Different Types of Market Segmentation

Market segmentation is a marketing technique that divides a target market into smaller groups based on specific characteristics. Businesses can use this information to create targeted marketing campaigns that are more likely to be successful.


It can also help companies discover new market niches. For instance, if a brewery finds that their customers with young children are a valuable segment of their audience, they might add outdoor seating and offer kids meals to draw this group toward their business.

Demographic Segmentation

This form of Market segmentation involves grouping consumers by demographic traits like age, gender, income, and family status (or life stage). It’s among the most common types of market segmentation. It is used to identify potential consumer groups that may have similar purchasing behaviors and reactions to marketing techniques. It is also used to develop more targeted products and create marketing campaigns that are more effective.

Demographic market segmentation can also be useful for identifying long-term trends in the buying behavior of specific customer groups. This allows businesses to anticipate future needs and prepare for the future by modifying their product offerings and marketing strategies accordingly. For example, a fitness company that uses this type of market segmentation can develop workout apparel in various sizes to accommodate the different body shapes of men and women.

However, relying solely on demographics can lead to inaccurate marketing assumptions. For example, a toy company that markets dolls only to girls and action figures only to boys is reinforcing gender stereotypes and missing out on the potential market of toy-lovers in between these two categories. Similarly, a travel agency that targets luxury-seeking consumers based on income alone may miss out on budget-conscious travelers who value experiential travel. This is why it is important to use psychographic market segmentation in conjunction with demographics when developing your marketing strategy.

Geographical Segmentation

Geographical segmentation is one of the most useful tools for companies looking to expand their customer base. This type of market segmentation takes into account not just what country, region or city a consumer is located in, but also various other geographic factors like climate, cultural preferences and population density.

These demographics can be used to create more targeted marketing campaigns that will resonate with customers on a deeper level. The result is that companies are able to connect with customers on a more personal level and foster lasting brand loyalty.

Another advantage of using geographic segmentation is that it allows businesses to optimize their campaign spending. For example, if a company knows that their products will not sell well in certain areas, they can avoid spending money on ads for those regions. This is a great way to maximize ad budgets and increase profits.

For example, Planet Fitness uses geographic segmentation to target their ad campaigns only to people within a 2-mile radius of their physical locations. This helps to eliminate wasteful ad spend and ensures that their messages are reaching the people who are most likely to need and buy their products. Additionally, they can target audiences during regional cultural events like Thanksgiving in the US, Diwali in India, Chanukah in Israel and Mardi Gras in New Orleans.

Occupation Segmentation

Using occupation segmentation in market research, marketers can better understand how their product or service is used by the target audience. This type of segmentation also allows companies to identify new markets and opportunities for growth.

However, this method can be costly for companies to implement as it requires the collection and analysis of data. It is also often associated with increased complexity of the product line as companies try to cater to each audience’s specific needs and interests.

The goal of market segmentation is to maximize the effectiveness of marketing campaigns and to increase revenue through targeted advertising. With the right market research, you can create a more personalized approach that makes your customers feel understood and satisfied, which is essential for building brand loyalty.

Other benefits of market segmentation include the ability to identify niche markets and find ways to serve them, improved customer retention and loyalty, and more effective R&D efforts. In addition, the process can help you stay on track with marketing and content strategies and avoid getting distracted by less productive areas of your business. There are four primary types of market segmentation: demographic, geographic, behavioral, and psychographic. Each type of market segmentation has its own advantages and disadvantages, but all are crucial for achieving your marketing goals. In fact, 81% of executives cited market segmentation as an essential element for growing profits in a study by Bain & Company.

Lifestyle Segmentation

Marketers can use lifestyle segmentation to identify customers who are likely to purchase a product or service. Then, they can tailor marketing efforts to meet these customers’ needs and wants. This strategy can lead to increased sales and customer retention. It can also help marketers find new opportunities for market expansion by identifying underserved consumer groups.

Lifestyle segmentation involves dividing a market into groups of consumers with similar lifestyles, values and interests. This method of market segmentation is often used in marketing research, especially when it’s difficult to distinguish between groups based on other demographic factors. For example, a study on the information-seeking behavior of older adults found that the age group was too broad to segment into meaningful groups. However, the study did find that some general characteristics of the target group could be identified based on their responses to questions about their personal values and leisure activities.

The first step in implementing a lifestyle-based market segmentation strategy is to identify your team’s goals. This might include retaining existing customers or finding new ones for your business. It’s also important to determine the amount of time and money that your company is willing to invest in the lifestyle segmentation process. Finally, it’s important to test your model with actual customers through focus groups or surveys. You can also optimize your data operations by using a reliable software application with detailed analytics and a database architecture that facilitates access to consumer interests.