Market Segmentation: Definition, Types, And Real-World Use Cases

Market Segmentation: Definition, Types, And Real-World Use Cases

Ineffective marketing to the incorrect demographic might make you feel like you’re chasing your tail. Setting yourself out from the crowd is difficult with so many online businesses. Thanks to market segmentation, you can zero in on the specific messages that will convince your target audience to make a purchase.

It is possible to learn more about the habits and perspectives of different consumer subsets by employing the technique of consumer segmentation. The term “customer segmentation” refers to dividing an existing client base into subsets. Some overlap exists between research design, data collecting, and analysis. However, the studies focus on various facets of segmentation, leading to some differences.

Before delving into the nitty and gritty of the types of segmentation, let’s take a look at what the term actually means.

What Is Market Segmentation?

Market segmentation, at its heart, is the process of breaking your target market into manageable categories. Understanding your market’s subsets will help you fine-tune your marketing efforts and product offerings. It may also provide motivation for new product iterations by directing product development efforts toward target markets.

For instance, manufacturing ketchup alone is not enough. For the products to succeed, manufacturers must further distinguish and identify their brands as classic ketchup or gourmet ketchup.

Therefore, market segmentation paves the way for targeted marketing and product positioning to obtain an edge over competing brands in understanding customers’ wants and requirements.

Different Types Of Market Segmentation And Examples

1. Demographic segmentation: The Who

When most people hear “market segmentation,” they may immediately think of demographic breakdowns. This is the simplest method of segmenting your clientele, yet it’s still effective. Demographic segmentation considers distinguishable non-personal characteristics such as:

  • Age
  • Gender
  • Ethnicity
  • Income
  • Academic Progression
  • Religion
  • Occupation/position at work

Example: When segmenting a new video game console for its market target, it may be discovered that most of its buyers are affluent young males.

Related: 5 Simple Formulas for Success in Demographic Survey
2. Psychographic segmentation: The why

Classifying customers according to their way of life, personality, attitudes, and interests is the goal of psychographic segmentation, often the most challenging method of market segmentation. This may be trickier to do since

  1. these characteristics are fluid and 
  2. objective data is not always immediately accessible.

But this method may produce the most robust market segment results, as it classifies people according to their internal drives rather than any external data points.

Example: A fitness gear business may choose to market to people based on their interest in participating in or watching various sports.

3. Geographic segmentation: The where

Geographic segmentation is the practice of dividing up potential consumers into subsets defined by their physical location.

Climate, area, and region affect potential customers’ demands and interests. You can use this knowledge to determine where to promote a brand and where to expand your business.

Example: The United States is home to baseball’s massive fan base, whereas India is a nation that loves cricket. You should consider these varying inclinations whenever you promote sports gear or release sports writing.

4. Behavioral segmentation: The how

Market information, client behaviour, and purchasing habits are the backbone of behavioural segmentation. Here, we categorise consumers based on:

  • How you spend your money
  • Purchase habits
  • Patterns of Internet Use
  • Interactions with the brand
  • Loyalty to brand
  • A previous review of the product

Example: Younger consumers tend to purchase more bottled body washes compared to older consumers, who typically buy bars of soap.

Phases Of Market Segmentation 

A Bain & Company research study revealed that 81% of executives said segmentation was essential for increasing earnings. Segmentation involves five primary steps/phases:

  1. Identify your market: Does the market require what you’re offering? Is it a sizable market? Currently, what position does your brand have in the market?

  2. Determine how you want to segment your market: Market segmentation entails breaking the overall consumer base down by age, income, education, marital status, occupation, geographic location or shared interests. You don’t have to choose just one. In fact, most businesses employ a mix of strategies. Examine all of your options and discover which ones fare the best.
  1. Assess your market: Learn your customer base by undertaking primary market research through surveys, focus groups, and other methods. Surveys continue to rank highly among the available options to get precise information on customers and businesses. Use a mix of quantitative (with tickable/selectable boxes) and qualitative (with open-ended for open text replies) questions relevant to your chosen segments.

  2. Determine which customer segments are most relevant to your brand: The results of your study should be analysed to determine which kind of customers are the most important to your business.

  3. Putting your marketing strategy to the test: Testing your marketing plan based on the results of your surveys and before implementing your new approach to your target audience is an excellent way to gauge its success. Additionally, continue your testing. Reconsider your target demographics or the validity of your studies if adoption rates are below expectations.

Market Segmentation In A Nutshell

Now that you’ve categorised your target audience and established a solid plan for reaching each subset of buyers, you can begin to implement your business strategy. Therefore, you should know how to communicate with prospective clients and tailor your outreach to each.

The future is fraught with difficulties stemming from the need for ongoing marketing adjustments, including testing new messages, strategies, and methods and monitoring audience reactions.

You may now begin your investigation into the market segmentation. Using online surveys, you may get in touch with your intended audience and discover more about their preferences and habits.

Let SurveyPoint help you simplify the process with no-code templates, prebuilt forms, and user-friendly digital tools. Still over the fence? Try it risk-free Today!

Heena Shah – Content Writer at Sambodhi

Heena Shah
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