Ultimate Guide to Market Segmentation

You can divide market segments into four types. We have explained all the four main types of market segments below.

• Geographic Segmentation 

Geographic segmentation involves segmenting consumers based on where they reside. Customers may be segmented by country, state, city, or area so that they can be better understood, and marketing efforts can be targeted accordingly. 

These are a few examples of the ways in which geographical segmentation is used to segment target audiences:

• • Based on Season: People in colder countries create a demand for different kinds of products relative to those in warmer countries. In cold countries, people want products like warm clothing and warm beverages. In warmer countries, there’s a higher demand for summer wear and cold foods such as ice cream and milkshakes.
  • Based on Type of Region: Based on the type of region and their culture, organizations have to adapt their marketing strategies to appeal to the local market.
  • Based on Entry into New Regions/Markets: Organizations use geographic segmentation to launch their product/service in a new geographical location. They do so to study local customers so that they can adapt to their wants and their culture, and be able to compete with local businesses. 
• Demographic Segmentation

This type of market segmentation categorizes the target market based on specific variables such as age, gender, income, and education. This allows organizations to understand customer behavior accurately, allowing them to target customers more effectively.

These are a few ways in which customers are segmented demographically:

1. • By Gender: Gender-specific products are very common, from clothing to shampoos and soaps, marketers tailor marketing strategies based on gender. This is because men and women often have different needs and preferences.
   • By Age: Products are often targeted to customers based on their age, and the generation they were born in, as their preferences will vary due to these variables.
   • By Income: Income is an important variable to take into account while segmenting as it affects pricing strategies. Higher-income segments will be targeted differently by marketers and lower-income segments will be targeted differently.

• Psychographic Segmentation

Psychographic segmentation is a market segmentation technique that divides a target population based on psychological traits that influence consumption habits. 

There are five main segmentation variables and they are:

1. • Lifestyle: This type of segmentation categorizes customers based on how they live. For instance, some customers may like to eat healthy and participate in physical activities, while some may not.
   • Attitude: Attitudes are molded based on cultural background and a person’s environment. Different attitudes will result in different spending patterns. 
   • Social Status: People’s social status plays a predominant role in deciding which products they purchase. Different social classes have different preferences while buying goods such as clothes, shoes, food, cars, etc. 
   • Personality: Customers that are segmented based on personality may be segmented based on the following characteristics; extroverted, introverted, creative, friendly etc. Customer personality and purchasing habits are often strongly interrelated.
   • Activities/Interests: This segmentation is based on what activities customers are inclined toward, or on their opinions on certain subjects. For instance, some people enjoy watching shows and movies online while some enjoy watching them on television channels. 

• Behavioral Segmentation

Behavioral segmentation groups consumers based on their behavior while making purchasing decisions. There are four main types of behavioral segmentation and they are:

1. • Usage-Oriented Segmentation: Segments customers based on the number of times the customer uses the product.
   • Loyalty-Oriented Segmentation: This type of segmentation categorizes respondents based on their level of loyalty and the brand’s customer retention rates.
   • Benefit-Oriented Segmentation: When customers are looking to purchase a product, it is because they want to gain certain benefits from that product. This type of behavioral segmentation categorizes respondents based on the benefit they want to receive.
   • Occasion-Oriented Segmentation: This type of segmentation refers to when products are purchased for certain occasions. It may be a one-time purchase or may lead to repeat purchases.