How to define Market Segment1

How to define Market Segment?


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Market segmentation is a business strategy and one of the most used techniques when it comes to targeted marketing. Market segmentation is the process in which customers (existing and potential) are divided into groups or segments based on their shared characteristics. These shared characteristics could be age, gender, lifestyle, needs, etc. 

The customers who respond in a similar fashion to a marketing effort are grouped together. This helps the company identify the target audience and tailor marketing campaigns, products, and branding approaches to attract the right audience.

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Importance of Market Segment

  • Targeting groups of customers who share similar characteristics makes it easy for marketers to create the right marketing message and campaigns that target the entire group. 
  • With a properly done market segment marketers can develop a marketing mix that suits each segment of customers. Knowing what each group likes and dislikes, marketers can easily create a different marketing mix which is customized for a particular group. 
  • Marketers can understand how each segment reacts to different products/ services. This helps them figure out prime ways to develop and deliver those products to boost revenue. 
  • Market segmentation helps you to identify the best channels that you can use to reach your target audience. The older generation prefers traditional methods of marketing, while the younger generation likes digital advertisement.

Four types of Market Segmentation

How to define Market Segment2

Geographic Segmentation

The market segmentation is done on the basis of geographic factors. Different regions have different requirements – culture, thoughts, or behavior. Using market segmentation-based geography allows marketers to learn about the factors that influence the customer’s purchase decision. People from different regions may have a different reason to buy the same product or use it differently.So, geographic segmentation enables marketers to personalize marketing efforts for different segments.

Demographic Segmentation

Age, gender, income, religion, marital status, etc. are a few of the variables that fall under the category of Demographic segmentation.Demographic segmentation is the most commonly used segmentation type in the market. You can see the beauty industry targeted products for males and females separately. Automobile industries target customers in terms of their income level. 

Customer’s purchase decision is highly influenced by their demographic factors. Marketers take advantage of this to showcase to the customers which product suits them the best. This helps a brand get a stronghold on their customers.

Behavioral Segmentation

Behavioral segmentation takes into consideration the behavior, preference, usage, and choice that influence a customer’s decision as to the variable for segmentation. 

Marketers believe that the knowledge about the use of a product/service is the motivating factor behind their purchase decision. A fashion influencer will prefer high-end apparel, while an average person will look for more affordable clothes, all because of their preference and likes.

Psychographic Segmentation

Personality, attitude, and lifestyle are the characteristics used to segment audiences under Psychographic Segmentation. 

The personality of a customer and their lifestyle play a key role in influencing their decision. Their habits, temperament, emotion, etc. impact what they buy and why. A couple may be fine living in a two-bedroom apartment, whereas another couple may prefer to live in a well-furnished house.

Example of Market Segmentation

The Optical Products Company, Canon tapped into a new market with their low-end digital cameras and profited 40% market share within a year of its launch. Canon realized that their low-end digital camera had huge potential in the market especially for children. Most adults use their phones to capture photos. However, they are not comfortable with getting smartphones for their kids. 

This discovery made Canon realize that it was a great opportunity for the company to advertise low-end digital cameras to the parents. They launched campaigns centering on children’s interest in photography. This resulted in a 40% of market share for the company. Canon used market segmentation to identify the unconventional segment of the audience. They noticed the interest of children in photography and the dilemma of parents about buying smartphones for their kids. Canon noticed the gap between the two and filled it with their targeted campaign.

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Benefits of Market Segmentation

Creates homogeneity

Market Segmentation helps create a homogenous group. It helps marketers focus on different factors separately instead of looking at a confusing mixture of different factors. This makes it easier for the marketer to develop targeted marketing campaigns for each segment and cater to the needs of that segment.

Helps understand gaps in the market

Market segmentation helps identify the gaps in the market. It helps a marketer see why some campaigns are not attracting the audience. It helps identify the segment which is not targeted with the right campaigns and marketing message. It creates an opportunity for the company to improve its strategy and target the right audience in the right manner to increase profit.

Helps you see customers

Market segmentation enables you to understand what the customers need, their likes and dislikes. It helps you understand what you are doing right or wrong. This gives you the chance to deliver what the audience wants. This helps make customers satisfied with the company and increases customer loyalty.

Limitation of Market Segmentation


 Market segmentation is a process that requires extensive research. For small businesses, it is not possible to invest too much time to conduct in-depth market research.


 It can also be an expensive process. A company has to create customized marketing mixes for different segments of customers. Moreover, manufacturing products that suit each segment is more expensive than mass production for a general audience.

Market Research toolkit to start your market research surveys and studies.


Market Segmentation is the process of clustering customers into different groups in terms of the characteristics that they share. Each segment is a homogenous group and is different from the other segments.

Marketing Mix refers to the tactics and tools used by a marketer to create targeted marketing campaigns for the targeted segment of customers.

Market segmentation is generally considered to be four types:

  • Demographic 
  • Psychographic
  • Behavioral
  • Geographic

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