service you’ve developed doesn’t solve a stated problem of your target audience or isn’t useful, then that product will have difficulty selling. When you know what each of your market segments cares about an/d how they live their lives, it’s easier to know what products will enrich or enhance their day-to-day activities.

Use market segmentation to understand your customers clearly , so that you can save time and money developing products and services that your customers will want to purchase.

Campaign optimization

Marketing and content teams will value having detailed information for each customer segment, as this allows them to personalize their campaigns and strategies at scale. This may lead to variations in messaging that they know will connect better with specific audiences, making their campaign results more effective.

When their marketing campaigns are combined with strong calls to action targeted to the specific segment, they will be a powerful tool that drives your target market segments towards your sales channels.

After you determine your segments, you want to ensure they’ll be useful. A good segmentation analysis should pass the following tests:

• Measurable : Measurable means that your segmentation variables are directly related to purchasing a product. You should be able to calculate or estimate how much your segment will spend on your product. For example, one of your segments may be made up of people who are more likely to shop during a promotion or sale.
• Accessible : Understanding your customers and being able to reach them are two different things. Your segments’ characteristics and behaviors should help you identify the best way to meet them. For example, you may find that a key segment is resistant to technology and relies on newspaper or radio ads to hear about store promotions, while another segment is best reached on your mobile app. One of your segments might be a male retiree who is less likely to use a mobile app or read email, but responds well to printed ads.
• Substantial : The market segment must have the ability to purchase. For example, if you are a high-end retailer, your store visitors may want to purchase your goods but realistically can’t afford them. Make sure an identified segment is not just interested in you, but can be expected to purchase from you. In this instance, your market might include environmental enthusiasts who are willing to pay a premium for eco-friendly products, leisurely retirees who can afford your goods, and successful entrepreneurs who want to show off their wealth.
• Actionable : The market segment must produce the differential response when exposed to the market offering. This means that each of your segments must be different and unique from each other. Let’s say that your segmentation reveals that people who love their pets and people who care about the environment have the same purchasing habits. Rather than having two separate segments, you should consider grouping both together in a single segment.

Market segmentation is not an exact science. As you go through the process, you may realize that segmenting based on behaviors doesn’t give you actionable segments, but behavioral segmentation does. You’ll want to iterate on your findings to ensure you’ve found the best fit for the needs of your marketing, sales and product organizations.

We’ve outlined the do’s , so here are some of the dont’s :

• Avoid making your segments too small or specialized : Small segments may not be quantifiable or accurate, and can be distracting rather than insightful
• Don’t just focus on the segment rather than the money : Your strategy may have identified a large segment, but unless it has the buying power and wants or needs your product, it won’t deliver a return on investment
• Don’t be inflexible : Customers and circumstances change, so don’t let your segments become too entrenched – be prepared to let them evolve.

Market segmentation doesn’t need to be complicated to be effective. We would advise, though, to  get automated from the beginning . Forget spreadsheets – choose  market segmentation software  to measure and streamline your marketing strategy; as you grow, the technology will scale with you.

Innovative features such as XM Directory allow you to build your own customer segments and start personalizing experiences at scale based on the rich insights into your critical customer groups.

If you want to get a feel for your market segmentation upfront, before taking a step towards a streamlined and integrated system, trust us to take you through the research with our Market Segmentation Research service .

Related resources

Market fragmentation 9 min read, behavioral segmentation 20 min read, psychographic segmentation 11 min read, geographic segmentation 14 min read, demographic segmentation 14 min read.

Brand Perception

Brand Sentiment 18 min read

Brand intelligence 12 min read, request demo.

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What Is Market Segmentation?

• How It Works
• Determining Your Market Segment
• Limitations
• Market Segmentation FAQs

The Bottom Line

• Marketing Essentials

Market Segmentation: Definition, Example, Types, Benefits

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

Market segmentation is a way of aggregating prospective buyers into groups or segments, based on demographics, geography, behavior, or psychographic factors in order to better understand and market to them.

Key Takeaways

• Market segmentation seeks to identify targeted groups of consumers to tailor products and branding in a way that is attractive to the group.
• Markets can be segmented in several ways such as geographically, demographically, or behaviorally.
• Market segmentation helps companies minimize risk by figuring out which products are the most likely to earn a share of a target market and the best ways to market and deliver those products to the market.
• With risk minimized and clarity about the marketing and delivery of a product heightened, a company can then focus its resources on efforts likely to be the most profitable.
• Market segmentation can also increase a company's demographic reach and may help the company discover products or services they hadn't previously considered.

Investopedia / Matthew Collins

Understanding Market Segmentation

Companies can generally use three criteria to identify different market segments:

• Homogeneity , or common needs within a segment
• Distinction , or being unique from other groups
• Reaction , or a similar response to the market

For example, an athletic footwear company might have market segments for basketball players and long-distance runners. As distinct groups, basketball players and long-distance runners respond to very different advertisements. Understanding these different market segments enables the athletic footwear company to market its branding appropriately.

Market segmentation is an extension of market research that seeks to identify targeted groups of consumers to tailor products and branding in a way that is attractive to the group. The objective of market segmentation is to minimize risk by determining which products have the best chances of gaining a share of a target market  and determining the best way to deliver the products to the market. This allows the company to increase its overall efficiency by focusing limited resources on efforts that produce the best return on investment (ROI).

Market segmentation allows a company to increase its overall efficiency by focusing limited resources on efforts that produce the best return on investment (ROI).

Types of Market Segmentation

There are four primary types of market segmentation. However, one type can usually be split into an individual segment and an organization segment. Therefore, below are five common types of market segmentation.

Demographic Segmentation

Demographic segmentation is one of the simple, common methods of market segmentation. It involves breaking the market into customer demographics as age, income, gender, race, education, or occupation. This market segmentation strategy assumes that individuals with similar demographics will have similar needs.

Example: The market segmentation strategy for a new video game console may reveal that most users are young males with disposable income.

Firmographic Segmentation

Firmographic segmentation is the same concept as demographic segmentation. However, instead of analyzing individuals, this strategy looks at organizations and looks at a company's number of employees, number of customers, number of offices, or annual revenue .

Example: A corporate software provider may approach a multinational firm with a more diverse, customizable suite while approaching smaller companies with a fixed fee, more simple product.

Geographic Segmentation

Geographic segmentation is technically a subset of demographic segmentation. This approach groups customers by physical location, assuming that people within a given geographical area may have similar needs. This strategy is more useful for larger companies seeking to expand into different branches, offices, or locations.

Example: A clothing retailer may display more raingear in their Pacific Northwest locations compared to their Southwest locations.

Behavioral Segmentation

Behavioral segmentation relies heavily on market data, consumer actions, and decision-making patterns of customers. This approach groups consumers based on how they have previously interacted with markets and products. This approach assumes that consumers prior spending habits are an indicator of what they may buy in the future, though spending habits may change over time or in response to global events.

Example: Millennial consumers traditionally buy more craft beer, while older generations are traditionally more likely to buy national brands.

Psychographic Segmentation

Often the most difficult market segmentation approach, psychographic segmentation strives to classify consumers based on their lifestyle, personality, opinions, and interests. This may be more difficult to achieve, as these traits (1) may change easily and (2) may not have readily available objective data. However, this approach may yield strongest market segment results as it groups individuals based on intrinsic motivators as opposed to external data points.

Example: A fitness apparel company may target individuals based on their interest in playing or watching a variety of sports.

Other less notable examples of types of segmentation include volume (i.e. how much a consumer spends), use-related (i.e. how loyal a customer is), or other customer traits (i.e. how innovative or risk-favorable a customer is).

How to Determine Your Market Segment

There's no single universally accepted way to perform market segmentation. To determine your market segments, it's common for companies to ask themselves the following questions along their market segmentation journey.

Phase I: Setting Expectations/Objectives

• What is the purpose or goal of performing market segmentation?
• What does the company hope to find out by performing marketing segmentation?
• Does the company have any expectations on what market segments may exist?

Phase 2: Identify Customer Segments

• What segments are the company's competitors selling to?
• What publicly available information (i.e. U.S. Census Bureau data) is relevant and available to our market?
• What data do we want to collect, and how can we collect it?
• Which of the five types of market segments do we want to segment by?

Phase 3: Evaluate Potential Segments

• What risks are there that our data is not representative of the true market segments?
• Why should we choose to cater to one type of customer over another?
• What is the long-term repercussion of choosing one market segment over another?
• What is the company's ideal customer profile, and which segments best overlap with this "perfect customer"?

Phase 4: Develop Segment Strategy

• How can the company test its assumptions on a sample test market?
• What defines a successful marketing segment strategy?
• How can the company measure whether the strategy is working?

Phase 5: Launch and Monitor

• Who are key stakeholders that can provide feedback after the market segmentation strategy has been unveiled?
• What barriers to execution exist, and how can they can be overcome?
• How should the launch of the marketing campaign be communicated internally?

Benefits of Market Segmentation

Marketing segmentation takes effort and resources to implement. However, successful marketing segmentation campaigns can increase the long-term profitability and health of a company. Several benefits of market segmentation include;

• Increased resource efficiency. Marketing segmentation allows management to focus on certain demographics or customers. Instead of trying to promote products to the entire market, marketing segmentation allows a focused, precise approach that often costs less compared to a broad reach approach.
• Stronger brand image. Marketing segment forces management to consider how it wants to be perceived by a specific group of people. Once the market segment is identified, management must then consider what message to craft. Because this message is directed at a target audience, a company's branding and messaging is more likely to be very intentional. This may also have an indirect effect of causing better customer experiences with the company.
• Greater potential for brand loyalty. Marketing segmentation increases the opportunity for consumers to build long-term relationships with a company. More direct, personal marketing approaches may resonate with customers and foster a sense of inclusion, community, and a sense of belonging. In addition, market segmentation increases the probability that you land the right client that fits your product line and demographic.
• Stronger market differentiation. Market segmentation gives a company the opportunity to pinpoint the exact message they way to convey to the market and to competitors. This can also help create product differentiation by communicating specifically how a company is different from its competitors. Instead of a broad approach to marketing, management crafts a specific image that is more likely to be memorable and specific.
• Better targeted digital advertising. Marketing segmentation enables a company to perform better targeted advertising strategies. This includes marketing plans that direct effort towards specific ages, locations, or habits via social media.

Market segmentation exists outside of business. There has been extensive research using market segmentation strategies to promote overcoming COVID-19 vaccination hesitancy and other health initiatives.

Limitations of Market Segmentation

The benefits above can't be achieved with some potential downsides. Here are some disadvantages to consider when considering implementing market segmentation strategies.

• Higher upfront marketing expenses. Marketing segmentation has the long-term goal of being efficient. However, to capture this efficiency, companies must often spend resources upfront to gain the insight, data, and research into their customer base and the broad markets.
• Increased product line complexity. Marketing segmentation takes a large market and attempts to break it into more specific, manageable pieces. This has the downside risk of creating an overly complex, fractionalized product line that focuses too deeply on catering to specific market segments. Instead of a company having a cohesive product line, a company's marketing mix may become too confusing and inconsistently communicate its overall brand.
• Greater risk of misassumptions. Market segmentation is rooted in the assumption that similar demographics will share common needs. This may not always be the case. By grouping a population together with the belief that they share common traits, a company may risk misidentifying the needs, values, or motivations within individuals of a given population.
• Higher reliance on reliable data. Market segmentation is only as strong as the underlying data that support the claims that are made. This means being mindful of what sources are used to pull in data. This also means being conscious of changing trends and when market segments may have shifted from prior studies.

Examples of Market Segmentation

Market segmentation is evident in the products, marketing, and advertising that people use every day. Auto manufacturers thrive on their ability to identify market segments correctly and create products and advertising campaigns that appeal to those segments.

Cereal producers market actively to three or four market segments at a time, pushing traditional brands that appeal to older consumers and healthy brands to health-conscious consumers, while building brand loyalty among the youngest consumers by tying their products to, say, popular children's movie themes.

A sports-shoe manufacturer might define several market segments that include elite athletes, frequent gym-goers, fashion-conscious women, and middle-aged men who want quality and comfort in their shoes. In all cases, the manufacturer's marketing intelligence about each segment enables it to develop and advertise products with a high appeal more efficiently than trying to appeal to the broader masses.

Market segmentation is a marketing strategy in which select groups of consumers are identified so that certain products or product lines can be presented to them in a way that appeals to their interests.

Why Is Market Segmentation Important?

Market segmentation realizes that not all customers have the same interests, purchasing power, or consumer needs. Instead of catering to all prospective clients broadly, market segmentation is important because it strives to make a company's marketing endeavors more strategic and refined. By developing specific plans for specific products with target audiences in mind, a company can increase its chances of generating sales and being more efficient with resources.

What Are the Types of Market Segmentation?

Types of segmentation include homogeneity, which looks at a segment's common needs, distinction, which looks at how the particular group stands apart from others, and reaction, or how certain groups respond to the market.

What Are Some Market Segmentation Strategies?

Strategies include targeting a group by location, by demographics—such as age or gender—by social class or lifestyle, or behaviorally—such as by use or response.

What Is an Example of Market Segmentation?

Upon analysis of its target audience and desired brand image, Crypto.com entered into an agreement with Matt Damon to promote their platform and cryptocurrency investing. With backdrops of space exploration and historical feats of innovation, Crypto.com's market segmentation targeted younger, bolder, more risk-accepting individuals.

Market segmentation is a process companies use to break their potential customers into different sections. This allows the company to allocate the appropriate resource to each individual segment which allows for more accurate targeting across a variety of marketing campaigns.

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What Is Market Segmentation? Tips, Types, and Benefits Explained

Market segmentation facilitates better personalization. It makes it easier for brands to connect with people in a meaningful way that impacts results and forges stronger bonds between consumers and companies alike.

Once you know how it’s done and what tools to use, you can immediately start to leverage it in your business.

What is market segmentation?

Market segmentation is a process of division. It takes people within a market and separates them into groups based on shared characteristics, interests, or behaviors. With it, companies can create stronger marketing campaigns to drive higher conversions and revenue.

The shared characteristics of the segments could be based on demographic data, such as location, age, occupation, and gender. It can also be based on needs, product usage, priorities, purchase history, company attributes, interests, funnel stage, and more.

Fun Fact: While market segmentation tools have advanced significantly, the concept of market segmentation is over 100 years old. Back in the 1920s, it was used by manufacturers who started to produce different vehicle models–each designed to meet the needs of various psychographic and demographic market segments, such as income, interests, lifestyle, and location.

Different types of market segmentation

There are four core types of market segmentation : demographic, firmographic, psychographic, and behavioral. The best segmentation type will depend on your business and its audience. Below, you’ll find a quick explainer for each.

1. Demographic segmentation

What it is: Demographic segmentation breaks a market or audience down into smaller groups based on characteristics that can be easily identified by various data points. This could include income, occupation, location, gender, marital status, age, education, nationality, religion, etc.

How it’s used: Organizations use demographic segmentation on the assumption that those with shared characteristics will have similar needs and respond to similar messages. By dividing up a market into smaller segments, companies can develop targeted marketing campaigns and use tactics like advertising personalization to target a group based on its demographic qualities.

Market segmentation example: Geographic segmentation is a popular type of demographic segmentation. Here, you divide a group up based on geographical location. Depending on the type of business and its reach, you may wish to target people in specific cities, states, or countries. Geographical location impacts language and timezone and has additional implications on purchasing habits, pricing, and cultural considerations.

In this example, I’m using Similarweb Digital Research Intelligence to review geographical segmentation for Sprout Social. I see the top 15 countries for my highest-traffic markets globally. I can view respective growth, average visit duration , how many pages per visit , and bounce rate . Of course, this is just the starting point for market segmentation. But in terms of showing me my most valued markets and their respective standings at a glance, it’s a quick and easy way to capture this data.

2. Behavioral segmentation

What it is: Behavioral segmentation splits people into groups based on their interactions. These can be online spending habits, product usage, check-out status, customer service, co-branded goods, discounted products, free trial take-up, benefits sought, lifestyle, patterns in decision-making, etc.

How it’s used: Organizations use behavioral segmentation to develop targeted marketing campaigns that focus on the specific habits that groups of users have displayed. By honing in on people’s preferences and actions, organizations can offer personalized ads, relevant offers, and tailored messaging that appeal to the target audience.

Market segmentation example: Benefit segmentation is a widely-used type of behavioral segmentation. Here, a target audience can be split into categories of perceived benefits. Let’s take a skincare brand as an example. Some of the different benefits could be:

• Acne-prone skin
• Blemishes or pigmentation
• Sensitive skin

Here, we group consumers into categories by ‘benefit’ based on their individual skin type. This type of market segmentation gives a business the ability to target specific groups with related products, content, offers, and more.

Read More: Your Guide to Behavioral Segmentation With Examples and Practical Tips

3. Firmographic segmentation

What it is: Firmographic segmentation is a type of market segmentation that examines organizations. It includes data points, such as company size, number of employees, locations, size of customer base, industry, revenue, etc.

How it’s used: This type of market segmentation is widely used for B2B marketing purposes as it analyzes organizations instead of individuals. It takes groups of businesses and sorts them based on shared or similar attributes, which helps create more effective targeted campaigns.

Market segmentation example: In the B2B technology space, a company providing IT support would do firmographic segmentation to separate enterprise accounts from the SMB market. This way, it can approach larger organizations with a tailored package for complex support and smaller businesses with a more cost-effective, fixed-fee service for a more basic level of support.

4. Psychographic segmentation

What it is: Psychographic segmentation is perceived to be one of the most challenging types of market segmentation. It splits a market up according to personality traits, consumer interests, values, lifestyle, opinions, etc.

How it’s used: This type of market segmentation is used by marketers who need to select specific groups based on their interests, likes, and opinions. Social media has enabled organizations to leverage psychographic segmentation more effectively, as people signal their interests openly on these platforms.

Market segmentation example: A great example of psychographic segmentation in action comes in the form of a simple market research survey . If you’ve ever received a survey from a brand you shop with that asks about your hobbies or interests – this is how most types of psychographic segmentation start out.

Here’s an example of a market segmentation survey in action. Most people are accustomed to seeing these types of forms and will be asked to complete them by companies they already do business with or through platforms like Yougov .

Benefits of market segmentation

At its very core, segmenting a market will help you generate more demand for your business. It can shape your strategy and play out in more personalized messaging that increases the appeal of a product or service to a target audience . This naturally leads to better engagement rate and higher conversions while adding to the bottom line – something any business will benefit from.

