What is market segmentation and how can it help?

Market segmentation is the process of qualifying companies (or people) into groups that respond similarly to marketing strategies. It is the first crucial step in developing a selling model designed to resonate through various populations. Your segmentation strategy will be mainly influenced by what your product is, and which types of companies are already buying it.

An ideal market segment is:

  • Measurable
  • Large enough to earn profit
  • Stable, not going to vanish after a short time
  • Reachable by your marketing strategies

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Demographic Segmentation

The most widely used form of market segmentation is demographic segmentation and involves categorizing the market based on age, gender, income, occupation, ethnicity, etc. As a bare minimum, most companies have a general understanding of what groups are buying their goods. For example, the picture above is from multiple generations' favorite video games. You can get a sense of what generation (or segmentation) favorite is from which type of game is their most favorite. Is it the super one, world, smash, galaxy, kart, and etc.

Psychographic Segmentation

In this umbrella of psychographic segmentation more complex characteristics are graded. Less tangible than demographic segmentation, this classification method includes details like lifestyle, personality, beliefs, values, and social class. Such evaluation is important since two individuals can possess identical demographic details, but make entirely different buying decisions, and therefore need different marketing. Health and fitness commercials, for instance, may not go a long way for someone who likes spending their money on video games and energy drinks, even though they are working in the same industry and living in the same house.

Behavioral Segmentation

Behavioral segmentation at its foundation is the process of categorizing prospects based on their actions, usually within the marketing funnel. For starters, prospects who have visited a landing page for an upcoming event can benefit from a customized invitation to receive. Market segmentation based on habits is usually conducted by marketers through their marketing automation tools but every organization with a mailing list has already conducted behavioral segmentation simply by monitoring customers who have signed up to receive emails.

Geographic Segmentation

Geographic market segmentation, the most direct of the group, takes into account the locations of customers to better identify marketing strategies. It is best to create more detailed geographic segmentation examples when dealing with a large population to get more depth: North, South, West, East sides.

Market segmentation in phases- How to?

Phase 1: Gather the data

First things first, it's time to collect data so you can use it to create segments of your market. There's a lot of ways to do it — some people like starting through pre-made lead lists, others like doing their own research. If you're in the latter category (you could certainly be), you can structure your searches in the categories below.

Researching by company size:

Size can mean a variety of things but is most commonly calculated by the number of workers, a number of customers, or a business report's total sales revenue. Many businesses have transparency on their websites which makes it much easier to reach out to the right person. Especially when it comes to government, education, or if they have their budgets open with public companies. 

Researching by industry:

The company is unlikely to be available in all sectors, which is why there is segmentation within the industry. Segmentation of industry would help ensure you don't waste your time by targeting a client that doesn't need your product. Make sure to match your products or services that match a company or target market.

Researching by location:

If you provide a location-specific product or service, such as local community landscaping services, your regional market segmentation is likely to be very airtight: you are likely to use helpful tips such as lead maps and participate in local marketing anywhere possible. Make sure you know your timezones of business, especially if you are looking to business internationally. 

Researching by needs:

This segmentation approach involves selecting companies, depending on whether they need your goods or services. Although that description is clear, it may not be the mechanism behind making this decision, depending on what you propose. If you are offering landscaping services, you can use Google Maps to look up the headquarters of a company. If their office is in a rental upstairs, they probably don’t need any landscaping, maybe window washing.

Capturing data in web forms:

Web forms are industry standards for the collection of data from prospects. The procedure is simple: if you have high-quality content that can give your site visitors a great deal of satisfaction, you should put the content behind a web form that allows users to apply their name, email address, and other information before they can access it. This is what most businesses do when they offer free material for your info or percentage off of their products. 


Surveys may be tactically applied more of a targeted targeting strategy to obtain fairly specific knowledge from prospective customers in return for extremely specific products or incentives. Typically the traditional survey format provides a meaningful reward — like a gift card or a free product — in return for a reasonable amount of voluntary user information. While somewhat vague, surveys are also one of the best ways to get hyper-targeted data about consumers and companies. 

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Phase 2: Sort the data into segments

There are a lot of ways to go about it. Some require pricey consultants, advertisers, and plenty of time and loads. Given that time and resources are a problem, you can estimate your own market segmentation by collecting the data into a single source and running filters on it to manually link the targets and businesses by segments together.

Remember, ask yourself the following:

  • Is this segment measurable?
  • Is this segment large enough to earn a profit?
  • Is this segment stable, and not going to vanish after a short time?
  • Is this segment reachable with my marketing strategies?
  • Is this segment homogenous, and will they respond similarly to my marketing strategies?
Phase 3: Plug in your marketing channels

Now that your segments have been completely identified, it's time to bring life into your ads and connect the dots. This involves drawing up a campaign for each of your marketing tactics and platforms and developing specific ways to get to your segments with them. You’ll be attributing different marketing and sales tactics to each stage of your pipeline, and determining what sticks. The good news is that your market segments are clearly defined and you’ll be able to speak to them clearly. The real challenge is continuously improving your efforts with trial and error to get the best possible conversion rates.

Market segmentation in a nutshell

Now you have your markets easily segmented, your strategy figured out, and your distribution processes closely mapped to your segments of the industry. Of this cause, you will have a good idea of how to speak with your prospects, and how to isolate your consumer segment-based outreach activities. The challenges ahead are grounded in the continuous modification to your marketing — testing your ads, your campaigns, and analyzing the reactions of your viewers.