Market segmentation is a marketing term referring to the aggregating of potential customers into groups or segments with common needs. The segments created are composed of consumers who will respond similarly to marketing strategies and they enables companies to target different categories of consumers and services differently from one another and share traits such as similar interests, needs, or locations.

Market Segmentation Importance

Personalizing marketing campaigns and arranging company’s target market into segmented groups, rather than targeting each potential customer individually, will be very useful for marketer’s time, money, and other resources than if they were targeting consumers on an individual level.

By dividing a market based on key characteristics and personalizing the strategies based on that information reduces the risk of an unsuccessful or ineffective marketing campaign.

Furthermore, segmentation will help the marketers to prioritize their target audiences and better allocate their attention and resources and will allow them to be more efficient in terms of company resources, their time and of course, budget. Also, creating groups of similar customers allow marketing professionals to target potential consumers in the most cost-effective manner.

Types of Market Segmentation

As a matter of fact, market segmentation practically acts as a blueprint when coming up with effective marketing campaigns. Now, let’s discuss market segmentation types in detail to gain a better understanding of the subject.

Generally speaking, there are four ways to classify market segmentation and all of them vary in their implementation in the real world.


1- Demographic Segmentation

Demographic segmentation, segments markets based on consumer- demographic variables such as age, income, family size, education, ethnicity, nationalism, social class, religion, etc. It assumes that consumers with similar demographic profiles will exhibit similar purchasing patterns, motivations, interests and lifestyles. These characteristics will translate into similar product/brand preferences. In practice, demographic segmentation can potentially employ any variable that is used by the nation’s census collectors.

2- Behavioral Segmentation

This type of market segmentation divides the population on the basis of their behavior, their knowledge, attitude, benefits sought, brand loyalty, readiness to buy, seasonal requirements, usage rate and response towards products.

Typical behavioral variables and their descriptors include:

  • Purchasing pattern
  • Benefit
  • User Status
  • Usage Rate
  • Purchase Frequency
  • Loyalty Status
  • Buyer Readiness
  • Attitude towards the product

3- Psychographic Segmentation

Psychographic segmentation is used to describe human characteristics of potential consumers. This segmentation  is measured by studying the activities, interests, and opinions (AIOs) of customers. Consumers may also be classified according to their personality traits. In other words, it’s process works on a premise that consumer buying behavior can be influenced by his personality and lifestyle.

4- Geographic Segmentation

This type of market segmentation divides potential consumers according to geographic criteria. In practice, markets can be segmented as broadly as continents and as narrowly as neighborhoods or postal codes. Typical geographic variables include:

  • Regions: continent, countries, states, neighborhoods, etc.
  • Size of metropolitan area: Segmented according to size of population
  • Climatic zone: weather conditions according to some geographic locations
  • Population density: divided as urban, suburban and rural

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