Let’s take a look at some of the top benefits market segmentation offers.

Discover new opportunities for growth

Market segmentation research helps organizations decipher new ways to grow. Use it to find and convert new customers, uncover new marketing channels to use, find and flesh out new markets to enter, and entice customers to buy from you again.

Lower cost of acquisition

Market segmentation can also reduce customer acquisition costs. With it, you can slice and dice a market into bitesize chunks, then pick and choose priorities according to your budget or preference. Knowing where and how to reach customers reduces the time and money needed to acquire them.

Let’s say you’re a multinational firm spending money consistently on PPC and TV advertising. Your strategy takes a mass market approach, and results are steadily increasing. After doing market segmentation, you find that your ideal customer profile spends more time on social channels, specifically LinkedIn and Twitter, and their newspaper of choice is the New York Times. You would then be able to use this data to reach more people in your target market far more effectively and at a much lower cost to your business. 

Create tailored offerings

Personalized offers are no longer nice to have; modern-day consumers expect and respond to targeted ads based on their purchase history, needs, habits, and other important factors. Market segmentation gives you data to fuel these activities and create bespoke offers that hit the mark with your prospects.

Foster loyalty

You can build stronger relationships with clients by communicating in a way that resonates and has an impact. With closer connections to customers, they feel understood, valued, and important to your business, making them less likely to leave or take up rival offers on a whim.

A survey by Salesforce.com revealed 70% of consumers believe a company’s ability to understand their individual needs impacts their loyalty.

Helpful for new product development

You can and should design products and features around your customers’ needs. Market segmentation studies give you an x-ray vision into the pain points, wants, and needs of a target market . Needs-based segmentation is ripe for finding whitespaces in a market and serves as a great platform for innovation when launching new products .

Achieve better post-launch product evaluations

Market segmentation can also come into play once a product or service is launched. Organizations can use it to understand potential shortfalls of a product vs. consumer needs and expectations.

Improve customer experience

Market segmentation outcomes shouldn’t be limited to marketing and management. When you take time to collect data and share it throughout an organization, you can leverage it to deliver a better experience.

In a study conducted by Evergage, over 88% of marketers said their biggest goal with personalization is to improve customer experience . 

Here’s a quick example.

A telecom provider or streaming service could segment its existing customers based on their product usage data. Should a customer call in to speak with your team, they know exactly what products or add-ons to offer based on this information. It leads to a better experience, and customers feel valued and understood. These stats would also be pivotal for service teams looking after clients who wish to cancel, as they can immediately step in with an enticing offer that’s relevant and of genuine value.

Attract the right customers

Market segmentation enables you to deliver more personalized, powerful marketing campaigns. With this, you can target prospects who are an ideal match for your products or services. Combine this with well-defined target personas for each segment of your market, and you’ll reap the rewards.

Supercharge your marketing strategy

Segmentation adds substance to your marketing strategy, giving you vital intel about who to target, where to find them, and how to speak with them effectively. Having access to digital intelligence platforms with granular data is essential for any successful digital marketing strategy . 

Fine-tune your messaging

Most brands have well-developed audience personas, each with their own preferences and pain points to address – doing market segmentation gives you ultra-granular data. Allowing you to create impactful messaging for specific groups based on their unique and multivariate characteristics.

Let’s say you’re an e-tailer focused on selling laptops and computing equipment to a broad market. The messaging you use to students or younger members of your audience who are looking for bargain basement offers won’t necessarily appeal to the portion of your target market who want high-spec equipment. So, it’s important to use market segmentation to determine what messages are best for each persona you target. 

Increase response rates and conversions

Tailored messaging that reaches people at the right time and says the right things can help you boost response rate and, thus, conversions. Whether through retargeting, social, or email outreach, you will get higher conversions and better responses to your marketing efforts.

Develop customer personas

The more market segmentation you can do, the more accurate your audience personas will be. Using a blend of segmentation types, and often will help you develop ideal customer profiles that are true to life and relevant to today’s market.

Support decision-making in other business areas

By analyzing the preferences of different segments, you can accommodate the audience better in other areas, such as pricing, distribution, content, and design.

Considerations before starting market segmentation

There are four core phases to address before you start any market segmentation activities. It’s important not to skip over these – doing so will ensure you’ve considered and developed a thorough plan that will save you time and enrich your results.

Identify clear goals for your market segmentation. Consider its purpose and what you want to find out from the activity. Are there any existing segments used by your business or prior research to review?

Do a competitive analysis to establish any existing segments that your rivals target. You can use an audience analysis tool to do basic demographic segmentation for your current customer base or analyze your competitors. This includes considering what type of data you want to collect and the best ways to obtain it.

Tools like Similarweb Research Intelligence can help, but there are other sources you might consider, such as buying data from a third-party data source, using data capture forms, quizzes on your site, or even social media audience analytics tools.

Here, you will evaluate your list of potential segments. Do your segments align with your ideal customer profile? You’ll need to consider the short and long-term consequences of focusing on these segments, both collectively and individually.

For instance, if you decide to go all-in on messaging for a younger audience, consider the impact this could have on your audience who fall outside of this target demographic . Another key consideration is the data. How and where you source information for your segments will impact how representative it is of the true market segments.

Once you’ve analyzed your potential audience and segments can you then develop a strategy for your own market segmentation. Here, you want to establish what defines a successful segment strategy, considering metrics, and KPIs, then defining what success will look like. Think about how and if you can test assumptions made about segments on a smaller scale before implementing broader marketing activities.

Once all of these phases have been considered, you will need to consider how to communicate the new strategy to the business. It’s important that all divisions that may come into contact with customers, such as sales, support, and customer service teams know about the marketing campaigns and understand why and how the target audience is being segmented.

How to optimize your market segmentation strategy

Keep these three tips in mind when creating your market segmentation strategy:

• Make sure your segmentation variables are measurable. To create an effective strategy, you must measure and analyze segment performance and compare the results.
• Choose criteria that are related to the buyer’s journey and could affect the purchasing decision . Let’s say you are offering swimwear. Segmenting by gender would result in more effective marketing. But if you offer a streaming service, gender may not be relevant. Instead, you’d need to consider behavioral-based segments, such as device distribution or session duration.
• Monitor and optimize segment performance. Adapt content in segments or test different marketing channels. Individual prospects may move from one segment to another based on changing behaviors or preferences as they move through the funnel.

Market segmentation with Similarweb

Similarweb Digital Research Intelligence gives you instant access to data that will help you do demographic, behavioral, and psychographic segmentation across a market or for specific competitors you wish to track.

To bring this example to life, I am choosing the travel sector. Specifically, the accommodation and hotels market. This is from the perspective of an industry leader, hotels.com .

Demographic segmentation example

Step 1 : First, I am looking at demographic segmentation to establish key facts about my current audience. I want to understand which countries I perform highest in to inform my geographic segmentation.

Here, I see my top 20 locations and the respective growth and decline in each . My top 5 markets account for almost 70% of my total traffic. This allows me to geographically segment my business and split each country into its own segment to analyze. For the purpose of this example, I will focus only on my top market, which is the US.

Step 2: Next, I want to see how my own traffic share in each geographic segment compares with the key players in my industry. By comparing traffic share by country with my four closest rivals, I get a picture of who performs best in each market. This intel helps me select which competitors to target for the next phase of my market segmentation.

In the US, booking.com and expedia.com achieve significantly better results, with booking.com commanding a 31% share and expedia.com achieving almost 50% market share.

Step 3: Now, I will use further demographic segmentation to see how our audiences compare. I start my market segmentation by analyzing the audience demographics of hotels.com, booking.com , and expedia.com , side-by-side for my chosen market.

Here, Expedia is doing a better job at attracting a younger demographic and is performing better with a male audience. However, on the surface, things look fairly well balanced. This requires me to go deeper into a website segment analysis to see exactly where Expedia is getting its gains.

This very straightforward exercise gives me key facts about the demographics of my audience vs others in my space. If you repeat this activity across all major markets and consider industry leaders and emerging players alike, you can use this information to build relevant segments to target with market campaigns that are location, age or gender specific.

Helpful reading: Read our guide to get a 7-step guide to doing market segmentation

Similarweb customer success story using market segmentation

Wonderbly is a global firm offering personalized books online to over 6 million customers. It used a blend of demographic and psychographic segmentation to uncover a new audience profile and product line to add to its range. After implementation, it saw a 69% growth in revenue due to the changes it made.

It had three key challenges to solve.

• Low visibility into key competitor’s activity
• Limited view of audience browsing behavior
• Lack of data to enter new markets

Here’s how it went to battle and came out a winner.

• By doing demographic segmentation, it analyzed its own audience vs those of its rivals.

Using Similarweb audience demographics, it uncovered rivals were better at attracting a younger demographic. With this knowledge, it developed a new audience profile that honed in on a younger persona and later adapted campaign strategy and creatives to suit.

2. Next, it used market segmentation to analyze the respective seasonal performance of each competitor by category.

By splitting up each period, and reviewing data provided by Similarweb’s Seasonal Trends Keywords, it was able to see rivals’ traffic gains for the Weddings and Anniversaries category. This intel enabled it to identify an untapped market and see its potential in tandem.

3. Finally, using a type of behavioral segmentation, it reviewed the interests and online shopping habits of an audience it was yet to capture. Similarweb’s audience data helped identify several key partners in the US, UK, and CA, to collaborate on content-focused partnerships.

Here, you see Similarweb’s audience overlap. This uncovered insights about the existing and untapped audience. It included which sites they cross-browsed and how loyal their customers are compared to their rivals.

Wrapping up – what is market segmentation

Similarweb’s suite of market intelligence features helps you perform many types of market segmentation; without the need to invest in third or second-party data or wait around for extensive studies and analysis to take place. With continuous access to fresh data, you can enjoy dynamic segmentation capabilities that allow you to flex and rapidly adapt personas, strategies, and campaigns.

Try Similarweb for free and find out for yourself how our research tools can support your market segmentation.

Similarweb Digital Research Intelligence gives you a ready-made platform to access insights and data that can revolutionize how your business makes decisions. It’s trusted and used by some of the world’s biggest brands: click through below to get a 7-day trial, for free.

Start Your Market Segmentation with Similarweb Today

Why similarweb.

Similarweb’s suite of digital intelligence solutions offers unbiased, accurate, honest insights you can trust for analyzing any industry, market, or company.

• Methodologies used for data collection are robust, transparent, and trustworthy.
• It updates dynamically–giving you the freshest data about an industry or market.
• Filter and refine results according to your needs.
• Clear presentation of data via an easy-to-use, intuitive platform.
• Data is available via an API – so you can plug into platforms like Tableau or PowerBI to streamline your analyses.

How do you collect data for market segmentation?

You can use market intelligence tools like Similarweb. Alternatively, you can survey existing customers via email, lead generation forms, quizzes, and even try out social media audience insights if you’re active on those channels. You can also purchase data from third-party or second-party sources.

Market segmentation is the practice of dividing your target market into approachable groups.

What are the 4 types of market segmentation?

Demographic, psychographic, behavioral, and geographic segmentation are considered the four main types of market segmentation.

What are the benefits of Market Segmentation?

The benefits of market segmentation include increased efficiency in marketing activities, more effective targeting of customer segments, and the ability to customize product offerings to meet customer needs.

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What is market segmentation? Definition, 5 types, and examples

Market segmentation is a vital component of any product marketing strategy. Without it, you may fail to address the diverse needs and pain points of your varied customers.

Market segmentation helps you develop products that cater to the specific needs of distinct segments within the total market. This enables you to more effectively solve customer problems. Moreover, market segmentation ensures a return on investment while guaranteeing profitability and market success.

Defining market segmentation

Market segmentation is a strategic approach that divides the total addressable market (TAM) into several smaller segments. Each segment consists of customers who share similar characteristics, such as demographics, pain points, needs, etc. Consequently, a single product or a similar set of products can satisfy all customers within a particular market segment.

Segmenting the market enables you to target customer segments with a highly personalized approach. This aligns with current industry trends that emphasize hyper-personalization across omnichannel customers.

5 types of market segmentation

The five most common types of market segmentation are:

• Demographic segmentation
• Firmographic segmentation
• Geographic segmentation
• Psychographic segmentation
• Behavioral segmentation

1. Demographic segmentation

Demographic segmentation is perhaps the most common and straightforward method of segmenting the market. It considers demographic characteristics such as age, income, gender, ethnicity, profession, and level of education.

The assumption here is that individuals with similar demographic traits are likely to have shared preferences and are therefore likely to purchase the same products to meet their needs.

2. Firmographic segmentation

Firmographic segmentation applies an organizational perspective to demographic segmentation. In other words, it pertains to organizations rather than individuals.

For instance, the needs of a small firm will likely differ from those of a midsized organization or large corporation.

3. Geographic segmentation

Geographic segmentation is a subset of demographic segmentation. It pertains to people within a specific geographic area and takes into account their unique needs based on their location.

4. Psychographic segmentation

Psychographic segmentation is arguably the most challenging type of segmentation because it divides the market based on factors that can change or vary over time, such as lifestyle preferences, and motivations. However, this form of segmentation is gaining traction due to the industry’s shift towards hyper-personalization.

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When large internet companies gather customer data from online transactions, they use this information to make decisions about intrinsic preferences and spending habits, providing a comprehensive picture that allows for effective customer segmentation.

5. Behavioral segmentation

This type of segmentation is driven by customers’ past behavior. It projects market segments based on data collected from previous purchases and customer preferences over time, thereby predicting what they are likely to buy in the future.

Examples of market segmentation

To truly understand the power of market segmentation, let’s look at three companies that have effectively used this strategy to drive their success:

Apple’s demographic and psychographic segmentation

Apple, the tech giant behind the iPhone and iPad, has skillfully used both demographic and psychographic segmentation. The company targets customers based on age and income — typically younger, affluent consumers — as well as social class and occupation.

This understanding of their customer base allows Apple to focus on creating products with superior design and user experience, knowing that its target customers are willing to pay a premium for high-quality items.

Slack’s firmographic segmentation strategy

In the market of team collaboration tools, Slack stands out for its effective use of firmographic segmentation. The company targets businesses of all sizes, recognizing that a small startup’s needs will differ from those of a large corporation.

By segmenting its market in this way, Slack can offer tailored solutions — from Slack Free for smaller teams to Slack Enterprise Grid for larger organizations — that meet each segment’s unique needs.

Netflix’s mastery of behavioral segmentation

Streaming service Netflix provides an excellent example of behavioral segmentation. By collecting extensive data on users’ viewing habits — including what they watch, when they watch it, how often they watch it, and even when they pause or stop watching something — Netflix can segment its users based on these behaviors.

This approach not only allows Netflix to provide personalized content recommendations but also informs its decisions about which original series or films to produce.

Tips and best practices for effective market segmentation

• Adopt a data-driven approach — Relying on data for research and analysis allows you to quantify and define market segments accurately. This method leads to a more rationalized approach to market segmentation
• Define personas — Because market segmentation is based on user characteristics, defining user personas can help map these characteristics effectively. This process aids in creating a more precise segmentation
• Use established business models — Employing proven business models, such as Porter’s Five Forces , can provide insights into market conditions. Understanding factors such as market penetration and competition can lead to robust market segmentation

Market segmentation forms the bedrock of an effective marketing strategy. It ensures that the product is built for the right target customers, guarantees product profitability, fosters long-term customer retention, provides return on investment for marketing efforts, and supports an efficient business model.

Taking it one step further, market segmentation ensures that products are highly personalized and tailored for specific customer segments. Therefore, product and product marketing teams that adopt the market segmentation approach are best positioned to capitalize on the market for ensuring product success.

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What Is Market Segmentation? Types, Benefits, Examples

Appinio Research · 28.09.2023 · 24min read

Are you ready to unlock the power of understanding your customers on a deeper level, tailor your strategies precisely, and gain a competitive edge in your industry? In this comprehensive guide, we delve into the world of market segmentation, breaking down its intricacies, best practices, challenges, and real-world examples.

Whether you're a seasoned marketer or new to the field, the insights and strategies within will empower you to create more effective marketing campaigns and connect with your target audience on a profound level.

Introduction to Market Segmentation

Market segmentation is the foundation of successful marketing. It allows you to break down your broad target audience into smaller, manageable segments. Each of these segments shares common traits, making it easier to tailor your marketing efforts to their specific needs.

What is Market Segmentation?

Market segmentation is the process of dividing a larger market into smaller groups based on shared characteristics, such as demographics, geographic location, psychographics , and behavior. It is vital because it enables you to:

• Better Understand Your Customers: Segmentation helps you gain insights into what drives your customers' buying decisions and behaviors.
• Improve Marketing ROI: Tailoring your marketing efforts to specific segments increases the chances of reaching the right people with the right message.
• Enhance Customer Satisfaction: When you deliver what your customers want, they are more likely to be satisfied and loyal.

Purpose of Market Segmentation

The primary purpose of market segmentation is to:

• Identify Target Markets : It helps you pinpoint your products or services' most promising customer groups.
• Customize Marketing Strategies: Segmentation enables you to craft marketing campaigns that resonate with each segment's unique preferences and needs.
• Optimize Resource Allocation: You can allocate your resources more efficiently by focusing on high-potential segments.

Benefits of Effective Market Segmentation

Effective market segmentation offers several advantages:

• Increased Sales: You can boost sales and revenue by tailoring your offerings to specific segments.
• Enhanced Brand Loyalty: Customers are more likely to remain loyal to your brand when they feel understood.
• Competitive Advantage: Segmentation helps you stand out in a crowded market by addressing unique customer needs.
• Improved Product Development : Insights from segmentation can guide product development to meet market demands better.

Form purpose

How to Conduct Market Segmentation?

Implementing market segmentation effectively involves a series of crucial steps that can significantly impact the success of your marketing efforts. Let's dive deeper into these key steps to help you understand how to navigate them successfully.

1. Data Collection and Analysis

Data is the foundation of effective market segmentation. It provides the insights needed to understand your audience better and make informed decisions.

• Data Sources: Gather data from various sources, including customer surveys, online analytics, CRM systems, and social media platforms.
• Data Quality: Ensure the accuracy and reliability of your data. Inaccurate data can lead to flawed segmentation.
• Data Segmentation Variables: Identify the specific variables you will use for segmentation. These could include demographics, psychographics, behavioral data, and geographic information.
• Data Analysis Tools: Utilize data analytics tools and software to uncover patterns and trends within your data. These tools can help you identify meaningful segments.

2. Identify Target Customer Groups

Once you have collected and analyzed your data, the next step is to group your customers into distinct segments based on shared characteristics.

