4 Types of Market Segmentation You Need to Know

Market segmentation is the act of dividing and subdividing your target market into smaller and smaller, more specific segments to identify which one will give you the highest return on investment for your product or service. To do this, you’ll need to choose from among four different market segmentation strategies that vary in how specific they are and how many segments they create. A segmentation strategy that may work best depends on your business goals and the industry you’re in, so be sure to consider all of your options before deciding what’s right for you.

Demographic

One of the most common ways to segment a market is by demographics. This can include factors like age, gender, income, education, and more. By understanding the demographics of your target market, you can better tailor your products or services to meet their needs. For example, if you’re selling baby clothing, then knowing that mothers with children in the 2-6 year old range are your target demographic will allow you to design your clothing with this audience in mind. If, on the other hand, you're trying to sell shoes for women in their 20s and 30s, then not catering to this demographic would mean missing out on a huge opportunity. The goal of demographic segmentation is to put yourself in the mindset of your target customer and find out what they want from your company.

Geographic

One way to segment your market is by geography, which can be as simple as dividing up your target area by zip codes or neighborhoods. Or you could go more granular and segment by climate, whether urban or rural areas, or even specific streets or blocks. Another option is to target a certain radius around your business location. If you're targeting households in that zone, this might be the best choice for you.   For example, if you have a small shop near an apartment complex with 50 units, then maybe focusing on those residents will work better than trying to draw from all of New York City's 5 boroughs.  Using geographic information means understanding not just where people live but how they live and what they need (i.e., fast-paced city dwellers might need convenience stores while more laid-back suburbanites may require grocery stores).  Based on studies, the most important consideration when deciding where to buy food was where I am. Geographic segmentation has been shown to help businesses improve customer satisfaction and loyalty by providing customized offerings and services tailored to local needs.

Behavioral

One of the most common ways to segment a market is by consumer behavior. This type of segmentation looks at how consumers make purchasing decisions, what motivates them, and how they use products or services. By understanding these behaviors, businesses can better target their marketing efforts.  For example, behavioral segmentation might help you identify that people who shop in-store are more likely to be loyal customers than those who prefer shopping online. Knowing this could help you focus your campaigns on building loyalty among in-store shoppers through exclusive promotions and incentives.  It’s also important to note that one person may have different buying habits depending on the product or service being offered. Behavioral segmentation works best when combined with other types of market segmentation because it helps you further refine your targeting strategy.

Psychographic

Psychographic segmentation is the type that segments by lifestyle, personality, and values. When companies use this segmentation technique, they are looking for a way to speak directly to potential customers on an emotional level. Consumer attitudes include information such as lifestyle choices (vegetarianism), personal beliefs (religion), self-concepts (self-esteem) and so forth. Psychographics can also be broken down into three categories: economics (quality of life), social class (aspirations) and sociocultural factors (beliefs).  Consequently, marketers will focus on reaching out to people with lifestyles similar to their target customer's.  They want these people to identify with their company, which ultimately leads them to purchase from them. For example, if your goal is to attract vegetarian shoppers then you would likely advertise in magazines about vegetarianism or near grocery stores catering to vegetarians. Similarly, if you wanted affluent professionals who value eco-friendly products then you would advertise in upscale publications or around natural food stores.  The beauty of psychographic segmentation is its ability to speak to specific types of consumers. It helps create meaningful connections between companies and consumers based on shared interests, beliefs, aspirations and desires.

Conclusion: So Which Is The Best?

The best type of market segmentation is  the one that is most feasible for your company. Each has its pros and cons, but if you're looking for the most effective option, then combining these four types might be the way to go. It's up to you and your business what will work best for you.