It’s no secret that business owners, marketers, and decision-makers in any organization want to attract more sales and access a larger market share. To achieve this, the organization needs to go the extra mile and gain access to strategies to increase engagement rates and bring its messages to its target audience.

Based on the testimonials from business owners, marketers, and other people involved in marketing, and implementing segmentation about 40% of businesses experienced an increase in sales, while more than 25 percent enjoyed higher revenue based on the eMarketers report.  

This guide will help you understand what market segmentation is, its importance, the different types, and how to use it to grow your bottom line. 

What Is Segmentation

In marketing, segmentation is the process of dividing a target market into smaller, more specific groups called segments. Segmentation allows businesses to better target their products or services to the segments most likely to purchase them.

There are many different ways to segment a market, but the most common method is to use demographic criteria such as age, gender, income, or location. Businesses can also segment their markets based on non-demographic factors, such as interests, lifestyle, or personality.

No matter how a business segments its target market, the goal is always to identify the consumers who are most likely to buy what the company is selling. By doing so, brands can tailor their marketing messages and strategies to more effectively reach their target consumers.

Suppose you’re thinking of starting a business or are already in the early stages of starting one. In that case, market segmentation is essential to developing your marketing efforts and improving business ROI and marketing strategy. By segmenting your market, you can ensure that you’re targeting the right consumers with your products and services.

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If You Choose Not To Segment Your Market What Are The Outcomes? 

If you don’t segment your market, you may be missing out on valuable opportunities. Segmenting allows you to focus your resources on specific groups of people that are more likely to convert. This can help you save time and money while still reaching your target audience.

Not segmenting your market can also lead to less effective marketing campaigns. Without segmenting, you risk your marketing messages falling on deaf ears. You may also miss out on key insights about your target market, which can make it difficult to adjust your campaigns to meet their needs.

Overall, segmentation is a key part of any successful marketing strategy. By segmenting, you can focus your resources, create more effective campaigns, and gain valuable insights into your target market.

Why Is Market Segmentation Important

The most important thing is to make sure that your segmentation strategy is well thought out and based on solid data. Otherwise, you run the risk of wasting time and money on a strategy that doesn’t work.

For example, at MDB construction segmented email campaigns have helped us increase our open rate by 30%. If you specifically tailor your email content to the right audience your organization will witness an increased open rate. 

That’s the power of segmented email campaigns. By segmenting your audience and sending them targeted content, you can increase your open rate, click-through rate, and overall engagement.

Market Segmentation Use Cases

There are endless ways that businesses can use market segmentation to improve their marketing efforts. By understanding the needs and wants of different groups of people, businesses can create targeted marketing campaigns that are more likely to be successful.

Some common market segmentation use cases include targeting different demographics, understanding customer behavior, and creating custom product offerings. Additionally, market segmentation can be used to identify new market opportunities.

.By understanding your target market and creating targeted campaigns, you can boost your marketing efforts and see better results. Some activities related to market segmentation use cases includes;

  • Lead generation

There are a lot of different ways to slice and dice your target market. But one of the most effective ways to segment your market is by using lead generation.

Lead generation is a process of identifying and targeting potential customers for your product or service and then obtaining their contact information. By targeting potential customers who are likely to be interested in your product or service, you improve your chances of making a sale.

So how do you go about segmenting your market for lead generation? One way to segment your leads is with an opt-in survey. This is a type of survey that customers can fill out when they sign up for your product or service. By tracking what customers signed up for, you can segment them into different groups.

This can be a useful way to segment your leads, but it’s not the only way. You can also segment your leads based on their behavior or other criteria. However you choose to segment your leads, the important thing is that you do it in a way that makes sense for your business and your customers.

  • Investment intelligence: 

Investment intelligence is a type of data that can be used to make informed decisions about investments. This data can come from a variety of sources, including financial reports, economic indicators, and political news.

The use case of investment intelligence focuses on investors’ risk tolerance, investment goals, and other factors to better understand their needs. This information can then be used to create investment products and services that are more likely to meet the needs of those investors.

If you’re interested in learning more about market segmentation with investment intelligence, you can find more information in the resources below.

Market Segmentation Vs Customer Segmentation

When it comes to marketing, there are a lot of different approaches you can take. So, what’s the difference between the two?

Market segmentation is all about dividing up the market into different groups based on certain characteristics. For example, you might segment the market by age, gender, location, or interests. 

Customer segmentation, on the other hand, is about dividing up your customers into different groups. This is usually done based on factors like customer needs, buying habits, or demographics.

Both market segmentation and customer segmentation can be useful for your business. But which one you use will depend on your specific goals and objectives. If you’re not sure which approach is right for you.

Types Of Market Segmentation

There are many different ways to segment a market. The most common methods are geographic location, demographics, psychographics, and behavior. A less common but still useful method of segmentation is firmographic segmentation. 