• Segmentation Methodology: Choose a segmentation methodology that aligns with your business goals. Common methodologies include clustering analysis, factor analysis, and decision trees .
• Segmentation Variables: Apply the segmentation variables you identified during data collection. For example, if you're in the fashion industry, you might segment based on factors like age, style preference, and shopping habits.
• Segmentation Criteria: Determine the criteria for each segment. These criteria could include age ranges, income brackets, and purchasing behavior.
• Segment Profiles: Develop detailed profiles for each segment. Include information such as demographics, psychographics, buying patterns, and preferences. These profiles will serve as the foundation for your marketing strategies.

3. Create Customer Personas

Customer personas are fictional representations of your ideal customers within each segment.

They help humanize your audience and guide your marketing efforts. To create effective personas:

• Persona Characteristics: For each segment, create personas that encapsulate the key traits and behaviors of the typical customers in that segment.
• Detailed Profiles: Dive deep into each persona's life. Consider their age, gender, job, hobbies, interests, pain points, and aspirations.
• Empathy Building: Put yourself in the shoes of your personas. Understand their needs, desires, and challenges.
• Use Cases : Personas should be actionable. They should guide your marketing messaging, product development, and customer engagement strategies.

4. Evaluate Market Segments

Not all segments are created equal. Some will have more potential and value than others.

Evaluating your segments helps you prioritize where to allocate your resources.

• Size and Growth: Determine the size of each segment and its growth potential. Larger, rapidly growing segments are generally more attractive.
• Profitability: Analyze the profitability of each segment. Consider factors such as margins, customer lifetime value, and acquisition costs.
• Accessibility: Assess how easily you can reach and engage with each segment through your marketing channels.
• Alignment with Business Goals: Ensure your selected segments align with your business objectives and capabilities.

5. Segment Activation and Strategy Development

With your segments defined and evaluated, it's time to create tailored marketing strategies for each one. This step is where your market segmentation efforts start translating into action.

• Messaging and Content: Craft marketing messages and content that resonate with each segment's unique needs and preferences. Tailor your language, visuals, and tone accordingly.
• Channel Selection: Choose the most effective marketing channels to reach each segment. For example, younger consumers might be more responsive to social media advertising, while older demographics might prefer email marketing.
• Product or Service Customization: If feasible, adapt your products or services to better meet the needs of specific segments. This customization can significantly enhance customer satisfaction.
• Pricing Strategies: Develop pricing strategies that align with each segment's willingness to pay. Some segments may be willing to pay a premium for specific features or benefits.

By following these critical steps in market segmentation, you'll be well-prepared to create effective marketing campaigns that resonate with your target audience. Remember that market segmentation is not a one-time task; it's an ongoing process that requires regular evaluation and adjustment as market conditions and customer preferences evolve.

Market Segmentation Best Practices

1. using data analytics.

Data analytics plays a pivotal role in enhancing your market segmentation efforts. By leveraging advanced analytical tools and methodologies, you can extract valuable insights from your data to create more effective and targeted marketing strategies.

Data analytics allows you to delve deeper into your customer data, identifying hidden patterns and trends that may not be apparent through traditional methods. It enables you to comprehensively understand your segments, going beyond surface-level demographics to uncover behavioral nuances and preferences.

Predictive modeling, a subset of data analytics, empowers you to forecast future customer behavior. This is invaluable for anticipating customer needs, optimizing resource allocation, and proactively responding to market changes. By analyzing historical data, you can make data-driven predictions about which segments are likely to grow or decline, enabling you to tailor your strategies accordingly.

A/B testing is another essential component of data-driven segmentation. By experimenting with different marketing strategies within each segment, you can determine what resonates best with each group. This iterative process allows you to refine your approach continuously and improve campaign effectiveness.

2. Conducting Surveys and Focus Groups

While data analytics provides quantitative insights, surveys and focus groups offer qualitative perspectives from your customers. These methods allow you to better understand customer motivations, pain points, and unmet needs.

Surveys are a valuable tool for collecting structured feedback from a large number of customers. By crafting targeted survey questions , you can gather insights specific to each segment's preferences and expectations. Surveys can uncover customer sentiments, shedding light on emotional connections and potential loyalty drivers.

Focus groups take a more qualitative approach, bringing together a small group of customers representing each segment to engage in discussions. These discussions delve into the "why" behind customer behaviors and preferences. Focus groups provide a forum for customers to express their opinions and feelings, offering rich insights that may not be apparent from data alone.

Both surveys and focus groups enable you to humanize your segments by putting faces and voices to the data. This qualitative information complements quantitative data, providing a more holistic view of your customers.

3. Monitoring and Adapting to Market Changes

Market segmentation is not a static process; it requires continuous monitoring and adaptation to remain effective. Markets are dynamic, and customer preferences evolve over time. To stay relevant and competitive, you must be agile and responsive to changes in the marketplace.

Continuous monitoring involves regularly analyzing data and assessing how your segments are performing. Key performance indicators (KPIs) specific to each segment should be tracked to evaluate the success of your strategies. Monitor metrics such as conversion rates, customer retention, and ROI to gauge the effectiveness of your segmentation efforts.

Market changes, including shifts in consumer behavior and emerging trends, should be closely watched. These changes can create opportunities or threats for your segments. By staying attuned to market dynamics, you can proactively adjust your segmentation strategies to capitalize on new opportunities or mitigate potential risks.

Competitive benchmarking is another vital aspect of monitoring. Keep an eye on how your competitors approach segmentation and adapt their strategies. Analyze their successes and failures within specific segments to identify areas for improvement or differentiation.

Incorporate feedback from your customers into your segmentation strategy. Customer feedback provides real-time insights into changing preferences and pain points. Make adjustments based on this feedback to enhance the relevance of your segments and refine your marketing approaches.

What Factors Influence Market Segmentation?

Market segmentation is influenced by a variety of factors, both external and internal to your organization. Understanding these factors is essential for crafting effective segmentation strategies.

External Factors

External factors are elements beyond your organization's control that can impact your market segmentation efforts. Here's a closer look at some vital external influencers:

• Market Dynamics: Keep an eye on the broader market dynamics, including industry trends, economic conditions, and regulatory changes. For example, a sudden shift in consumer preferences towards sustainability can create new segmentation opportunities for eco-friendly products.
• Competitive Landscape: Analyze your competitors' segmentation strategies. Understanding how they target and position themselves within market segments can help you identify gaps or areas for differentiation.
• Technological Advancements: Advances in technology can open up new possibilities for segmentation. For instance, the rise of artificial intelligence enables more precise data analysis, allowing for more sophisticated segmentation based on behavioral data and predictive modeling.
• Cultural and Social Shifts: Changes in societal values, lifestyles, and cultural norms can influence consumer preferences and behaviors. Segmentation should be responsive to these shifts to remain relevant.
• Globalization: If your business operates internationally, consider how cultural differences, language barriers, and regional preferences can affect your segmentation approach. Localized strategies may be necessary.

Internal Factors

Internal factors refer to aspects of your organization that impact your market segmentation decisions. Here are some internal factors to consider:

• Product Portfolio: Your product or service offerings play a significant role in segmentation. Different products may appeal to different segments, leading to varied segmentation strategies.
• Marketing Capabilities: Assess your team's marketing expertise, tools, and resources. Your segmentation strategy should align with your team's capabilities and available technology.
• Organizational Goals: Your company's objectives and growth strategies can influence your segmentation priorities. For example, a startup looking to establish a foothold in the market may prioritize targeting a niche segment.
• Resource Allocation: Consider the budget and resources allocated to your segmentation efforts. More complex segmentation strategies may require more significant investments in data analysis and marketing.
• Brand Identity: Your brand's identity and values should align with the segments you target. Ensure that your brand message and positioning resonate with the preferences and values of your chosen segments.

Market Research and Analysis

Effective market segmentation relies heavily on robust market research and analysis. Here's how to leverage these factors to refine your segmentation strategy:

• Continuous Monitoring: Markets are dynamic, and consumer preferences change over time. Regularly monitor market data to identify shifts in behavior, emerging trends, or new segments that may have evolved.
• Competitive Benchmarking: Analyze how your competitors approach segmentation. This can provide insights into which segments are most lucrative and which are underserved.
• Feedback Loop: Establish a feedback mechanism with your customers. Collecting feedback can help you fine-tune your segments and marketing strategies. Customer surveys, reviews, and direct engagement are valuable sources of feedback.
• Data Enrichment: Continuously enrich your customer data with new information. This can involve incorporating data from social media, customer interactions, and third-party sources to build more comprehensive customer profiles.
• Segment Performance Metrics: Define key performance metrics for each segment, such as conversion rates, customer lifetime value, and customer satisfaction. Regularly assess how each segment is performing against these metrics.
• Segment Optimization: Be prepared to optimize and adapt your segments based on your research findings. Segmentation is not static; it should evolve as your understanding of your market deepens.

Unlock the power of data-driven market segmentation with Appinio 's advanced data collection solutions. Seamlessly gather market insights, consumer preferences, and behavioral data to inform your segmentation strategy. Appinio empowers you to stay ahead of market dynamics, monitor competitors, and continuously refine your segments.

Book a demo today to see how Appinio can elevate your market research and segmentation efforts, helping you make data-driven decisions that drive success!

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Market Targeting and Positioning

Once you've defined your segments, the next critical steps are targeting specific market segments and positioning your brand effectively within those segments.

1. Select Target Market Segments

Selecting target segments involves prioritizing which customer groups to focus your marketing efforts on.

• Segment Prioritization: Consider the potential of each segment. Factors such as size, growth rate, profitability, and alignment with your business goals should influence your choices.
• Resource Allocation: Allocate your marketing budget and resources according to the priority of your selected segments. High-priority segments may receive more substantial investments.
• Competitive Analysis: Assess how your competitors target these segments. Are there gaps or underserved needs within these segments that you can exploit?
• Customer Needs: Ensure that the segments you target align with the unique needs and preferences of your offerings. Targeting segments that genuinely benefit from your products or services increases your chances of success.

2. Develop Marketing Strategies for Each Segment

With your target segments identified, it's time to craft tailored marketing strategies for each one.

• Messaging and Content: Customize your marketing messages and content to resonate with each segment's specific needs and preferences. Tailor your language, visuals, and tone accordingly.
• Channel Selection: Choose the most effective marketing channels to reach each segment. Consider factors such as their online behavior, preferred social media platforms, and communication preferences.
• Product or Service Customization: If feasible, adapt your products or services to meet the needs of specific segments. Customization can significantly enhance customer satisfaction and loyalty.
• Pricing Strategies : Develop pricing strategies that align with each segment's willingness to pay. Some segments may be willing to pay a premium for specific features or benefits, while others may prioritize cost-effectiveness.
• Promotions and Incentives: Create promotions and incentives that appeal to each segment's motivations. For example, loyalty programs may work well for segments seeking long-term value, while limited-time offers may entice more price-sensitive segments.

3. Position Your Brand in the Market

Effective brand positioning is crucial for establishing a strong presence within your target segments. Consider the following strategies:

• Unique Value Proposition (UVP): Clearly define what sets your brand apart in the minds of your target segments. Your UVP should resonate with their specific needs and preferences.
• Consistency: Ensure that your brand's messaging and positioning remain consistent across all touchpoints, from your website and social media to advertising and customer support.
• Competitive Analysis : Continuously monitor how your competitors position themselves within the same segments. Identify opportunities to differentiate your brand.
• Customer Feedback: Listen to customer feedback and incorporate it into your brand positioning strategy. Address pain points and improve on aspects that matter most to your segments.
• Adaptability: Be prepared to adapt your brand positioning as market conditions and customer preferences evolve. Staying relevant is critical to long-term success.

By thoroughly considering these factors and taking deliberate actions in selecting target segments and positioning your brand, you can increase the effectiveness of your market segmentation efforts and achieve better results in reaching and satisfying your customers.

Remember that market segmentation is a dynamic process requiring ongoing evaluation and adjustment to stay aligned with changing market dynamics and consumer behaviors.

Market Segmentation Examples

Learning from real-world applications of market segmentation can provide valuable insights into how businesses successfully target and engage with their diverse customer bases. Let's explore some in-depth examples to understand the nuances of segmentation strategies.

1. Coca-Cola

Coca-Cola, a global beverage giant, excels in market segmentation by tailoring its marketing messages to different age groups. One of its successful strategies involves campaigns targeting teenagers, young adults, and older consumers separately.

• Teenagers: Coca-Cola often appeals to teenagers with vibrant, youth-oriented advertisements, associating its products with fun and socializing. These ads often feature music, sports, and social events, aligning with the preferences of this demographic.
• Young Adults: For young adults, Coca-Cola emphasizes themes like happiness, freedom, and self-expression. They focus on experiences and moments of joy, showcasing how their products can enhance social gatherings and celebrations.
• Older Consumers: In contrast, campaigns aimed at older consumers focus on heritage, nostalgia, and the comforting aspects of the brand. These ads often evoke sentiments of tradition and long-standing quality.

By segmenting its market based on age groups, Coca-Cola effectively tailors its messaging to connect with customers across various life stages.

Amazon, the global e-commerce giant, excels in behavioral segmentation . It uses data analytics and sophisticated algorithms to recommend products based on a customer's past purchases and browsing history.

• Behavioral Data Analysis: Amazon tracks user behavior extensively, including the products customers view, add to their carts, and purchase. This data is analyzed to understand individual preferences and buying patterns.
• Personalized Recommendations: Based on behavioral analysis, Amazon provides customized product recommendations to each user. These recommendations appear prominently on the homepage and in email communications.
• Targeted Email Campaigns: Amazon also uses behavioral data to send targeted email campaigns. For example, if customers frequently shop for electronics, they may receive emails featuring new tech products and deals.

Amazon's behavioral segmentation strategy demonstrates how leveraging customer data can enhance the shopping experience, boost sales, and create customer loyalty.

Apple, the tech giant known for its innovative products, excels in psychographic segmentation . Its segmentation strategy focuses on creating a loyal customer base that values innovation, design, and a seamless user experience.

• Psychographic Traits: Apple's customers are typically characterized by traits such as creativity, a love for cutting-edge technology, and a preference for simplicity and elegance in design.
• Product Lineup: Apple offers a range of products that cater to specific psychographic segments. The iPhone appeals to those seeking a premium smartphone experience, while the iPad targets creatives and professionals.
• Brand Loyalty: Apple's emphasis on user experience, ecosystem integration, and design aesthetics fosters brand loyalty among its target segments. Customers are often willing to pay a premium for Apple products.

Apple's success story underscores the importance of aligning your brand with the values and preferences of your target segments, creating a solid emotional connection with customers.

4. Procter & Gamble (P&G)

P&G, a consumer goods conglomerate, excels in market segmentation by understanding the diverse needs of its customer base and launching products tailored to each segment.

• Product Diversification: P&G owns a vast portfolio of brands, each serving specific consumer segments. For instance, they offer laundry detergents for families with young children (Tide) and premium skincare products for health-conscious consumers (Olay).
• Localized Marketing: P&G tailors marketing campaigns to resonate with regional and cultural differences. Advertisements and product formulations may vary based on local preferences and needs.
• Continuous Innovation: P&G invests heavily in research and development to identify emerging consumer trends. They use this data to innovate and introduce new products or enhance existing ones to meet evolving segment demands.

P&G's success underscores the importance of profoundly understanding each segment's unique needs and preferences and tailoring both products and marketing strategies accordingly. These real-world examples illustrate the diverse approaches businesses take in market segmentation. By carefully analyzing customer data, understanding psychographic traits , and adapting strategies to align with customer needs, these companies have achieved success in delivering products and messages that resonate with their target segments.

As you apply these insights to your own business, remember to continuously reassess and refine your segmentation strategies based on changing customer behaviors and market conditions to stay competitive and relevant in your industry.

Market Segmentation Challenges

Common mistakes to avoid.

Market segmentation can be complex, and several common mistakes can hinder its effectiveness. Avoiding these pitfalls is critical to achieving successful segmentation outcomes.

One common mistake is over-segmentation, where businesses create too many segments, leading to resource inefficiency and confusion. While granularity is essential, it's equally vital to strike a balance and avoid creating segments that are too narrow to yield meaningful insights or support viable marketing strategies.

Ignoring Feedback is another misstep. Failing to incorporate customer feedback can result in missed opportunities for improvement. Customer feedback is a valuable source of information that can guide your segmentation strategy and help you address customer pain points effectively.

Static segmentation is a very common mistake as well. Segments should evolve as market conditions and consumer preferences change. Failing to adapt your segments over time can lead to stagnation and missed opportunities. Regularly reassess and update your segments to stay aligned with the evolving landscape.

Overcoming Challenges in Implementation

Overcoming challenges in market segmentation requires a proactive and strategic approach. Here are strategies to tackle common obstacles:

• Segmentation Reevaluation: Regularly assess and adjust your segments based on changing market conditions. This ongoing process ensures that your segmentation remains relevant and effective.
• Data Quality Management: Invest in data quality management to ensure the accuracy and reliability of your data. Clean, reliable data is essential for meaningful segmentation.
• Team Collaboration: Encourage collaboration between different departments within your organization, such as marketing, sales, and product development. Alignment across teams ensures that everyone is working toward common segmentation goals.
• Stakeholder Education: Ensure that all stakeholders within your organization understand the importance of market segmentation and how it impacts their roles. This shared understanding fosters alignment and commitment to segmentation strategies.
• Pilot Programs: If you're implementing segmentation for the first time, consider starting with pilot programs. Testing your segmentation strategies on a smaller scale allows you to identify challenges and refine your approach before a full-scale rollout.
• External Expertise: In cases where segmentation complexities are high, consider seeking external expertise or consulting services. Experienced professionals can provide valuable insights and best practices.

By addressing these challenges head-on and proactively implementing these strategies, you can enhance the effectiveness of your market segmentation efforts and achieve better results in reaching and satisfying your customers. Remember that market segmentation is a dynamic process that requires continuous improvement and adaptation to remain successful in a rapidly evolving business landscape.

In conclusion, market segmentation is your key to reaching and engaging your customers effectively. By understanding their unique needs, behaviors, and preferences, you can tailor your marketing strategies for maximum impact. Remember, it's not just about what you sell but how well you know your audience. Stay agile, adapt to changes, and never stop refining your segmentation efforts to stay ahead in the ever-evolving market.

