After discussing and finding several strategies to employ to retain customers and improve your customer service, another challenge is structuring your products and services to meet these diverse customer demands most efficiently and profitably.

Market segmentation allows you to focus your marketing efforts on the right audience to ensure your business succeeds.  In this article, we will be explaining what market segmentation is, types and its benefits.

What is Market Segmentation?

Market segmentation is a business practice used to divide target markets into smaller, more manageable groups of people based on common ground they share to optimize their marketing, advertising, and sales efforts. Simply put, customers of each market segment have similar characteristics that businesses can leverage to advance their efforts.

You can use this targeting in product, sales, and marketing tactics if you understand your market segments. Market segments can help you power your product development cycles by informing how you construct product offers for diverse demographics, such as males vs. women or high income vs. low income.

Types of Market Segmentation

  • Geographic segmentation: Geographic segmentation is used to target clients based on a predetermined geographic boundary. Interests, values, and preferences change greatly between towns, regions, and countries, therefore it’s essential for marketers to notice these variations and tailor their advertising accordingly.
  • Psychographic segmentation: Psychographic segmentation takes into account the psychological components of customer behavior by segmenting markets based on consumer lifestyles, personality traits, beliefs, perspectives, and interests. When large markets, such as the fitness industry, group its clients into categories of people who care about healthy living and exercise, they utilize psychographic segmentation.
  • Behavioral segmentation: Consumer behaviors, patterns, and the way customers go through their decision-making and purchase processes are the subject of behavioral segmentation.  Behavioral segmentation refers to how people feel about your brand, how they use it, and how conscious they are of it. This type of data is collected in the same way as psychographic data is collected. This enables marketers to create a more targeted strategy.
  • Demographic segmentation: Age, gender, level of education, family size, occupation, ethnicity, income, and other factors are used to segment a market. Specific items catering to clear individual needs linked to at least one demographic element are a common reason for this type of segmentation.


  • Customer retention: To begin with, the unified client segments will result in high customer retention. Customers that are captured from the start of a precisely crafted customer journey will have a positive brand experience and are more likely to remain loyal to your company. They will find it tough to say no to you if every word and product you share with them resonates in some manner.
  • Enhanced profits: Customers’ disposable incomes vary; therefore, pricing can be established according to how much they’re willing to spend. Knowing this will help you avoid overselling (or underselling) yourself.
  • Product development: You’ll be able to design with your consumers’ wants in mind, and create multiple items to cater to different regions of your customer base.
  • Differentiate your brand from the competition: You may set yourself apart from the competition by crafting messages that are particular to your value proposition. By concentrating on unique client wants and traits, segmentation allows you to differentiate your brand.
  • Identify your niche market: Market segmentation aids in the identification of your specific market. Determine which niche has the largest audience and whether it has needs that your business can meet.
  • Stronger marketing messages: You don’t have to be generic or vague any longer; you may communicate directly to a specific set of individuals in ways that they can comprehend because you know their qualities, desires, and requirements.