  • Geographic segmentation is when you divide the market by geographic location, such as city, region, or country. 
  • Demographic segmentation is when you divide the market by age, gender, income, etc. 
  • Psychographic segmentation is when you divide the market by lifestyle, personality, values, or interests. 
  • Behavioral segmentation is when you divide the market by consumer behavior, such as purchase history or brand loyalty. 

The best way to segment a market depends on the product or service you’re selling, as well as your target market. To determine the best method, you will need to consider your marketing goals and objectives.

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Demographic Segmentation 

Demographic segmentation is a method of dividing consumers into groups based on shared characteristics like age, income, gender, etc. This information can be used to better understand each group’s needs and desires, and ultimately create more targeted marketing campaigns.

There are a few different ways to go about demographic segmentation, but the most common approach is to use market research surveys. These surveys can help you gather information about your target audience’s demographics, which you can then use to segment them into groups.

Once you have your groups, you can start creating targeted marketing campaigns that are more likely to resonate with each group.

One common example of demographic segmentation is age-based segmentation. This is often used by businesses to target specific age groups with their products and services. For example, a toy company could target children and adults with their products. 

Lego has sets that are for children while other sets are targeted at adults. 

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Look at the heading. – Build mindfulness, piece by piece – no kid is worried about mindfulness. Even the imagery and presentation of the product are clearly targeted at adults. 

Another common form of demographic segmentation is gender-based segmentation. This is often used by businesses to target specific genders with their products and services. For example, a clothing company may target women with their products, while a tools company may target men.

Demographic segmentation can be a helpful tool for any business that wants to better understand its customers and achieve marketing goals.

An example of how companies use demographic information in the fashion industry:

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Louis Vuitton specifically targets affluent adults aged 35 and older. The company’s products are designed to appeal to this demographic, and its marketing campaigns are carefully crafted to reach them. 

For example, Louis Vuitton’s print ads often feature affluent adults enjoying luxurious lifestyle experiences, such as attending a black-tie event or traveling to an exclusive destination. By using demographic segmentation to target its advertising and marketing efforts, Louis Vuitton can maintain its luxurious image and appeal to high-end customers. 

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Nike uses a variety of demographic criteria to segment its customers, including age, gender, income, and lifestyle. This allows Nike to create targeted marketing campaigns that appeal to specific groups of people. 

For example, Nike has a separate marketing campaign for young women who are interested in sports fashion. This campaign features stylish female athletes and is designed to appeal to this demographic group.

Psychographic Segmentation 

Psychographic segmentation is a marketing technique that involves dividing customers into groups based on their personality, values, beliefs, and lifestyle choices. This type of segmentation can be extremely helpful in creating targeted marketing strategies that are more likely to appeal to certain customer groups.

If you’re thinking of using psychographic segmentation for your business, there are a few things you should keep in mind. First, you’ll need to gather data on your target customers’ personalities, values, and lifestyle choices. This can be done through surveys, interviews, and focus groups. Once you have this data, you can start to segment your customers into different groups.

Keep in mind that psychographic segmentation is just one tool you can use to target your marketing. You’ll also need to consider other factors, such as geographic location and demographics. 

Indomie is a type of instant noodle produced by the Indonesian company Indomie Mi Tarik. It is distributed in Australia, Asia, Africa, New Zealand, the United States, Canada, and Europe. The marketing mix of Indomie is designed to capture a wide range of target markets. 

The pricing strategy is created to be affordable for all target markets. The product is available in different packaging sizes to cater to the different needs of the target market. The distribution strategy is created to be widely available in all major supermarkets.

Indomie segmented its target market into three psychographic segments which are social class, lifestyle, and personality. The social class segmentation is based on the income level of the target market. The lifestyle segmentation is based on the target market’s busy lifestyle. The personality segmentation is based on the target individual.

Geographic Segmentation 

Geographic segmentation is the process of dividing a market into smaller groups based on geographic factors. This can be done in several ways, such as by country, region, state, city, or even neighborhood. Geographic segmentation allows businesses to target their products and services to specific areas, which can be helpful in multiple ways.

For example, geographic segmentation can help businesses save money on marketing and advertising by targeting only those areas where their products are likely to be purchased. Additionally, it can help businesses tailor their products and services to the specific needs of a particular geographic area.

Apple is a prime example of a company that uses geographic segmentation for its marketing. By targeting specific regions with its marketing campaigns, Apple can reach a larger audience and generate more sales.

For instance, Apple has specifically targeted the Asian market with its iPhone models. By tailoring its marketing to this region, Apple has been able to capture a large share of the Asian smartphone market. 

Additionally, Apple has also targeted the education market with its iPads. By marketing the iPad as a tool for learning, Apple has been able to reach a new demographic and boost its sales.