As you apply the insights and best practices from this guide, keep in mind that successful market segmentation is an ongoing journey. Embrace the dynamic nature of your audience and the market itself. With dedication and a customer-centric approach, you can build lasting relationships and achieve remarkable success in your business endeavors.

How to Conduct Market Segmentation in Minutes?

In a world where timely decisions can make or break a business, Appinio emerges as a game-changer in market segmentation. As a real-time market research platform, it empowers companies to harness the power of consumer insights effortlessly.

• Lightning-Fast Insights: Say goodbye to long, tedious research processes. With Appinio, you'll transform questions into actionable insights in mere minutes.
• User-Friendly Experience: No need for a research PhD. Appinio's intuitive platform is designed for anyone to navigate, making market research accessible to all.
• Global Reach, Targeted Precision: Define your ideal audience from over 1200 characteristics and survey them in 90+ countries. Appinio ensures you reach the right people, wherever they are.

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• What is market segmentation?

Last updated

18 March 2023

Reviewed by

Learn all about market segmentation, what it is, how to do it, and the benefits of a properly implemented market segmentation.

It involves sectioning the total addressable market into discrete, smaller groups. This marketing technique is used to group or ‘segment’ buyers with common characteristics to tailor their needs. 

Each group shares common characteristics that enable the firm or business to create targeted experiences or products for them. A group may have customers with the same income, personality traits, age, religion, or interests. 

• Why is market segmentation important?

Market segmentation allows for the customization of brand messages or products for different customers. Using customization, customers will feel more valued and appreciated since the brand caters directly to their needs and wants. It is also essential in determining different consumer groups’ purchasing habits. For a brand, it helps identify social, cultural, or economic factors influencing different customer groups’  purchasing behaviors. 

Furthermore, market segmentation allows businesses to identify the most promising customer groups to focus their marketing efforts on. With a well-segmented market, brands have better alignment with their goals and have a sharper focus on their different customer groups, thus delivering better business results. 

• Five types of market segmentation

The types of market segmentation used today include:

1. Demographic segmentation

This is the most common type of market segmentation. It refers to sectioning the market using different variables such as nationality, education, gender, age, income, or personality. You can use demographic surveys to reveal these characteristics of the target market. 

2. Firmographic segmentation

This type of segmentation is common in business-to-business marketing. It relies on the characteristics of business customer groups, such as the number of customers, size of the firm, profits, ownership, location, or annual revenue, to identify groups of businesses most likely to benefit from another business's services or products. 

3. Geographic segmentation

This involves sectioning the target market based on geographical location. For example, geographical segmentation allows businesses to section customers depending on where they live or work. Under this type of segmentation, geographical boundaries such as states, countries, regions, and towns/cities determine how to tailor the product or service to customers in that location. 

4. Behavioral segmentation

This refers to sectioning the market depending on customer behavior. Behavioral segmentation allows businesses to segment the target audience by their decision-making patterns and behaviors. It involves knowing both the customer's attitudes and perspectives towards your brand and how this plays out in their actions and behavior. 

5. Psychographic segmentation

This groups the target audience based on their lifestyle, beliefs, values, interests, and attitudes. Psychographic segmentation provides a framework for understanding the psychological factors behind customers' purchasing decisions. This type of segmentation allows a brand to understand the motivations behind why customers make certain choices, i.e., the attitudes and beliefs driving behavior. 

• Benefits of market segmentation

A segmentation driven marketing strategy offer several business benefits. The following describes some of the key ones:

1. Improves campaign performance

Market segmentation allows companies to know their target audience and tailor the perfect message that appeals most to them. When a business identifies and understands its key audience, it can appropriately communicate brand values and benefits of the products or services they are offering to its customers. 

2. Informs product development

It also encourages the development of new products that will cater to the customers' needs. Once a brand focuses on its target audience, it can learn what they need and identify product gaps in the market. Through market segmentation, companies can develop new products with the right features that specific audiences will likely buy. 

3. Reveals areas to expand

With segmentation, a brand can uncover new information on its target audiences. Segmentation can reveal untapped areas with potential customers into which your brand can expand. 

4. Improves business focus

Business focus is among the most important benefits of market segmentation. When a company concentrates on target customers, its focus improves. A brand can focus on targeted segments with the right products or services. In addition, a business has clear objectives which automatically enhance the firm's business focus. 

5. Informs other business decisions

With valuable insights gathered from identifying the target audience, a business can unearth helpful information that can help them make better-informed business decisions. Market segmentation allows companies to consider other decisions like pricing and distribution strategies. A company will consider the customer's price sensitivity and how to boost sales while satisfying their target audiences. 

6. Build customer loyalty

Market segmentation is also an excellent way to retain customers. When you tailor products or services to meet customers' needs, customers overall can be maintained and improved. Customer retention rate increases and they become more loyal to the brand. 

7. Reach new markets

With the use of geographic segmentation, reaching new markets is possible. Through market segmentation, businesses can identify hidden and underserved markets. Once identified, businesses can develop products and strategies to serve customers in these markets. 

8. Reduce customer acquisition costs

Also, by tailoring market campaigns, businesses can make a more cost-effective use of marketing resources and save on costs required for customer onboarding. Market segmentation is cost-effective since it allows a business to focus on specific resources that attract their target audience while spending less time on non-core audiences. 

9. Build better products

When a company narrows down to a specific target market, it can focus on customers' pain points concerning certain products. With the newly acquired information, companies can develop better products that meet their customer's needs and address their challenges.

• How to determine your market segment

Although there is no single way to determine your market segment, the following steps can be helpful.

Step 1: Set clear objectives

The first step in determining your market segment is to set clear objectives. This includes clarifying the goals and expectations of performing a market segmentation. 

Step 2: Collect data through market research

Market research goes beyond understanding your customers to have a macro level view of the marketplace as a whole. You can do this through online focus groups, in-person interviews, research surveys, or polls. Also, use analytic tools like Alexa and Quantcast to give you an overview of your customers. The US Census Bureau site is also helpful in gathering demographic information such as income, education, gender, and age. 

Step 3: Create buyer personas

Buyer personals are semi-fictional representations of the target audiences. To help you create buyer personas, use the following approaches:

Use research from third parties combined with your own insights

Gather feedback from your sales team

Send out customer surveys

Once you have collected the information, organize groups based on the various buyer personas. 

Step 4: Build marketing strategies

Based on the collected responses, identify the market segments that are most relevant to your brand. Many firms use a combination of segmentation strategies to build a marketing strategy. However, choose one that fits naturally with the identified target market. Some of the marketing strategies to use include:

Expansion opportunities

Niche markets

Step 5: Test a marketing strategy that works

Once the segments are in place, test the findings and review the customer segments while making appropriate changes where needed. Then, create segmented marketing campaigns which communicate directly to the customer persona. For instance, consider communicating around unique values or beliefs that resonate best with them. 

• What are some market segmentation strategies?

The four market segmentation strategies used by firms to segment their target population are:

Undifferentiated strategy

This involves using a mass marketing approach to sell products to customers. Under this strategy, the entire market is targeted instead of a small segment. An example is generic consumables such as salt or sugar. You can advertise products using this approach, as many consumers have the same needs for the products. 

Companies that use the strategy include Coca-Cola and Colgate, who have overwhelming market share and mass market appeal. They sell products that do not require customer segmentation, as they target all consumers within a population. 

Concentrated strategy

This is where a business chooses only one market segment to focus its resources on. The market segmentation strategy is common among smaller businesses starting out in the marketplace. The advantage is that it allows companies to analyze the needs of only one segment and design product and communication strategies to match. 

  Differentiated strategy

This is where the business focuses on two or more market segments. Under this strategy, the firm develops a distinct marketing mix for each segment. The advantage of a differentiated marketing strategy is an increase in total sales, as it targets a larger proportion of the addressable market versus a concentrated strategy. However, its drawback is the higher costs of developing multiple marketing and product development programs. 

Hyper-segmentation

This is a strategy that allows for customization for each particular individual. It focuses on creating unique and targeted experiences tailored for each customer. Hyper-segmentation strategy utilizes data analytics, artificial intelligence, and automation to personalize products and services. For instance, Amazon may provide suggestions based on previous purchases unique to an individual customer based on specific individual customer data. 

• Examples of market segmentation

You can see market segmentation in everyday advertising campaigns. Some examples include:

A clothing store may segment its target consumers based on the location of where these customers live. The brand may advertise its products to accommodate customers based on these locations. Also, based on the location, the firm may sell seasonal products like winter or summer clothing based on its geographic segmentation. For instance, in a region that is cold most of the year, the business may want to promote the sale of warm and cozy outfits.

Streaming services like Netflix segment the target market based on the age of their target audience—for instance, child versus adult content. They may also section their market based on the tech-savviness of their users. Spotify, for example, may target younger adults, especially Gen Z and millennials, rather than older adults. 

A sports brand like Nike sections its target market based on customers' interests. For instance, it will tailor products for athletes, gym lovers, sportswomen, and sportsmen. The sportswear manufacturer may modify their products and communications to cater to the needs that appeal to each distinct group. 

• Limitations of market segmentation

Although market segmentation offers many benefits, the technique also has limitations that include the following:

It needs extensive research and therefore can be expensive

Brands often spend significant resources gathering data and researching their broad customer bases. In addition, companies may need to create customized marketing strategies for the different segments of customers (if they aim to cater to multiple segments). Brands may also have to spend an increased amount on production costs to satisfy the different segments, again, if they choose to target multiple ones. 

Has a higher reliance on up-to-date data

Market segments evolve; thus, keeping up to date with them can be expensive and time consuming. Segmentation requires businesses to be mindful of the changing trends to tailor services and products that cater to their customers' needs. 

It is expensive and time consuming to cater to small numbers of individuals

Producing products for every individual is not feasible for most brands. Tailoring specific products for many different market segments is more expensive than mass production, and mass marketing to all potential customers. Also, being very specific with your targeting risks alienating potential customers who may fall outside your segments. 

It increases the risk of inappropriate targeting

Market segmentation increases the risk of inappropriately marketing products to the wrong audience. In addition, since you base market segmentation on the idea that similar demographics have the same values and share similar traits, there is a risk the company may lump together the needs and preferences of people within that segment and not capture important individual nuances.

• Three common segmentation errors

Here are the common mistakes that businesses make when sectioning their target markets:

1. Segments becoming obsolete

By not updating your market segments frequently, you risk losing customer relevance and loyalty. Customer trends change fast. Thus, it is crucial that you perform quarterly or yearly surveys to ensure you capture the target audience's changing needs. 

2. Creating segments that are too small

When you choose and focus on a market segment that is too small, there will be less potential for revenue and turnover, which in turn affects the profitability of the business.

3. Not focusing on the return on investment

Market segments do not always guarantee profits. For instance, a larger customer segment may not have the purchasing power for your product or services compared to a smaller but more affluent segment, which may lead to lower overall profitability or negative returns.

Learn more about market research platforms

What are the five essentials of effective market segmentation.

An effective market segment should be measurable, actionable, accessible, substantial, and identifiable.

Which companies use market segmentation?

Many companies use market segmentation to target various categories of their customer base—for example, Proctor and Gamble, Netflix, Apple, and Unilever.

Does Amazon rely on market segmentation?

Amazon has segmented its market to include potential new customers as well as frequent shoppers. In addition, it uses behavioral segmentation to understand its target audience. 

What is Nike's market segmentation?

Nike incorporates four types of market segmentation (geographic, demographic, behavioral, and psychographic) to create personalized products for its customer base.

What is McDonald's segmentation?

McDonald's marketing segmentation focuses primarily on demographic segmentation. Their products mainly target families, children, and students interested in fast and convenient foods.

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market Segmentation Research: a comprehensive guide

Kat Figatner

Senior Vice President, In-Person Qualitative Research

Chief Executive Officer

Robbin Jaklin

Former President

Your prospects and customers are not all the same—segmentation research helps guide your targeting and messaging strategies.

Market segmentation in consumer research is essential for effective marketing, as it recognizes that products and services cannot appeal to everyone universally. By identifying specific groups with varying attitudes, needs, and motivations, segmentation research enables companies to develop a targeted portfolio of brands and tailor marketing communications to distinct consumer segments.

Segmentation should be purpose-built and customized for each product category, involving an investigative and often multi-modal phased design and analysis process.

download the ebook

A primer to understanding segmentation research.

Your prospects and customers are not all the same—learn how segmentation research can help guide your targeting and messaging strategies.

Defining Segmentation

Customer segmentation refers to the process of dividing a customer base into groups of individuals that are similar in specific ways relevant to marketing, such as age, gender, interests, spending habits, and so on. It enables businesses to target these groups effectively and allocate marketing resources to the best possible effect.

Segmentations vary in complexity and analytical depth:

• Simple segmentations use straightforward criteria like generation or ethnicity, relying on cross-tabulated data.
• Intermediate segmentations apply basic advanced analytics, such as cluster analysis on Attitude & Usage study data.
• Complex segmentations are in-depth, often the main focus of the study, requiring iterative and/or multi-modal processes with extensive use of advanced analytics.

When do you need a segmentation study?

Typically segmentations are done to:

• Uncover new growth opportunities through tailored, industry-specific segmentation research.
• Understand the array of consumer experiences and needs.
• Develop engaging personas and creative presentations for segmentation results.
• Help refine and expand a brand’s target market share more effectively.
• Deliver actionable, “living” segmentations for effective organizational implementation.

Exploring Types of Segmentation

There are an endless number of ways you can segment.

• Attitudinal Segmentation: (also known as Psychographic Segmentation) Groups people with similar attitudes, then profiles them using demographics, behaviors, brand perceptions, media habits, etc., for targeted strategies.
• Occasion-Based Segmentation: Focuses on product/service use in different situations, identifying diverse consumer needs and opportunities for growth.
• Behavioral Segmentation: includes key aspects of purchase behavior, usage rates, and benefits sought from a product or service. It is particularly useful in tailoring marketing messages and promotions to fit specific consumer habits, enhancing customer engagement and retention.
• Marrying Behavior with Attitudes: Combines transactional and attitudinal data to form unique segments.
• Geographic Segmentation: This type of segmentation divides the market based on geographic boundaries or characteristics. This can refer to regional or location-based, climate or cultural preferences impacted by geography.
• Needs-based: Categorizes consumers based on their specific needs and desires regarding products or services. It focuses on identifying what drives customer purchases, ranging from functional requirements to emotional or psychological desires.

Case Study Insights: – Applying segmentation in practice with a focus on C+R’s Vodka Category Segmentation Case Study . – Comprehensive Pork Demand Landscape research partnering with the National Pork Board .

Getting started | What’s the right segmentation to use?

As with other custom research, one size does not fit all, and the segmentation should be designed based on what you are looking to accomplish. For example, each of our client situations is unique, so our recommended solution is really based on getting to know their business intimately and understanding how they intend to use the segmentation.

This process entails the following four phases, addressed in further detail in our segmentation eBook .

The Methodology of Segmentation in Marketing

Phase 1: sharing, planning and aligning.

Stakeholder Engagement and Kickoff Meeting

This initial phase is critical for the success of segmentation studies, involving considerable client investment and diverse stakeholder input. It starts with in-depth, individual interviews with key internal stakeholders to gather insights about the current market, future directions, and each stakeholder’s vision of success. These insights are crucial for shaping the research and garnering stakeholder buy-in. The findings from these interviews lay the groundwork for the kickoff meeting, a structured group discussion to further share knowledge, align objectives, and address any additional information relevant to the study, such as market trends, specific demographic insights, or the impact of external factors.

Phase 2: Building Empathetic Insights Through Qualitative Research

Understanding Consumers and Their Point of View on the Category

• Explore target consumers’ values, lifestyles, and how they perceive the category, including the fit of different products/brands.

Identify Motivations, Jobs, and Perceptions

• Analyze needs and behaviors in various contexts.
• Identify roles fulfilled by specific products/brands in the category.
• Investigate the decision-making process and brand perceptions to reveal factors influencing client’s brand and competitors.

Develop Hypotheses and Update Language

• Use qualitative insights to create language reflecting consumer perceptions and motivations.
• Involve Cohort Experts for multicultural consumer insights.
• Form an initial framework for validation in the quantitative phase.

Process and Techniques

• Overview of methodologies utilized in market segmentation.

Phase 3: Evaluating Need States and Survey Execution

This is the most involved stage. It includes everything from designing the sample, developing the questionnaire, and creating segmentation models. After gathering qualitative insights and formulating hypotheses , the questionnaire is developed , typically over 20 minutes, with the sample size adapted to the diversity of the target audience.

Pilot studies are employed to refine the survey, focusing on differentiating attributes through factor analysis. Once the data is collected, the segmentation process involves data preparation , such as removing poor quality responses and doing advanced analytics controlling for scale-use bias, and selecting appropriate segmentation analytics like ensemble clustering, latent class, or K-means based on data types. The final steps include segmentation validation techniques , ensuring stable and accurate segment classification.

Phase 4: Evaluating Need States and Survey Execution

The final stage of the segmentation study is to make the information digestible for your stakeholders.

An iterative approach with work sessions helps integrate the learning into the organization. It’s important to present data in a visually appealing and engaging way to maintain interest. Techniques to bring segments to life are also employed for clearer understanding.

The process culminates in a final presentation involving a cross-functional client team, where strategies and tactics for key segments are developed and activated.

Example custom segmentation research case studies

• Applied Case Study: Reference to the Kid Retail Strategy Case Study for practical application.
• Effective Segmentation of Moms Case Study .
• Targeting Donors Case Study
• For a more off the shelf solution, explore C+R’s SmartMarket Segmentation blog .

Tools and Analytics for Segmentation

Data Preparation involves removing poor quality data: respondents who answer with low-variability or inconsistent answers. We also control for scale-use bias: Because respondents use scales differently, it’s essential to take steps to control for that bias so that data is standardized across cases. Solutions involve either normalizing scale data or using scale measurements that avoid scale bias, such as Max-Diff utilities.

Segmentation analytics are chosen based on the type(s) of data used in the segmentation: categorical, binary, scaled, ranked, choice-based utilities, metric (such as counts or spend), or a mix of measures. Some examples include:

• Ensemble clustering : which uses several different algorithms to run hundreds of solutions, then aggregate the results into the most reproducible segments.
• Latent class : appropriate for clustering with variables of many different data types.
• K-means : a basic clustering method used on variables with equal variance.
• Hierarchical : applied to market structure studies to build taxonomies of products.
• Segmentation Validation is a step to ensure that the analytic solutions provide stable and accurate classification into segments.
• Information criteria : Akaike and Bayesian Information Criterion allows for direct model comparison to maximize likelihood while minimizing the overlapping that might occur with many segments.
• Split-half validation : Predict half of the cases out of sample using solution on the other half.
• Reproducibility : Test the ability of the solution to classify future cases into the existing model.

The Segmentation Solution is Final: Time to Tell the Story and Develop Personas

Once the segmentation solution is finalized, each segment will be profiled, sized, and prioritized for meeting the brand’s objectives for growth. Personas are created so that segments are presented in a quick and easily digestible way for the stakeholders to understand everything about the segments. Following are some examples:

Bringing the Segments to Life

We always encourage our clients to add one of the following methods for bringing the segments to life. Many times, we will involve C+R’s Storyologists to connect our clients to the segments to build understanding and empathy.

Video Clips that represent people from different segments—can be collected via online discussions, webcam interviews, or video platforms such as VoxPopMe.

Video Sizzle Reels — can be created using video clips to capture key insights in a compelling way—either more artistically stylized or more ethnographic documentary style.

Look Books — a tangible “book” to give to your stakeholders to use as a segment reference “bible.”

Animated Videos — these highlight the journeys/ consumer stories in a memorable way for staying power in your organization.

Social Media Profiles — segments are presented similar to a social media profile.

Introducing Real Consumers to Represent Segments — there are several ways to connect your stakeholders with “real consumers” for a deeper understanding of the segments:

Panel discussion — consumers sit on a panel and stakeholders ask questions.

Speed Dating — this is where stakeholders and people from key segments meet one on one and do a quick question and answer session; stakeholders rotate from person to person, each representing a different segment.

Walk in Segment’s Shoes — this is where we take clients into the life of each segment such as in-homes where people prepare meals and the clients join the family for dinner or go on dine-alongs, etc.

Read a segmentation case study

Learn how we partnered with an alcoholic beverage client to develop a comprehensive occasion-based segmentation, including how we worked to bring segments to life.

Co nclusion

Remember, segmentation methods continue to evolve, along with innovative and powerful ways of conducting and analyzing segmentation data. Segmentation research offers a wealth of insights, and addresses many strategies to grow your business, including:

• To drive sales by decreasing acquisition and retention costs, along with improving conversion
• To support opportunity identification and prioritization
• To provide marketing and sales with a clear and concise playbook by segment
• To identify the segments’ needs and preferences, which can be communicated in advertising and positioning messaging
• To support and build consideration of and loyalty to your brand
• To reduce or eliminate barriers to the brand
• To create opportunities against high-value customers and likely-to-convert segments

Hopefully, this primer educated and inspired you on the “how to’s” and benefits of segmentation research.

Next time you are thinking about conducting segmentation research, reach out and let’s chat about the best way to design the research to ensure you get the most actionable results out of your segmentation investment.

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What is Market Segmentation Research?

Market segmentation research is research that is used to help a firm identify segments in a market, with the end goal of developing different strategies and tactics for the different segments (i.e., market segmentation). Market segmentation research is often referred to as segmentation research.

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The output of segmentation research.

The table below is an example of the end-point of a basic segmentation study. It describes four segments of toothpaste buyers. Typically, there will be a lot more information than shown here, both in terms of richer qualitative information and detailed tables of differences between segments.

Types of segmentation research

Broadly speaking, segmentation research can be classified into four broad types of methodology:

Quantitative survey-based research

Research carried out on secondary data, research carried out based on company databases, qualitative research.

Survey-based research involves the collection of data from a survey of people in the market of interest, and then using a segmentation algorithm, such as k-means cluster analysis or latent class analysis, to form segments. This is the main way that companies form market segments, because/since this method is the most flexible and produces the most detailed outputs, in that:

• Any form of data can be collected, such as demographics, behavior, attitudes, price sensitivity, preferences, etc.
• As a byproduct, it can produce all the key bits of information that are required for the implementation of the market segmentation (e.g., the size of the segments, the differences between segments in their attitudes, media viewing, etc.)

Secondary data is data that has already been collected and is usually in the public domain. Most commonly this is data collected by government statistical agencies, such as census data. Segmentations based on secondary data tend to focus on demographics.

Segmentation research studies based on company databases tend to focus on behavioral data, such as frequency and types of products purchased, customer value, and loyalty.

The three most common qualitative research methods are focus groups, in-depth interviews, and ethnography. The strength of qualitative research is its ability to provide complex textual descriptions of how people experience a given research issue. One advantage of qualitative methods in exploratory research is that the use of open-ended questions and probing gives participants the opportunity to respond in their own words. Researchers often use qualitative and quantitative material to complement each other. The final qualitative report containing descriptions and estimates of the sizes of the segments.

The term rich data describes the notion that qualitative data and their subsequent representation should reveal the complexities and the richness of what is being studied and the type of data that can be used for forming segments. However, they present the most challenges in terms of implementation, since/because the nature of the research means that much of the information required for effective implementation is missing (e.g., media usage, the size of the segments).

Acknowledgments

The table of outputs is adapted from Haley, R. I. (1968). "Benefit Segmentation: A Decision Oriented Research Tool." Journal of Marketing 30(July): 30-35.

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Market segmentation — definition, types, and examples

If you’re a marketer or business owner, you know that segmentation is an effective way to expand your market and reach new customers.

But even if you understand market segmentation, sometimes you need a little inspiration to start doing it yourself. In this article, we’ll explore the key segment types with real-world examples to jump-start your company’s foray into market segments and help you improve your overall marketing efforts.

This post will cover:

What is market segmentation?

Types of market segmentation, demographic segmentation, examples of demographic segmentation, psychographic segmentation, examples of psychographic segmentation.

• Geographic segmentation
• Examples of geographic segmentation
• Behavioral segmentation
• Examples of behavioral segmentation
• Firmographic segmentation
• Examples of firmographic segmentation

Benefits of market segmentation

Frequently asked questions (faq).

Market segmentation is the practice of grouping customers together based on shared characteristics — including demographic information or common interests and needs. It’s a strategy for dividing a large, broader target audience into specific groups to create tailored and personalized marketing campaigns.

A market segment refers to the individuals who are grouped together based on their shared characteristics. The idea is that these people have similarities as consumers and respond similarly to marketing efforts. So companies need to communicate to them in a particular way, rather than just messaging their audience as a homogenous whole.

Businesses segment their market in different ways. Market segments should be based on extensive research of their potential customers’ demographics, lifestyles, needs, personalities, and more.

There are various types of segmentation that help businesses market to their target audience groups. We’ll go over the five main types of market segmentation and provide examples of each one.

Demographic segmentation is grouping customers based on data points like age, gender, marital status, occupation, and more. It’s essentially the “who” segment of your market. This is the most common type of segmentation because it’s easily identifiable. Demographic segmentation can help you understand the individuals that make up your audience and how to target your marketing efforts to them.

Demographic segmentation is typically sorted by characteristics like:

• Level of education
• Family size or status
• Professional occupation or role in a company

Demographic segmentation provides objective information on who is interested in your product or service. While it’s best to use other methods of segmentation as well, demographics provide an excellent starting point for marketers to group their audience.

Here are a couple examples of how demographic segmentation can be used:

Brooks Running Shoes and Dick’s Sporting Goods partnering on empowerment . Brooks and Dick’s are great real-life examples of using demographic segmentation to capture customer interest. The companies partnered to celebrate National Girls and Women in Sports Day with their “Empower Her” collection. It included a variety of women’s shoes and clothing, including products with phrases like “Dream Chaser” and “Respect Her Run.”

HelloFresh targeting female social media users . Lots of different people use meal delivery subscriptions, and marketing efforts often focus on making dinner prep easier for busy young professionals or families. But HelloFresh wanted to specifically target its primary market segment. Knowing its audience was 80% women and primarily between the ages of 30 and 50, HelloFresh created a female-oriented influencer campaign that produced buzz on foodie social media.

Demographic segmentation provides excellent initial information, but to understand the customer thought process, you need to use other segmentation methods too.

Psychographic segmentation is the “why” segment of your market. In this segmentation, you analyze how your audience thinks and create a strategy targeted toward customers’ attitudes and beliefs. These groups will likely have similar psychological characteristics, personal values, aspirations, and political opinions.

Companies generally divide psychographic segments based on:

• Personality
• Hobbies and interests
• Lifestyle choices
• Social or political views
• Values and beliefs

Psychographic segmentation is more difficult to segment because it’s more subjective. Social media analytics can be a helpful tool, but you should also plan to conduct interviews and surveys and hold focus groups to gather all the information you can about your audience.

Here’s an example of psychographic segmentation:

Marvel Studios marketing toward movie fanatics . Marvel creates engaging social media posts that generate excitement and anticipation for its upcoming films. The studio posts countdowns to the days leading up to the movie and includes clips likely to pique its audience’s interest. Marvel can market to people based on their interests in comic books, superheroes, film, and more.

This segmentation is what makes customers who they are. But who they are can be influenced by other factors, such as where they are.

Geographic market segmentation

Geographic market segmentation is the “where” segment of your market. In this type, customers are segmented based on their geographic location. These people will live in the same city or state — perhaps even in the same zip code — and are likely to have similar attitudes, needs, and cultural preferences based on their geography.

Companies generally separate geographic segments by:

• Climate region
• Population density
• Rural, urban, or suburban setting

Examples of geographic market segmentation

Geographic segmentation works best for companies that are trying to focus their efforts on a particular area. It could involve simple changes, such as adapting product offerings or the language used in marketing to fit the main language of a region or slang that would typically be used in one area.

Some examples of geographic market segmentation include:

McDonald’s adjusting items for individual countries . McDonald’s started out as an American restaurant company, but as it grew to become a global mega-brand and expanded its locations all around the world, it adjusted some of its menu items to match the cuisine of different countries. For example, rather than just the typical burger and fries, there’s the Veggie Maharaja Mac in India, the McSpaghetti in the Philippines, and poutine in Canada.

Climate impacting fashion. One general example of geographic segmentation could be based on weather. If your company sells clothing, your marketing may vary by region. In colder regions you may want to highlight coats and beanies, while in a warmer area tank tops and shorts will be more suitable.

Physical environment has a huge impact on why customers purchase the way they do. It’s also important to analyze how they interact and respond to your brand.

Behavioral market segmentation

Behavioral market segmentation is the “how” segment of your market. This approach examines customer behavior and how people engage with your brand. From this type of segmentation, you can better understand how they may respond to changes in prices, new promotions, and more.

Audiences can be grouped by:

• Spending habits
• Browsing habits
• Interactions with your brand
• Loyalty to your brand
• Product feedback

Examples of behavioral market segmentation

Behavioral segmentation, like the other types, helps you gain a deeper understanding of who your client base is. This category, however, goes beyond noting stereotypical characteristics of the customer and reveals their interactions and spending tendencies.

Some examples of behavioral segmentation are:

Guinness advertising non-alcoholic beer. Guinness is a global brand with a loyal following of beer drinkers, but industry research shows there are millions of people who choose not to consume alcohol. To market to this growing group during the popular Six Nations Rugby Cup, Guinness produced clever ads for its new product “Guinness Clear” with slogans like “Make it a night you’ll remember.”

Amazon honing in on buying habits. Amazon displays recent customer purchases to show shoppers other products they may be interested in. For example, if someone purchased a soccer ball, they may get advertisements on their social media platforms for shin guards, cleats, and other soccer equipment.

Behavioral market segmentation gives businesses a close look into how customers interact with brands and spend their money.

Firmographic market segmentation

Firmographic segmentation is the B2B version of demographic segmentation. It’s the study and classification of B2B customers using information from similar company characteristics. This segmentation type is popular for firms to find businesses that would benefit the most from their product.

Companies generally separate the firmographic segment based on:

• Turnover and profit numbers
• Industry type
• Business size
• Number of employees
• Ownership (public, private, or government)
• Organizational trends (for example, more companies going remote)
• Average sales cycle

Examples of firmographic market segmentation

Most of the market segments detailed in this article focus on B2C marketing, but firmographic segmentation is helpful for B2B companies to create engaging campaigns.

Upwork advertising in New York City. Upwork is a popular platform for companies to hire freelancers. Since New York is one of the largest population centers and business hubs in the world, Upwork created a marketing campaign with digital billboards and other ads prominently placed around the city to attract the attention of businesses that might need freelancers.

There are many reasons why segmentation can create more personalized experiences for each customer. By doing research and keeping up with industry trends, your business can expand its market and improve marketing ROI.

Market segmentation provides a number of benefits for businesses. Not only does it help your teams better understand your audience and create the right messaging to attract customers and grow your reach, but it produces a stronger brand image, more efficient use of resources, a higher rate of success, and a better customer experience.

With market segmentation, you can:

• Identify high-value customers and the similarities and differences between different groups of customers.
• Create more personalized communications and more targeted marketing efforts.
• Reach new markets by showcasing your unique product or service and adjusting your messaging.
• Build better brand awareness and stand out by understanding individual customer needs and creating personalized experiences.
• Cut down on wasted marketing dollars by creating more impactful and efficient campaigns.
• Improve your products by meeting specific market expectations based on what customers want.
• Make it easier to learn about your audience and create more cost-effective campaigns in the future.
• Gain better marketing ROI by using existing data to improve the customer experience.

What is meant by market segmentation?

Market segmentation is the practice of grouping customers together based on certain characteristics they may share.

What are the types of market segmentation?

There are four main types of market segmentation — demographic, psychographic, geographic, and behavioral. But there are other types that your business can take advantage of as well, such as firmographic for B2B marketing.

What are the advantages of market segmentation?

Market segmentation helps you establish who your target market is and customize your message for individuals. It allows your business to expand across new markets and improve products to keep up with changing customer needs.

How do you identify market segments?

By becoming an expert on your business, doing extensive industry research, and categorizing people by identifiable characteristics, you can use the information to group potential customers that might be interested in your products or services.

What makes a good market segment?

A good market segment should be easily identifiable and different from other segments. The sample sizes of these segments should be large and able to be assessed for feedback.

Evaluate your marketing software for market segmentation capabilities

Your business can reach new markets by using market segmentation. When you’re ready to get started, evaluate your current marketing software to see how it handles segmentation. If there are gaps, look into a new solution.

Acting on insights requires an audience. Create and activate engaged audiences on any channel or device with Adobe Audience Manager .

Audience Manager turns insights into action so your teams can create memorable customer experiences and extend your reach further than before. As a data management solution, Audience Manager collects and merges information from practically any source — building intelligent audience segments that give you a complete view of your customers.

Watch the two-minute product tour to learn more.

https://business.adobe.com/blog/basics/market-segmentation

https://business.adobe.com/blog/basics/psychographic-segmentation

https://business.adobe.com/blog/basics/get-a-quick-refresher-on-market-segmentation

Segmentation research: What is it and how to make it actionable

Segmentation research helps companies find target segments that can propel their growth and profitability. This article establishes what segmentation research is and how companies effectively implement it.

Segmentation in marketing research

Editor’s note: Michaela Mora is the CEO of Relevant Insights. This is an edited version of an article that originally appeared under the title “ How to Make Segmentation Research Actionable. ”

Segmentation research helps companies identify groups of current and potential customers or users with the highest profitability potential. This, along with product positioning and target marketing, is one of the pillars of strategic marketing and product development.

This is broadly called “market segmentation”   in marketing and   market research because we effectively study current and potential buyers and users of products and services. Buyer and user behaviors may differ depending on the roles they adopt at different points in the user experience journey. For example, in video game purchases for minors, in specific segments of the gaming population, the parents are more likely to play the role of buyers as they are the authority figures. At the same time, their kids are most likely to be product users, but they also influence the purchase decision, often by nagging their parents to grant permission or give them money. Depending on the business goals, we may focus on segmenting customers on their buying or user behaviors or a combination of both.

The division (or merging) of roles between buyers, decision-makers, decision influencers and users can be found in many product categories. It is a mistake to assume that only users play a particular role. The roles change based on many factors including demographics, psychographics, market trends and purchase and usage scenarios.

Addressing the myriad roles a customer can take requires different marketing tactics and product positioning to reach the intended market. On the product development side, it may require the development of features to satisfy different needs.

The key concepts

Markets are not homogeneous. They are comprised of individual consumers/users with unique needs and desires. This is why   segmentation research is a powerful tool for creating better user experiences and leveraging competitive advantage.   This applies to both B2C and B2B markets.

A market segment is a portion of a market whose needs differ from the larger market and potentially from other segments.   When we do segmentation research, we need to consider the current and potential organizational capabilities. Capabilities include existing products and services, technologies, brand reputation, innovation pipeline, etc.

The first step is to identify   the need sets   the organization can meet. It is not pertinent to segment needs that lack the required skillset or resources.  

We talk about need sets because most products satisfy more than one need. Customer needs are not restricted to those satisfied by product features or user interactions. Their needs also include those that happen at different points in the journey of becoming a customer connected to:

• Types and sources of information about the product.
• Channels where the product is available.
• Product price.
• Services associated with the product.
• Perceptions and image of the product or brand.
• Where and how the product is produced or developed.
• User’s life stages and lifestyle.

Identifying relevant need sets that the organization’s current and potential products may satisfy requires qualitative and quantitative research.

Product features vs. benefits

Customers buy need satisfaction, not product features or attributes. Behind a preference for a feature or attribute there is a need searching for satisfaction and driving behavior. A consumer may buy cosmetics to satisfy the need to feel beautiful or transformed. Another will buy a drill for a DIY project, giving them a sense of accomplishment. A product manager may buy software to save time and better manage her job’s daily tasks. Segmentation studies based on product features tend to be less actionable than those based on needs.

The role demographic variables play

Users’ needs don’t exist in a vacuum. They are often associated with demographic variables such as gender, age, ethnicity, marital status, family composition, education, social class, occupation and geographic location. A segmentation solution may start by grouping users with similar product need sets despite different demographics. However, it is essential to understand these demographic differences to design effective marketing programs to reach them through different channels and messages.

Demographic information provides insights into the context in which products are purchased and used, how they think about the products beyond its features and the language they use to describe their user experience. For example, while singles, young families with children and middle-aged couples may want the same features in a mobile app, website or car display, they likely differ in how they perceive different aspects of product design, messages, channels we use to communicate with each group and the points of friction in product interactions.

Excluding demographic information leads to a lack of diversity, unintended discrimination and missed product development opportunities. For specific product categories, demographic variables can be used as segmentation criteria if they identify segments with distinctive needs and behaviors. In other categories, demographic information may not be as discriminating but still can be used to profile the segments and understand the context in which products are purchased and used.