Geographic segmentation is a powerful marketing tool that can be used to reach new markets and boost sales. Companies like Apple have used this strategy to great effect, and you can too.

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Business Insider

The two images above have shown that Apple has always been a company that prioritizes its customers’ privacy. In the United States, this has been a major selling point for the company. 

However, in the Asian market, privacy is not as much of a concern for customers. As a result, Apple has had to adjust its marketing strategy to appeal to its Asian audience.

Apple’s marketing strategy in the Asian market is to focus on the company’s other selling points, such as its quality products and customer service. By doing this, Apple can appeal to a wider range of customers in the Asian market.

Behavioral segmentation

Behavioral segmentation involves grouping customers based on their behavior – specifically, their decision-making patterns.

It can help you understand why customers make the decisions they do, and it can also help you predict what they might do in the future. armed with this information, you can tailor your marketing and sales strategies to better meet the needs of your customers.

LG Electronics uses a variety of methods to segment its consumers, but one of the most important methods they use is behavioral segmentation. This process looks at consumer behavior to identify different groups that LG can target. 

LG uses a variety of factors to determine consumer behavior, including purchase history, product usage, and even online behavior. By understanding the different behaviors of its consumers, LG can more effectively target its marketing and advertising efforts.

LG uses this 3D Smart TV ad to target customers with an interest in smart technology. The ad shows a lion almost jumping out of the TV. By using behavioral segmentation, LG can target customers who are interested in smart technology and who are likely to purchase a Smart TV.

This ad is targeting a specific segment of the population – those who are interested in smart technology. LG is trying to reach this segment by using behavioral segmentation, which is a type of marketing that targets consumers based on their behaviors and interests.

So far, the ad has been well-received by those who have seen it. LG is hoping that it will continue to appeal to its target audience and generate interest in its new 3D Smart TV.

Behavioral segmentation is just one of the many ways that LG Electronics segments its consumers. Other methods include geographic segmentation, demographic segmentation, and psychographic segmentation. By understanding the different needs and wants of its different segments, LG can more effectively sell its products and create a loyal customer base.

Firmographic segmentation

Firmographic segmentation is a method of segmenting a market by using criteria such as company size, industry, and location. This approach can be useful for companies that sell to other businesses (B2B), as it can help them to target their marketing and sales efforts more effectively.

There are a few different ways to do firmographic segmentation, but the most common approach is to use the North American Industry Classification System (NAICS). This system segments businesses by their primary activity, allowing you to target potential customers by their type of business.

If you’re planning to use firmographic segmentation for your business, there are a few things to keep in mind. First, it’s important to make sure that you have accurate and up-to-date data on your potential customers. Second, you need to decide which criteria are the most important factors when choosing your customer segment and how best they can be approached. 

An example of Firmographic segmentation: Hubspot, a leading inbound marketing and sales platform use firmographic segmentation to target its marketing efforts. 

It uses firmographic segmentation to focus on companies in the software-as-a-service (SaaS) industry in the United States with more than 100 employees. By targeting this specific group of companies, Hubspot can create marketing materials that are relevant to their needs and more likely to result in a sale.

What Are The Most Effective Ways To Segment Leads 

There are a variety of ways to segment leads, but not all methods are equally effective. The most important thing to consider when segmenting leads is what criteria will be used to divide them into groups. By using effective segmentation methods, which would be highlighted below, you can successfully build a segment of customers that is worthwhile to your organization.

Leads Segmentation Through Surveys

As the first step in the lead segmentation process, surveying your target market is essential to identify different types of leads. By surveying your target market, you can learn about their specific needs and pain points. This information will be invaluable in customizing your marketing and sales efforts.

There are different ways to go about conducting a survey. You can either do it yourself or hire a company to do it for you. If you decide to do it yourself, there are a few things you need to keep in mind. First, you need to create a list of questions that you want to ask. Second, you need to determine how you’re going to administer the survey. This can be done online, through the mail, or in person.

When conducting a survey, it is important to ask questions that will yield valuable insights. Below are some examples of questions that can be used to gather useful information from survey respondents:

– What is your opinion on the XYZ issue?

– How likely are you to support/oppose the XYZ policy?

– What is your opinion on the XYZ company?

– How likely are you to purchase the XYZ product?

– What is your opinion on the XYZ service?

– How likely are you to use the XYZ service?

– What is your opinion on the XYZ brand?

– How likely are you to recommend the XYZ brand to a friend?

There are a few simple steps you can follow to carry out a survey:

1. Decide on the objectives of your survey. What do you hope to achieve?

2. Choose the target population for your survey. Who do you want to survey?

3. Draft the questions for your survey. What do you want to ask?

4. Choose the method of collecting survey data. How will you gather the information?

5. Distribute the survey to your target population. How will you reach them?

6. Collect and analyze the survey data. What do the results tell you?

7. Present the survey results. How will you share the information?

With careful planning and execution, surveys can be a useful tool for gathering information and insights.