Key demographics that can affect product use

Research has shown that age shapes the products we buy, how we use them, where we shop, how we use technology and media and how we think and feel about marketing activities.  

Many products are created with a gender in mind however sometimes gender-specific products can be based on obsolete ideas of what each gender may need or prefer. There are also product designs that intentionally or unintentionally ignore the needs of the other gender.

Race and ethnic origin are connected to ethnic subcultures in which members share unique behaviors based on a common racial, language or cultural background. It is important to remember that all subcultures are diverse and general descriptions don’t apply to every member. It is important to remain vigilant about unconscious biases that can lead to stereotypes.

Nonetheless, shared cultural traditions, values, language and behaviors within those subcultures are rooted in their histories that influence how some of their members see their needs represented in the products they buy and use. The cultures we identify with influence how we use language, how we interpret visual design elements and what mental models we have about how a product should work based on personal experiences connected to that culture.

Household cycle stages  

As social species, we usually grow up in families and go through different stages in life, each with specific needs. As we age, we may get married, have children, become empty nesters or be caregivers of older parents. Our family may shrink or expand over time depending on the paths we take and the relationships we develop. The needs for products and services in each stage will change and influence what we buy and how we use products.

Income and education  

Education often determines occupation and income and often influences our opportunities and purchasing abilities. Education also influences how we think, make decisions and relate to others.

Intersectionality

We don’t just identify with a gender, race or a particular age. We are all those things together all the time. This means research must consider the intersectionality of many of these variables at the segment level. The experiences of young Black American men in America are very different from that of young white American men. They will share preferences and use certain products in similar ways. Still, they could differ in perceived barriers to product use, depending on design elements and messaging about the product connected to their identity groups.

Firmographics

In B2B markets we use “firmographics” as equivalents to demographic information in B2C. Variables such as company size in terms of employees and revenue, industry, product category, structure, decision-making chain and processes and geographic location often correlate with the products and services they buy and how they are used internally.  

These are just some of the demographics or firmographic variables that may be relevant for your product category. Qualitative and secondary research from internal data systems or prior primary research can shed light on which variables may influence product use in your case.

Segment profiling

The selection of a segmentation solution is often based on a combination of technical know-how and judgment calls that consider the consistency and viability of the segments. In exploratory segmentation research, in which we don’t know what the segments are a priori, we use multivariate statistical techniques to identify segments with similar needs sets, behaviors, attitudes, perceptions, demographics and other relevant variables. We also need to describe the segments across all the measured variables and check if their profiles make sense.

The smaller the segments, the more likely the product will meet the segment’s needs. Smaller segments tend to have dominant and specific needs and behaviors that separate them from the rest but servicing a small segment can be very costly. A segment must be large enough to be worth investing in to be viable.  

Segment profiles, also called   personas, should highlight the most prominent common traits within the segments that act as differentiators against other segments. These could be behaviors, use occasions, buyer and user roles, attitudes, barriers and pains, motivators, demographics, etc.

Segments are probabilistic constructs, which means they summarize needs sets, behaviors, attitudes, etc., that are more likely to be shared by a group of people (or companies in B2B). This doesn’t mean that each individual classified in a segment will perfectly fit the segment. We are all individuals with unique needs, yet we share commonalities with the different groups we belong to. Segment profiles help understand a group’s core needs and distinctive user behaviors so the company can develop products that satisfy those needs.  

Making segmentation research actionable  

Despite significant investment in segmentation studies, these may have little impact on organizational decision making unless some conditions are in place for insight implementation.  

Define your desired business decisions and outcomes  

The key to an actionable segmentation study is a precise translation of desired business actions and outcomes into the information needs the research should meet to support those actions and outcomes. In survey-based segmentation studies, this must go further to operationalizing those information needs into good question design grounded in how the team plans to use the results.

It’s not uncommon to see clients bring very indefinite descriptions of how they plan to use the research results. As someone who does market segmentation studies for clients, I often help them define the jobs they want done to support particular function(s) (marketing, product development, operations, etc.) and how they support business outcomes.

Failure to define the specific actions the team plans to make (create content for different media, identify keywords for SEO, etc.) to achieve business outcomes, can take the segmentation study in a direction that is likely to provide less than valuable insights.

Assign a C-suite research champion  

Segmentation studies generate a lot of insights that are often difficult to socialize internally. The sheer amount of data can be overwhelming. Consequently, an action plan is needed to share the insights and help the organization to adopt them. Internal research teams are often responsible for this task but are rarely successful without a mandate from the top. Any strategic research effort needs a champion in the C-suite from its conception to its implementation.

With support from the executive team, researchers connected to marketing or product development need to educate internal stakeholders on the value of both the tactical and strategic implications of the segmentation research the company may have conducted. They need to understand the organization’s ability to adapt to the study’s findings and create an implementation plan to help manage internal clients’ expectations.

By connecting the tactical changes recommended by the findings to the overall strategic business goals, the research team can help internal teams, including the C-suite, to become educated on needed strategic changes.

Allow for a flexible organizational structure

Segmentation research provides insights with both tactical and strategic recommendations. Tactical recommendations may include changing a product configuration, adding new features, changing how is presented in advertising, etc. These changes can be implemented without significant organizational changes.

However, serving identified segments long-term may require a new structure to help manage them if the segmentation solution doesn’t align with the current organizational structure. In cases like these, the solution companies use is to create cross-functional teams, but depending on how rigid the structure is, these teams may get little accomplished.

To implement the strategic insights stemming from segmentation studies, the organization must be willing to change its structure to manage the market segments efficiently.

Create a balance between long- and short-term goals

In many organizations, there is often tension between marketing, sales and product development functions as they own channels and goals with different time horizons. A segmentation study may have recommendations that impact the design of channels these functions own. The marketing team may be receptive to changes the sales team resists because it may upset established client relationship patterns and short-term sales goals.

To balance short- and long-term goals, the management team must consider all research outcomes and decision possibilities of strategic value at the research design stage. If there is no commitment to implement strategic insights from the segmentation study, it is best to narrow its scope to find tactical solutions.

Prioritize certain market segments

A segmentation, by definition, implies discriminating among the segments in some respects. This means the marketing and product development will also discriminate certain segments if the segmentation solution is adopted. In practical terms, this will require prioritizing specific customer segments considering the risk of dedicating fewer resources to others.

If the company doesn’t want to take the risk of discriminating between segments and tries a middle-of-the-road strategy to reach all, it is likely to forfeit the competitive edge the segmentation insights may provide.

Have an experienced team

Understanding the value of the insights that can come from segmentation research and being willing to implement them requires prior experience with segmentation work. A marketing or product team not exposed to a well-designed segmentation study will have difficulty translating the insights into business implications.

If this is the case at your company, experienced internal researchers or external research suppliers should be called to help the teams think through the implications of decision-making based on different findings. Both internal researchers and external research suppliers should have experience in this methodology to help internal teams derive actionable insights.  

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The Ultimate Guide to Market Segmentation

Want to improve your product-market fit? You gotta segment your market better. Here's how to use market segmentation as your secret weapon to scale your business.

Rakefet is the CMO at Mayple. She manages all things marketing and leads our community of experts through live events, workshops, and expert interviews. MBA, 1 dog + 2 cats, and has an extensive collection of Chinese teas.

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Natalie is a content writer and manager who is passionate about using her craft to empower others. She thrives on team dynamic, great coffee, and excellent content. One of these days, she might even get to her own content ideas.

Updated March 14, 2024.

"Don't try to boil the sea" - Peep Laja, CXL

That pretty much sums it up, doesn't it? You can't be everything to everyone.

Companies that try to develop every feature for every type of customer go out of business. Companies that focus on a specific customer segment and zero in all their R&D and marketing efforts on that one type of customer usually win.

Market segmentation has to be an integral part of your digital marketing plan, otherwise, you will go extinct. In this post, we break down what market segmentation is, different types of it, examples, and use cases (Click here to download your free marketing plan template) .

Let's begin.

What is market segmentation?

Market segmentation is a marketing strategy where a company identifies groups of consumers and selects specific segments of their target market based on demographics, priorities, common interests, and other psychographic or behavioral criteria.

Why is market segmentation important?

Market segmentation realizes that not all customers have the same interests, purchasing power, or consumer needs. And companies can't cater to all of them and meet everyone's needs. So brands create segments that help them focus their product on specific target audiences and increase the chances of generating sales.

Market segmentation helps companies become more efficient in their marketing and sales campaigns, saves money on unnecessary A/B tests and unused product features, and helps scale the brand much quicker.

Now, there are different types of market segmentation companies can use to their advantage.

Types of market segmentation

There are four main forms of segmentation that brands use:

Demographic segmentation

Demographic segmentation is the process of dividing a market into groups based on age, gender, education, income, and other demographic factors. Demographic segmentation is important because it helps companies to understand the needs of their customers and to develop products that will meet those needs.

Example : a luxury brand should target consumers in a specific income bracket or above a certain income threshold.

Geographic segmentation

Geographic segmentation is the process of dividing a market into different geographic regions. These regions can be countries, states, cities, postal codes, or even neighborhoods. Each region has its own unique characteristics and needs that must be considered when developing products or services for them.

Example : Mcdonald's offers different menu items in different countries in the world. Here is an example of their Maharaja Mac.

Firmographic segmentation

Firmographic segmentation is based on the type of firm. A firm might be a manufacturer, retailer, distributor, or service provider. It's most used by B2B companies and is popularized in what's known as ABM or account-based marketing.

B2B companies often create segments target leads based on their role in a company, the company size, the business size, and the industry.

Behavioral segmentation

Behavioral segmentation is based on how customers behave. This could be user behavior on your site or via any of your marketing channels. It could also include things like:

• if it's for business or personal use
• if the product is purchased online or in-store
• how often the product is purchased

Psychographic segmentation

Psychographic segmentation is a way to divide the market into groups based on a person's values and lifestyle. These segments tend to share attitudes, interests, and values. One example of this would be a political organization that sells products to a specific political party.

Example : a clothing company that creates t-shirts for skaters and skateboarders would segment the market to find 15-25-year-olds who are single, in school, and like to skateboard.

Benefits of market segmentation

There are significant advantages to properly segmenting your market. Studies show that 81% of executives find that segmentation is crucial for growing profits. Here are a few other benefits of segmentation:

1. Targeted digital advertising - you can hyper-target your advertising to each customer segment and increase your click-through rates and sales.

2. Develop effective marketing strategies - focusing on a customer segment helps you select the right tactics and channels to use in your marketing efforts.

3. Create better products - knowing the needs and wants of your target segment can help you with product differentiation and building features that stand out in the marketplace.

4. Identify niche markets - companies often find new segments to target during the segmentation process or new markets to expand to.

5. Increase brand loyalty - focusing on a specific market segment helps you delight your customers better and cater to their needs, which helps decrease your churn.

6. Stay on brand - create better and more focused marketing messages that stay true to your brand voice.

Limitations of market segmentation

How to get started with market segmentation.

there are five main steps to the market segmentation process.

1. Define your market

First, look at your market. Is your market big or small? Is there a need for your product or service? And where does your brand fit into the market?

2. Segment your market

Decide on which of the five types of segmentation you want to use (demographic, firmographic, psychographic, geographic, or behavioral). And you can use more than one to create your segment.

3. Understand your market

Conduct some qualitative and quantitative research about the segment that you've chosen. Try to understand who your potential customers are and what their motivation is for buying your product.

4. Create your customer segment

Take your research and create your customer segment(s).

5. Test your marketing strategy

Now take that data and test your findings on your target market. Use analytics tools to test your conversion rates and engagement to see if your segmentation worked.

Now that you know how to create your customer segments let's talk about specific use cases.

How to pick the right segment

According to the Harvard Business Review , there are six main criteria for choosing the right segment to target.

1) Identifiable - you should be able to identify the customers in each segment and distinguish them by their characteristics.

2) Substantial - segment size matters. It's not usually cost-effective to target a segment that's too small for your business. If your potential market segment is too small or doesn't have the buying power to actually purchase your product, try to expand it to other geographic locations, interests, and user behaviors.

3) Accessible - your company should be able to access the segment you chose and it may require building a presence on specific online platforms or marketing channels to do that.

4) Stable - your segment has to be stable long-term to be able to market to it strategically.

5) Differentiable - the people in your segment should have needs that are different than those of other segments.

6) Actionable - you have to be able to provide products or services to your segment. They have to be reachable by your marketing efforts.

Now that you know what to look for in a segment, and how to go about creating it, let's look at some use cases of market segmentation.

Market segmentation use cases

Market research.

To grow your business, you need to know who your ideal customer is and where they hang out online. You can use segmentation to break down your research, so you can better understand your customer base.

For example, when you've analyzed a potential new market, you can use your customer insights to identify how your target customers would react to new concepts, offerings, or services. Want to streamline the process? Check out our free market research template .

Segmentation and targeting

Say you're not seeing a high enough ROAS on your advertising campaigns and you want to try to advertise to a new target audience.

If you've gone through the process of market segmentation then you've identified different segments and have defined them by their demographics, needs, priorities, behaviors, or common interests.

You can use this information to improve your paid advertising campaigns, create better marketing messages, and advertise to the ideal audience.

Customer needs research

Sometimes a company has a churn problem where their customers aren't happy with the product or service. This is a great time to step back and do some research about your target segment.

Look at their preferences, and needs, and adjust your product's job to be done accordingly. You may also discover product features that you're missing and ways you can better differentiate yourself from the competition.

Product development

Whether you're developing a brand new product or want to improve your existing offering, doing some market research is a great way to make sure that there's a product-market fit.

"Positioning is the act of designing the company's offering and image to occupy a distinctive place in the minds of the target market" - David Ogilvy, advertising guru

Marketing campaign optimization

Running an omnichannel marketing campaign but not seeing the results you were hoping for? You may need to better segment your market.

Having more information on each customer segment allows brands to personalize their campaigns at scale, and improve their campaign results. It could also help the brand define the right marketing mix of digital channels to better target its segment.

Common segmentation errors

We've talked a lot about what to do , let's talk about what not to do in your segmentation efforts. Here are the top segmentation mistakes brands do.

Making your segment too small

The most common mistake with segmentation is when brands create a segment that's too small. Use the actionable insights from your research to broaden your target market to a size that makes sense for your business.

Not being flexible enough

Audiences change over time and if you see that one segment is not working go back to the larger market and expand it. Test out different characteristics of the broad population and find new variables to filter by.

Prioritizing segment size over everything else

Some brands take a very broad approach to segmentation and focus on creating the biggest segment possible instead of focusing on the buying power of that segment. Make sure you reach out to customers that are able to buy your product.

Leverage the power of segmentation in your marketing campaigns

Seeing good profits with customer segmentation? Don't rest on your laurels. Take the most successful segments and use hyper-personalization to really dig deep and find the specific characteristics that make them the ideal customer.

Then, test out new segments using those variables. And if someone on your team isn't basing their decisions on data, challenge them. Which segment are they targeting with their efforts? And why?

Don't have the resources on your marketing team? Need a hand with segmentation? Come find your ideal marketer at Mayple.

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Market segmentation in market research

January 27, 2023 5 min read

Market segmentation is the process of dividing a larger market into smaller subsets of consumers who have similar needs or exhibit similar characteristics. Being an essential aspect of market research, market segmentation allows businesses to understand their target market in depth, thus enabling them to target specific groups of consumers effectively and helping them identify new growth opportunities .

But how does market segmentation in market research brings more value to businesses? Through this article, we will look at the importance of market segmentation in detail, including its role in market research, types, benefits, and how it can be implemented into a strategy.

Role of market segmentation in market research

Market segmentation in market research focuses on dividing a broader market into smaller segments or groups of audiences or consumers with similar behavior or personas. This helps businesses to experiment and target the audience to which they can cater, leading to more effective and efficient marketing efforts.

Market research is the process of gathering, analyzing, and interpreting any information about a product, service, or market and its potential customer base. With the help of market segmentation, businesses can identify the specific needs and characteristics of each group, which allows them to tailor their products or services to meet those needs more effectively.

For example, a business that sells athletic shoes may use demographic segmentation to divide the market based on age, gender, and income. This can help the business to identify differences in consumer behavior and needs based on these characteristics. For instance, they may find that younger consumers are more likely to prioritize fashion over function, while older consumers may prioritize comfort and support. By understanding these differences, the business can develop products and marketing campaigns that are more tailored to the specific needs of each segment.

Market segmentation also allows businesses to understand the size and growth potential of each segment, which can be used to identify new growth opportunities.

Additionally, market segmentation helps businesses identify and target profitable segments of their market. By understanding the specific needs and characteristics of different segments, businesses can identify the most profitable segments and allocate resources accordingly. This can help businesses to maximize their ROI and increase overall profitability.

Overall, the role of market segmentation in market research is to provide businesses with a more detailed understanding of their target market, which can be used to develop more effective products/ services, marketing campaigns, and business strategies.

Types of market segmentation

There are several different types of market segmentation that businesses can use to divide their market. Some of the most common and most used are demographic, geographic, psychographic, and behavioral segmentations.

Demographic segmentation

This type of segmentation divides the market based on characteristics such as age, gender, income, education, and occupation. For example, a business that sells children’s toys may segment the market based on age, targeting its marketing efforts towards parents of young children. Similarly, a business that sells luxury watches may segment the market based on income, targeting its marketing efforts towards high-income individuals.

Geographic segmentation

This type of segmentation divides the market based on location, such as region, city, or even neighborhood. For example, a business that sells outdoor gear may segment the market based on geographic location, targeting its marketing efforts towards regions with a high concentration of outdoor enthusiasts. This can also be used to identify new opportunities for growth in different regions or cities.

Psychographic segmentation

This type of segmentation divides the market based on lifestyle, values, and personality traits. For example, a business that sells organic food products may segment the market based on consumers’ attitudes towards health and the environment, targeting their marketing efforts towards consumers who are particularly health-conscious or environmentally-conscious.

Behavioral segmentation

This type of segmentation divides the market based on consumer behavior, such as purchase history, brand loyalty, and usage rate. For example, a business that sells mobile phones may segment the market based on consumer behavior, targeting its marketing efforts towards heavy mobile phone users or consumers with a history of purchasing expensive mobile phones.

These are the main types of market segmentation; however, businesses can also use combinations of these segmentation methods to gain a more detailed understanding of their target market. Additionally, businesses can also use other methods like value-based, benefit based, etc. In fact, by combining different types of segmentations, businesses can gain a more comprehensive understanding of their target market.

Benefits of market segmentation

Market segmentation offers many benefits to businesses, some of those of listed below:

Tailored products and services

• By understanding the specific needs and characteristics of different segments, businesses can develop products and services that are tailored to meet those needs more effectively.
• This can lead to increased customer satisfaction, as well as increased sales and revenue.

More efficient marketing

• By targeting specific audience personas, businesses can develop more efficient marketing campaigns that are more likely to reach their target audience.
• This can help to reduce marketing costs and increase the effectiveness of marketing efforts.

Increased profitability

• By identifying and targeting the most profitable segments of the market, businesses can increase their overall profitability.
• By allocating resources toward the most profitable segments, businesses can maximize their return on investment.

New market opportunities

• By identifying new market segments, businesses can identify new growth opportunities.
• This can help businesses to expand into new markets and increase their overall market share.

Better decision making

• By understanding the specific needs and characteristics of different segments, businesses can make more informed decisions about product development, marketing, and business strategy.
• This can help businesses to stay ahead of the competition and maintain a competitive advantage in the market.

Improved customer service

• By understanding the specific needs and characteristics of different segments, businesses can develop customer service strategies that are tailored to meet those needs.
• This can lead to increased customer satisfaction and loyalty.

Increased brand awareness

• By targeting specific segments of the market, businesses can increase brand awareness among their target audience.
• This can lead to increased sales and revenue in the long term.

Strategizing and implementing market segmentation

Implementing a market segmentation strategy involves several steps. Below is a brief of the overall process.

Identifying the market segments

• The first step in implementing a market segmentation strategy is to identify the different segments of the market.
• This can be done through market research, which can include surveys, focus groups, and other data collection methods .
• Businesses can use various segmentation methods, such as demographic, geographic, psychographic, and behavioral, to identify different segments of the market.

Evaluating the segments

• Once the segments have been identified, businesses should assess each segment to determine their potential value.
• Factors that must be considered include the size of the segment, its growth potential, and profitability.
• By evaluating the segments, businesses can identify the most attractive segments to target.

Selecting the target segments

• After evaluating the segments, businesses should select the segments that they will target with their products or services.
• This decision should be based on the evaluation of the segments, as well as the business’s overall goals and resources.
• It’s important to select segments that are both large enough and attractive enough to be profitable.

Developing a value proposition

• A value proposition is a statement that explains the unique benefits that a business’s products or services will provide to its target segments.
• Businesses should develop a value proposition for each target segment, which will serve as the basis for the business’s marketing and sales efforts.
• This statement should be communicated clearly and consistently across all marketing channels.

Implementing the segmentation strategy

• Once the target segments have been identified and a value proposition has been developed, businesses can begin implementing their segmentation strategy.
• This can include developing products or services that meet the specific needs of each target segment, as well as developing marketing campaigns that will reach and resonate with each segment.
• It’s also important to continuously monitor and evaluate the success of the strategy and make necessary adjustments.

Review and analysis

• The final step is to review and analyze the performance of the market segmentation strategy.
• Businesses should track and measure key performance indicators such as sales, revenue, market share, and customer satisfaction to determine the success of their strategy.
• Based on the results, businesses can make necessary adjustments to improve their strategy in the future.

By following these steps, businesses can develop a market segmentation strategy that will help them better understand and target specific groups of consumers, leading to increased sales and profitability.

The bottom line

To conclude, market segmentation is a critical aspect and should not be overlooked. It may sound tricky or lengthy, but it gives first-hand knowledge and data, which can result in great ROI.

How can CleverX help you in making a perfect market segmentation strategy?

CleverX works with some of the leading professionals and experts in different industries, ensuring that raw, authentic, and first-hand data is concluded from each study. Further, it lets the business design custom-tailor the survey that can help it in finding niche-specific audience segments.

Interesting in learning more? Click to look at what we are doing, or sign up for free !

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What Is Market Segmentation Research?

In this blog, we look at how market segmentation can help bring a deeper understanding of the target market, and how marketing and sales activities benefit as a result.

Table of Contents: 

• What is market segmentation research?

The benefits of market segmentation

• Types of market segmentation research
• How to segment a market with the help of research

What should your market segmentation strategy be?

Market segmentation examples and use cases.

• How to avoid common market segmentation mistakes
• How quantilope can help with market segmentation research

What is market segmentation research ?

Market segmentation research takes a sample of people who are representative of a particular target market and then divides them up into segments. Within each segment, individuals share certain traits, needs, or attributes. The most common types of segmentation revealed by market research are:

Need-based Segmentation

What customers are looking for in a product. This will include needs that are currently being met, as well as unmet needs that can be tapped into with new products - such as what consumers need out of a breakfast cereal (energy, taste, convenience). 

Need-based segmentation is considered the gold standard in segmentation work. That’s because it closely explores what consumers actually want and need out of products and services, making the segmentation outcome super actionable for brands. 

Behavioral Segmentation*

How customers behave. For example, how much breakfast cereal do they buy per month? How many different varieties of cereal do they have in their kitchen cupboards? How do cereal product choices differ by household members?

Attitudinal Segmentation*

How customers' attitudes affect what they buy. For example, how do attitudes toward health and wellness impact breakfast cereal purchases? What about practicality? Which emotional associations do consumers have with cereals?

*Behavioral and attitudinal segmentations are often grouped together into ‘Usage and Attitudes’ surveys, as behavior and attitudes are closely related. These types of studies are often referred to as psychographic segmentation studies, focusing on consumer attitudes and values.

Demographic Segmentation

Who customers are. Their age, life stage, gender, social class, and where they live (as a few examples). 

Often demographic segmentations aren’t enough in themselves to define different segments sufficiently. That’s because individuals tend to show more similarities based on their attitudes and behaviors, not on surface-level characteristics. Demographic information can be used as a secondary means of defining segments, but at their core, segments are better defined by needs, behaviors, and attitudes.

Back to Table of Contents

quantilope users can interpret their segmentation findings in just seconds with the help of the platform's AI assistance: 

Market segmentation moves beyond seeing a customer base as one mass of people toward a deeper understanding of the differences between separate clusters of consumers. While two consumers might be buying the same product, they could be doing so for completely different reasons. Gaining an insight into what those reasons are will reveal how a business can best encourage people to buy into, or more of, a product or service.

More relevant messaging

Knowing who your different groups of consumers are means you can talk to each in the right way. What motivates one group might be different from another, so customer segmentation means you can tailor product development, sales, and marketing strategies accordingly.

Let’s consider a scenario where there are two people who buy the same product but for different reasons. Imagine that both are 45-year-old men and both are in the market for oatmeal. One is buying it because his children love eating oatmeal before they go to school, so he wants a quick-cook product that pours easily from the box and into which he can stir blueberries for one child and honey for the other. He needs something that doesn’t spill everywhere while he’s rushing around the kitchen getting his kids ready for school. The other male consumer is taking his oatmeal into the office and eating it at his desk, so he wants individual pouches that he can grab from home in the morning and then heat up in his office microwave. He needs an oatmeal product that is quick, convenient, and will power him throughout his workday.

These two consumers appear identical on the surface in terms of age and gender, but have two totally unique needs: a product that kids love and that is versatile enough to have other ingredients added to it, and another that is quick and convenient. Brand communication to each of these various oatmeal consumer segments will need to reflect different values and needs to make each consumer feel that the product is right for them.

Tailored messaging tone

Aside from defining the right content of messaging for each group of consumers through segmentation, the method can also be paired with Personality AI to develop the right tone of the messaging. Personality AI is a tool that measures specific personality traits using just one single question. Using this method in conjunction with segmentation allows a brand to map each segment’s personality traits, and use these findings to tailor messaging with the right tone of voice.

Going back to the oatmeal example, let’s suppose one segment is classified as extraverted through the Personality AI tool; for this segment, messaging that is fun, loud, and attention-grabbing would bode well. Meanwhile, Personality AI may identify that another segment ranks high for conscientiousness, so using messaging that is more reserved, focused, and serious might work better for this group. 

Standing out from the competition

As seen above with regard to relevant messaging, in-depth knowledge of consumer motivations, needs, and behaviors help make consumers feel heard and understood. As a result, consumers will gravitate toward the brands they feel effectively reach them. A key part of segmentation is identifying the language used by customers; if this is reflected in brand positioning and communication, they are more likely to feel that the brand understands them and that the brand's offer is most relevant amongst the competition.

Improved brand loyalty

Quite simply, when customers feel a brand understands them and meets their needs, they’re more likely to remain loyal to it. Loyalty means a steady stream of income for brands, making segmentation investments well worth it.

Lower acquisition costs

Leveraging segmentation means understanding who people are and what they're like so you can acquire and reach the appropriate group of customers right from the start.

Segmentation can also reveal where customers get information about a brand so that businesses can tap into the channels where the messages will be received. Digital channels such as social media are instrumental in marketing, so if you know where each of your segments is spending the most time digitally, placing messages in those places is a relatively low-cost way to attract new customers.  

Driving growth and profit

Knowing each segment in depth helps a brand stay on track with its marketing communication and market development. It identifies which groups are ready to buy more from a brand, which require new products to stoke their interest, and which groups already have what they need and are less likely to spend. On the subject of spending, segmentation also helps identify which price points are likely to appeal to different groups of consumers so that pricing can be set appropriately.

Types of segmentation research

Segmentations can be carried out through a number of methods, as detailed below.

Quantitative survey research

Perhaps the most common, respondents are interviewed via an online quantitative survey, and responses and demographic data are analyzed using cluster analysis algorithms. Depending on the questions asked, results show how groups differ in terms of factors like behaviors, needs, attitudes, and price sensitivity. They also show the relative size of each segment, useful for knowing how valuable a group of people will be to a brand.

Qualitative research

Qualitative research is adept at putting the ‘flesh’ on segment profiles and is usually carried out in conjunction with quantitative research. It can be used to explore customers’ needs and attitudes before quantitative research, as well as to provide a fully rounded picture of each segment once quantitative research has established what the segments are. As such, qualitative research on its own is not a substitute for quantitative segmentation research but works great in partnership with it. 

Focus groups, in-depth interviews, and ethnography studies are the main qualitative methodologies used for segmentation. All of these allow respondents to explain in their own words what they think, which is invaluable in collecting consumer language for communication strategies. Ethnography even allows researchers to ‘live’ the customer experience as respondents demonstrate how they use a product or what their need is.

How to segment a market with the help of research  

The market segmentation process involves first identifying who makes up the overall target market for your brand. Sales, CRM, and social media data can all be good sources of information on who is currently buying your brand, who is buying from competitors, and who isn't buying from the category at all but may be interested. All of these people make up your market, so you'll want to hear views from a sample that's representative of each of these groups.

Armed with the fundamental criteria that define your market - for example, the age range, geographical location, purchase behavior, any known attitudes, and lifestyle types - it's time to start creating profiles through screening questionnaires in your survey. Screening criteria will help further classify your target market based on additional needs, attitudes, behaviors, and other criteria. 

Using online survey platforms, creating the rest of your market segmentation study is very straightforward. Following the screening questions, your survey will ask respondents about their relationship with your brand: purchasing habits, brand usage, brand attitudes, needs, and so on. Findings from the survey then show how people think and act in relation to your brand or category. Those with similar feedback will be clustered into discrete groups, creating actionable segments for a brand to target. 

As well as identifying the segments of consumers that exist in your market, research often sizes the market too, indicating the size and value of each segment for your business. This gives an idea of which segments you should concentrate on for the best return. Back to Table of Contents

Market segmentations can be highly valuable cornerstones on which to base marketing and sales activity. They need to be solid and reliable, containing information that will be most useful for your business decisions.

Determine what your segmentation is based on

The first thing you need to decide is how best to segment your market - whether it should be based on needs, behaviors, psychographics, or attitudes. This will differ by category, so it's worth asking yourself which pieces of information will be most valuable for developing your business. If you're selling face cream, needs will be high on the agenda (e.g. needs for a youthful glow, a lack of wrinkles, moisturization...) while a transit company might be most interested in passengers' behavior by day of the week, and a political party might be most interested in attitudes. Establishing from the start which type of segmentation is most relevant to your business is essential. If you don't have a strong idea of what that might be, start with a need-based segmentation as you can always filter data down by other demographic or psychographic variables later on (assuming you've asked these kinds of questions in your survey). 

Decide the purpose your segmentation will serve

You also need to think about how you will use the segmentation once it's done. Will it guide product development? Messaging? Pricing? Packaging? Knowing how you want to use the findings will help shape your survey questions and deliver the right information at the end of the study. For example, as part of your main survey, you might want to gather attitudes about how much people are willing to pay for your brand, or which category messages are most motivating for them. You might also want to plan an ongoing tracker amongst your segments, monitoring any changes in needs, behaviors, or attitudes over time. Back to Table of Contents

To further illustrate how segmentation might be used, here are some examples.

Imagine you're a women's haircare brand with a portfolio of products offering a variety of benefits. Traditionally, you've focused on what the products do for hair - such as adding moisture, making it stronger, detangling, etc. - but you've recently noticed on social media that consumers are talking more about how they want products to make their hair look.  As women differ by hair type, the aspirations they have for their hair, and the types of products that attract them, you'll want to figure out a way to segment these haircare consumers into niche and actionable segments to effectively sell your products. 

Given the different needs consumers have when it comes to haircare products, a need-based segmentation approach would work best here to find out what drives product purchases. These needs could be to: 'obtain shiny, clean hair', 'get more defined curls', 'create bounce and movement', and so on. Pinpointing these needs helps the brand develop products that give consumers their desired look, and speak to them in the language they use so that they feel the products are relevant to them.

Once you've created segments grounded in haircare consumer needs, you can further classify segments depending on other hair criteria asked throughout the survey (i.e. if their hair is curly or straight, thin or thick, how often they wash their hair, etc.). All these variables can contribute to highly-catered products for each segment of consumers. 

Financial planning

As another example, a financial planning firm might want to segment its market based on attitudes, as they know this is what ultimately drives people's behavior around their finances. For example, if they identify one segment that is ignorant about their money and another segment that considers themselves 'money experts' and deals with finances every day, the firm will know to take different approaches with each segment in order to sell its services. The type of language they use with consumers who lack knowledge about financial products will need to be more engaging and educational in nature. In contrast, for those already in the know, the financial firm might want to use more complicated jargon in communications so they feel like an important and established audience.

As another option, if the financial firm instead wanted to run a need-based segmentation, they could uncover what each segment needs from their financial planning services - such as a need to learn more, to feel reassured, to have someone help with financial problems, to dive into investment opportunities, or to feel well-informed about the latest trends. Back to Table of Contents

How to avoid common market segmentation mistakes 

Segmentation is a powerful market research method to better understand and target your audience. However, there are some common mistakes you'll want to make sure to avoid in your study: 

Not asking enough questions

To successfully segment a market, your research study needs to include all possible areas of inquiry that will provide valuable context into your segments. It might not be obvious from the start as to how a brand's market will be best segmented, so it's important to gather as many details as possible to really define and differentiate each segment from one another. 

Over-simplification

One of the biggest mistakes made with segmentation research is the assumption that each consumer fits neatly into one segment. In reality, this can't always be true. Humans are complex, and needs and attitudes can change; people might sometimes fit into one segment but also have needs that place them in another. It's worth looking at when and why those needs change - it might be occasion-based (straight sleek hair for the workplace, tousled hair with glitter for a night out, etc.) season-based, or mood-based, but it's worth uncovering those nuances that help target messaging appropriately.

Segments are mutually exclusive categories, meaning each respondent will only be able to fit into one group (despite possibly having some qualities of multiple groups). One way to minimize the impact of these situations is to use the data to help you determine the right number of segments. Your team will want to include enough groups so that the market isn't forced into too few groups, while not having so many segments that they start to become similar to each other. 

Not keeping segments up to date

A segmentation study is a great way to reveal important context about the different types of consumers that make up your target audience. However, things can change over time and in different scenarios (as mentioned above) so it's a good idea to re-run your segmentation every so often or to run other research studies alongside it to keep tabs on how any potential changes in the market could impact your brand's decision making. 

How quantilope can help with market segmentation research

With quantilope, you can conduct a needs-based segmentation study through the online platform from start to finish. Start by selecting respondents from your target audience, then decide on the questions you want to ask in the survey. This stage takes some thought, as you need to make sure your questions reflect the type of segmentation you would like to achieve, and quantilope consultants are always available to help, should you need it. Once responses start coming in from the survey, quantilope’s AI-driven analysis tools will sort respondents into groups of customers and define how they differ from each other.

To gather consumer language and gain a more in-depth experience of consumer attitudes and usage, quantilope’s video research solution, inColor , provides a qualitative lens to segmentation work. Video footage of consumers brings segments to life, and emotional and facial analysis help unearth subconscious needs and views.

To learn more about quantilope's automated, need-based segmentation, get in touch below: 

Get in touch to learn more!

Related posts, how can brands build, measure, and manage brand equity, how to use a brand insights tool to improve your branding strategy, quantilope's 5th consecutive year as a 'fastest growing tech company', automated survey setup: how to utilize ai-generated question inputs.

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Market Segmentation Research: a 101 guide for beginners

Do you know what marketing segmentation research is and why should we do it?

When used correctly, the main applications of this tool can help your company to face marketing challenges. That is why we will teach you what it is, for what it is for and how to use it in your company.

What is segmentation research and what is it used

Segmentation research, as the name suggests, consists of dividing consumers and users of a product and/or services into segments. The action of segmenting your market is done through segmentation analysis, where we can categorize the public by age, gender, territory, tastes, behaviors, pains, preferences and other characteristics.

The objective of segmentation is to help make the company’s marketing strategy clearer and more certain, aimed at a specific target within these segments.

When we carry out market research, we are taking a step towards the campaign’s assertiveness, due to the definition of its target audience. This strategy will help you to better define your audience and understand their needs, preferences and tastes helping you to develop as a company. It also will help you identify possible  market gaps that other brands are not aware of and bring differentials to your service or product.

Having well- defined publics means understanding that despite “thinking alike” for consuming and/or valuing the same type of product or service, each group has its own preferences and characteristics, and it is from this understanding that the company is able to create marketing campaigns with more effective messages to reach the target audience.

Main targeting categories

There are several ways to carry out market segmentation study  and categorize the segmentations. The five main ones are: geographic, demographic, psychographic, behavioral and firmographic, which is more used for the B2B market.

• The Geographic category is related to the consumer’s region, the size of the municipality in which he resides, the concentration of people in the region and even the local climate;
• The Demographic is characterized by age, gender, occupation and income of the consumer;
• The Psychographic is defined through the consumer’s lifestyle, their values, preferences and their opinions;
• The Behavioral category is related to the customer’s behavior in relation to products and services, and at the time of purchase;
• Firmographic , as mentioned before, is the main category for segmenting the B2B market, and is related to characteristics such as industry, number of employees, type of clients and company size.

How and why to use market research in Latin America

Despite the fact that market segmentation may seem abstract, it is possible and extremely important to quantify it. When we consider the Latin American reality, market segmentation and public definition can be defined for three main reasons and objectives.

• In Latin America we find a great variety in the styles of the consumer public, mainly due to the mixture of cultures that expands across the countries of the region. It is worth noting that these cultural differences can occur within the country itself, as is the case in Brazil when we look at the Northeast and the South regions. Depending on the region, each audience has its specificity – even if it consumes the same product, it may respond better to different messages. That is why it is important to tailor campaigns to different targets.
• In addition to cultural differences, the economic situation of each region has a direct impact on the targeting of the public. High tax rates and unemployment have shown a mix of habits, especially after the latest world events (pandemic and international conflicts), with buying behavior often uncertain, it is important to identify the risks and investment opportunities in the regions.
• Another very important point that we must pay attention to is that the consumption mode can also be carried out due to different behavior profiles and desires, and therefore we must be attentive to the novelties and characteristics of the market and to the consumer generations, and how this influences at the time of purchase decision. An example could be the target facing the Z and Alpha generations, who tend to buy on impulse and or influence but with greater social awareness than previous generations.

After reviewing the why of market segmentation research and why it matters when choosing a marketing strategy, check out our blog for more research tips and insights . And get in touch with our team to find out about these and other services to help you and your company enter Latin American markets.

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Relationship Between Market Research & Market Segmentation

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What Are the Disadvantages of Qualitative Measurements When Doing Marketing Research?

What does varied target market mean, the basic steps of the marketing research process.

• How to Identify the Segmentation Criteria That Will Affect Your Target Market Selection
• Cross-Section Design of a Business Research Method

Market research is an important activity for companies hoping to better understand their customers and market so that they can improve their products and services to better meet market needs. An important element of effective market research is market segmentation, the process of dividing -- or segmenting -- the larger population into smaller units that better reflect target audiences.

Segmentation and Positioning

Segmentation and positioning are two important concepts in marketing. While these terms are generally used in relationship to promotional activities, the term segmentation has relevance for market research as well. Segmentation involves dividing the larger universe of consumers or businesses into smaller units that represent more specific target audiences. Positioning is the next step whereby companies determine, based on the segments they have identified, how they can effectively promote what they have to offer compared to competitive offerings (positioning). Effective marketers know that the better they can segment audiences, the more they will be able to develop target messages and select specific communication tools to reach and influence those audiences.

Market research involves gathering information from audiences through tools that may range from focus groups to one-on-one interviews to broadly distributed surveys delivered via traditional mail, email, phone or online polling. Different segments may lend themselves to different forms of market research. For instance, younger audiences may be well-suited to online research efforts, while older groups (baby boomers and older) might be best targeted through traditional survey efforts.

Qualitative Research

Qualitative research efforts are those that do not provide statistically reliable information, yet the input can be useful in creating more formal, quantitative research. Qualitative research efforts might include such things as focus groups or interviews conducted in shopping malls. Qualitative research might also involve observation of various market segments in natural environments -- for instance, observing shoppers' behavior in grocery stores or observing teens as they engage in sporting activities. Qualitative research can be particularly useful with segments of the population who are not able to effectively express their needs/interests, such as very young children or individuals with developmental disabilities.

Quantitative Research

Quantitative research involves focusing on specific target audience segments and then selecting a sample of that target population that will yield statistically significant results. Segmentation is important here in that the researcher will need to identify the larger market segment and determine the portion of that market segment that will need to be targeted to achieve the desired response. Rarely will a research survey all of the market; instead, a sample will be selected, based on mathematical calculations, to ensure a valid and reliable result.

• "Entrepreneur" Magazine; How to Identify and Reach Underserved Markets; Russ Fradin; 2010
• "Entrepreneur" Magazine; How to do Market Research: The Basics; Lesley Spencer Pyle; 2010
• Fast Company; Market Research 3.0 Is Here; Kevin Randall; 2009
• "Strategic Market Resarch"; Anne E. Beall; 2010
• "Marketing Research Kit for Dummies"; Michael Hyman and Jeremy Sierra; 2010

Leigh Richards has been a writer since 1980. Her work has been published in "Entrepreneur," "Complete Woman" and "Toastmaster," among many other trade and professional publications. She has a Bachelor of Arts in psychology from the University of Wisconsin and a Master of Arts in organizational management from the University of Phoenix.

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• 1 Types of Marketing Communication Concepts
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7 Best Market Segmentation Tools in 2024

How can you be sure that your product or service is exactly what all your customers want? Some may love a new feature, while others might hate it. Using market segmentation tools helps you group your customers based on similar preferences. This way, you can adjust your product, services, and marketing to suit each group’s needs.

Choosing the right marketing segmentation tool can be challenging because there are many options available. If you aim to customize your marketing strategies and messages for different audience groups to make your campaigns more relevant and effective, you now have to determine the best platform for your needs.

In this article, we’ll explore some top market segmentation tools from 2014 and help you decide which one suits your business best.

What is Market Segmentation?

Market segmentation specifies customer groups with similar characteristics and market-specific products or services to meet their needs. For instance, selling comfortable shoes with added cushioning to people aged 60 and above and trendy sneakers to those who are 25 and younger.

Market segmentation typically occurs in four main ways:

• Geographic: Targets customers based on location and regional differences.
• Demographic: Segments based on age, gender, income, etc.
• Psychographic: Focuses on values, lifestyles, and attitudes.
• Behavioral: Analyzes buying behaviors and brand loyalty.

What are Market Segmentation Tools?

Market segmentation tools are software or platforms that assist businesses in splitting their target audience into different groups. They help businesses analyze customer data, find segment similarities, and adjust marketing approaches to reach each group more effectively.

Using the right tools can help you better understand your customers and improve your marketing. Here are some important types of tools to consider for market segmentation. Businesses often use a combination of these tools to effectively segment their market and personalize their marketing strategies to each segment’s specific needs and preferences.

Customer Surveys

Collecting customer feedback through surveys is a great way to understand what customers want and expect. You can use QuestionPro to easily create and send out surveys to collect information about your customers’ demographics, behaviors, and attitudes.

Here’s how customer surveys help with market segmentation:

• Gather feedback directly from customers.
• Collect data on demographics, behaviors, attitudes, and preferences.
• Test value proposition, pricing, and positioning.
• Helps in identifying and differentiating market segments.

Customer Analytics

Customer analytics tools track and analyze data from various channels, such as websites, social media, and email, to understand customer interactions and behaviors. Google Analytics is the best example of a tool that helps monitor demographics, interests, and preferences, providing crucial segmentation data.

Here’s how customer analytics assist with market segmentation:

• Track and analyze customer interactions across various channels.
• Provide insights into demographics, interests, and preferences.
• Monitor customer behaviors, feedback, and loyalty.
• Optimize website and landing pages through heatmaps and A/B testing.
• Market Research

Market research tools offer insights and trends about your industry, competitors, and customers. These platforms provide data and reports on market size, growth, and segmentation, enabling businesses to identify opportunities and threats for segmentation.

Here’s how market research tools assist with market segmentation:

• Provide insights and trends about the industry, competitors, and customers.
• Discover new opportunities and threats in the market.
• Access data and reports on market size, growth, and segmentation.
• Analyze content, keywords, and backlinks against competitors.

Customer Personas

Creating customer personas helps visualize and understand your ideal customers, facilitating segmentation communication within your team. These types of tools allow businesses to build personas based on customer data and research, including demographics, goals, challenges, and motivations.

Here’s how customer personas help with market segmentation:

• Create visual profiles of ideal customers based on data and research.
• Synthesize and communicate segmentation to team and stakeholders.
• Include information like demographics, goals, challenges, and motivations.
• Design and present personas attractively and engagingly.

Customer Journey Maps

Customer journey mapping tools illustrate how customers interact with your brand across different touchpoints and stages. These platforms help identify customer needs, emotions, and pain points throughout their journey, guiding businesses in improving segmentation strategies and customer experiences.

• Illustrate how customers interact with the brand across touchpoints and stages.
• Identify and improve customer needs, expectations, and emotions.
• Include actions, thoughts, feelings, pain points, and opportunities.
• Prototype and test solutions for different segments.

7 Best Market Segmentation Tools of 2024

Customer segmentation helps you customize your offerings, improve marketing strategies, and boost your earnings. For this task, you need the perfect customer segmentation tool. Let’s check out the top 7 market segmentation tools for 2024.

1. QuestionPro

QuestionPro is a comprehensive survey and research platform that offers robust customer segmentation tools to businesses seeking to gain valuable insights from their target audience. It offers a comprehensive suite of features designed to empower businesses to segment their customer base effectively and drive targeted marketing strategies.

QuestionPro empowers businesses to segment their customer base effectively and confidently drive targeted marketing strategies. With its advanced survey design and segmentation features, QuestionPro stands out as a top customer segmentation software for businesses seeking to optimize their customer segmentation efforts.

Key features of QuestionPro:

• Advanced Survey Design
• Robust Segmentation Capabilities
• Real-Time Analytics
• Multi-Channel Distribution
• Integration Capabilities
• Customization and Branding
• Scalability and Flexibility
• Advanced customer segmentation capabilities for precise targeting.
• Customizable surveys to specific segmentation needs.
• Multi-channel distribution options for maximum reach and customer engagement.
• Real-time customer data analytics for instant insights and decision-making.
• Seamless integrations with popular platforms for streamlined data synchronization.
• Pricing may vary depending on the features and customization options required.
• Customization options may require some technical expertise to implement effectively.

2. Google Analytics

Google Analytics is one of the valuable audience segmentation tools. This platform offers powerful capabilities and insights for optimizing marketing campaigns and targeting specific audience segments.

• The platform provides plenty of pre-built audience segment reports, making it easy for marketers to quickly gain insights into different customer segments and their behavior.
• Google Analytics seamlessly integrates with Google Ads, enabling marketers to create audience segments in Analytics and apply them to Google Ads campaigns for targeted advertising.
• Analytics is free to use.
• Limited integration options with third-party platforms.
• Limited segmentation implementation options for non-Google platforms.
• Implementation may be challenging for beginners or smaller marketing teams.

3. MailChimp

Mailchimp is well-known for its powerful email marketing software. It’s known for its ability to group or segment email recipients effectively.

With Mailchimp, you can segment your email list using different criteria, such as previous customer behavior, location, customer status, and even when they usually open emails. Mailchimp’s simple editor makes it easy to set up campaigns. Plus, you can test different versions of your campaigns to see which works best.

Key features include:

• Email Audience Segmentation
• Simple Editor
• Split Testing
• Integration with Other Tools
• Mailchimp offers robust segmentation capabilities, allowing users to create highly targeted email campaigns based on various criteria.
• The platform features a user-friendly editor, making designing and customizing email campaigns without extensive technical knowledge easy.
• Mailchimp’s free plan allows users to maintain up to 500 contacts and send up to 2,500 emails monthly at no cost.
• Mailchimp’s automation capabilities are not as advanced as some other email marketing platforms
• Advanced features can be harder to learn for less experienced users with email marketing.

HubSpot is essential for effective marketing plans. Its easy-to-use design and strong tools help businesses organize their marketing, manage customer connections, and boost growth.

HubSpot offers powerful tools for market segmentation. It allows marketers to divide their audience into specific segments based on demographics, behavior, and engagement. This helps marketers create marketing campaigns personalized to specific groups, leading to better business outcomes and return on investment.

• Contact management
• Lead scoring
• Email marketing
• Marketing automation
• Built-in CRM and multi-channel attribution tools for tracking campaign results effectively.
• Ability to create and manage segmented campaigns across various channels, such as email, social media ads, and web content, from a unified dashboard.
• Extensive marketing segmentation options based on various factors allow for precise targeting of customers and prospects.
• Some advanced features may require higher-tier plans or additional add-ons, potentially increasing costs.
• HubSpot may not be useful for specific industries like e-commerce compared to other platforms.

Segment is a powerful customer segmentation tool for businesses looking to improve customer communication and engagement strategies through data-driven segmentation and omnichannel messaging.

It’s one of the few customer segmentation tools designed specifically to handle audience segmentation across various channels right from the start.

Key Features of Segment:

• Advanced Audience Segmentation
• Omnichannel Communication
• Real-time Dashboards
• Custom Audience Reports
• Segment seamlessly integrates with the other platforms
• Allow users to segment campaigns based on real-time data.
• Segment offers audience segmentation recommendations to create targeted campaigns.
• Expensive Add-ons
• Visits-based Pricing

UpLead provides helpful features to enhance and categorize customer information, making it a handy tool in the customer segmentation process for businesses aiming to find and connect with specific potential customers.

Additionally, UpLead provides the best customer segmentation tools to assist in setting up targeted campaigns and delivering tailored website content to different customer groups.

Key Features of UpLead:

• Account identification
• Lead enrichment
• Prospect segmentation
• Intent data segmentation
• Email campaigns segmentation
• Implementation tools to assist in creating segmented campaigns and delivering personalized website content to specific segments.
• Suitable for businesses utilizing an ABM Lite approach.
• Intent data segmentation allows users to prioritize leads and target accounts based on their level of interest or engagement.
• The pricing model is based on credits, which may limit the number of searches or data enrichment tasks users can perform within a given period.
• UpLead may lack some advanced features found in other market segmentation tools.
• Limited integrations.

7. Survicate

Survicate offers a simple yet powerful solution for customer segmentation through surveys. It allows businesses to gather valuable customer data through surveys.

Survicate enables effective segmentation for various marketing initiatives such as market research, product onboarding, and customer satisfaction programs.

Key features of Survicate:

• Drag-and-Drop Survey Editor
• Template Library
• Survicate offers an intuitive and easy-to-use interface, making it simple for users to create and deploy surveys without extensive technical knowledge.
• Survicate allows surveys to be deployed across multiple platforms, including emails, websites, social media, Intercom chats, and mobile apps, ensuring maximum reach and participation.
• Users can easily customize surveys to match their brand’s aesthetic and messaging, enhancing engagement and response rates.
• Subscription fees are relatively high
• New users can find it challenging to create surveys and analyze data initially.

How to Choose the Right Market Segmentation Tool?

Choosing the right market segmentation tool is really important for businesses that want to improve their marketing and reach their audience well. Here are important things to think about when you’re choosing the right tool:

• Segmentation Capabilities: Evaluate the tool’s segmentation features.
• Integration with Existing Systems: Consider the tool’s compatibility with your existing systems, such as CRM, marketing automation, and analytics platforms.
• Ease of Use and User Interface: Choose a tool with an intuitive user interface and easy-to-use features such as segmentation setup, data analysis, and campaign execution, even for users with limited technical expertise.
• Customization and Flexibility: Look for a tool offering customization options for your business needs and objectives.
• Data Accuracy and Reliability: Ensure the tool provides accurate and reliable data for segmentation purposes.
• Analytics and Reporting: Look for features such as real-time analytics, visualization tools, and customizable reports.
• Cost and Value: Assess the tool’s pricing structure and value proposition in relation to your budget and expected ROI.
• Customer Support and Training: Choose a tool that offers reliable customer support and training resources to help you maximize its potential.

Why QuestionPro is the Best Market Segmentation Tool?

QuestionPro offers businesses the necessary market segmentation tools and abilities to organize their customer base effectively and create focused marketing plans. Its advanced features make it the best customer segmentation tool for companies aiming to improve their customer segmentation and succeed in today’s competitive market.

Here is why you should choose QuestionPro for market segmentation:

• Advanced Segmentation Capabilities: QuestionPro provides advanced audience segmentation features, allowing businesses to divide their audience based on various criteria such as demographics, behavior, preferences, and more.
• Customizable Surveys: QuestionPro’s intuitive survey builder allows users to create customized surveys tailored to their specific segmentation needs, ensuring accurate data collection and analysis.
• Multi-Channel Distribution: QuestionPro’s multi-channel distribution options, including email, web, mobile, social media, and more, allow you to reach your audience wherever they are, maximizing response rates and engagement.
• Real-Time Analytics: QuestionPro’s real-time analytics dashboard provides instant insights into audience segmentation data, enabling quick decision-making and campaign optimization.
• Seamless Integrations: QuestionPro integrates with popular CRM, marketing automation, and analytics platforms, allowing for seamless data synchronization and analysis across multiple systems.
• Expert Support: QuestionPro’s expert support team is available to assist with survey design, implementation, and analysis, ensuring a smooth and successful segmentation process.

Not all customers and potential customers are the same, and how you treat them can really affect how much money you make. It’s important to divide them into different groups based on their interests and needs. This market segmentation should be done regularly, monthly, or even weekly. It might take some time, but the benefits are worth it.

A good way to begin is by simply asking your customers what they like and want and if they’re happy with your products or services. If that sounds good to you, why not try QuestionPro? Get started to make attractive surveys that give you helpful information.

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THE 10 BEST Moscow Flea & Street Markets

Flea & street markets in moscow.

• Gift & Specialty Shops
• Art Galleries
• Shopping Malls
• Antique Stores
• Flea & Street Markets
• Farmers Markets
• Department Stores
• Shopping Tours
• Factory Outlets
• Fashion Shows & Tours
• 5.0 of 5 bubbles
• 4.0 of 5 bubbles & up
• 3.0 of 5 bubbles & up
• 3rd Transport Ring (TTK)
• District Central (TsAO)
• District Eastern (VAO)
• Good for a Rainy Day
• Budget-friendly
• Good for Kids
• Good for Big Groups
• Good for Couples
• Hidden Gems
• Adventurous
• Honeymoon spot
• Good for Adrenaline Seekers
• Things to do ranked using Tripadvisor data including reviews, ratings, photos, and popularity.

1. Old Arbat (Stary Arbat)

2. Izmailovsky Market

3. Danilovsky Market

4. Central Market

5. Market Levsha

6. Dorogomilovsky Market

7. Chumodan

8. 818 Vintage

9. Moskvoretskiy Market

11. Svoya Polka

12. Flea Market

13. Cheryomushkinskiy Rynok

14. Freak Frak

15. Bloshinka

16. vernisazh, what travelers are saying.

• Danilovsky Market
• Izmailovsky Market
• Central Market
• Old Arbat (Stary Arbat)
• Market Levsha