Opt-In Questionnaires 

As your business grows, you’ll inevitably need to segment your leads to better target your marketing and sales efforts. And one of the best ways to do this is by using opt-in questionnaires.

Opt-in questionnaires are a great way to gather data about your leads so you can segment them into different groups. By asking questions about their needs and interests, you can more easily identify which leads are the best fit for your products or services. 

Plus, you can use the information you gather to create more targeted content that will speak to the specific needs of each segment. If you’re not already using opt-in questionnaires to segment your leads, now is the time to start. 

Leads Segmentation Based On What The Potential Targeted Audience Signed Up For

When it comes to leads, one size does not fit all. Just as every business is unique, so too are the leads that they generate. That’s why it’s so important to segment your leads based on what they signed up for.
For example, let’s say you have a lead who signed up for a webinar on your website. This lead is interested in what you have to say, but they may not be quite ready to make a purchase. In this case, you would want to send them more information about your product or service, as well as any other relevant content that might interest them.

When going this route, you’ll want to make multiple lead magnets that would appeal to the most important segments of your audience. That way, you’ll know exactly how to communicate with them when they sign up. 

For example, if you have a segment made of business owners and one made of marketers and you’re selling electronic signature software, there are two clear paths you can take. 

In the lead magnet for business owners, you may focus on how to make your reps more effective with productivity and leadership tips. In the lead magnet for sales reps, you can share how to close more deals and fill up their pipeline.

Purchase history

One way to segment leads is through purchase history. By understanding what type of product or service a lead has purchased in the past, you can create a campaign that speaks to their needs and interests.

However, segmenting your leads through purchase history is not without its challenges. To accurately segment your leads, you will need to have a robust data collection and analysis system in place. Additionally, you will need to have a clear understanding of your target market and what type of products or services they are interested in.

If you’re able to segment your leads through purchase history, you will be able to create more targeted and effective marketing campaigns.

Behavior on website

If you’re looking to generate leads through your website, one of the best things you can do is segment your visitors by their behavior. By tracking how users interact with your site, you can get a better idea of what they’re interested in and what type of content they’re most likely to convert on.

There are a few different ways you can segment your website visitors, but one of the most popular methods is through lead scoring. Lead scoring is a way of assigning a numeric value to a lead based on their behavior on your site. The higher the score, the more likely the lead is to convert.

There are different factors you can use to calculate a lead’s score, including website activity, page views, time on site, and bounce rate. You can also use lead scoring to prioritize your leads.

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How To Use Market Segmentation In Practice 

There are lots of different ways you can use market segmentation in your business. Here are just a few examples:

  •  You can use market segmentation to target your marketing campaigns. For example, if you know that your target market is young families, you can design your marketing materials accordingly.
  • You can use market segmentation to adjust your product offerings. For example, if you know that your target market is health-conscious, you can offer healthier alternatives to your products.
  • You can use market segmentation to fine-tune your sales strategy. For example, if you know that your target market is price-sensitive, you can offer discounts or create promotions.

Market segmentation is a powerful tool that can help you tailor your business to the needs of your target market.

For B2B brands

As a B2B marketer, you understand the importance of market segmentation. After all, it’s essential for tailoring your marketing messages to the specific needs of your target audience. But how do you put market segmentation into practice?

There are many different ways to segment your market, but the most common approach is to segment by industry. This allows you to target your marketing messages to the specific needs of each industry. For example, if you’re selling software to the healthcare industry, you’ll need to tailor your messaging to the needs of that industry.

Other common ways to segment your market include segmenting by company size, geographic location, and buyer persona. Once you’ve segmented your market, you can start creating content tailored to the needs of each segment. 

For B2C brands 

There are multiple ways that B2C brands can use market segmentation in practice. Perhaps the most common way is to target specific segments with specific marketing messages.

For example, a company might target young mothers with ads that focus on the benefit of their product for busy moms on the go. Or a company might target seniors with ads focusing on the product’s ability to help them stay active and independent.

Another way B2C brands can use market segmentation is by tailoring their products or services to specific segments. For example, a company might offer a senior discount or a discount for families with young children. Or a company might offer a special version of their product that is designed specifically for a certain segment, such as seniors-only methods.

Examples Of Market Segmentation

While market segmentation is a common practice, it is not always possible for a marketer to use the same strategy in every industry. This is because the characteristics of a market can vary greatly from one industry to the next. For example, the market for luxury goods is quite different from the market for essential goods. As such, a marketer would need to use a different market segmentation strategy for each industry they are targeting.

Food products

There are many different ways to segment the market for food products. Some common methods include segmenting by geographic region, type of food product, or by consumer demographics.

Segmenting by geographic region is a common method for food companies to target specific markets. For example, a company may decide to focus on the US market, the European market, or the Asian market.

Segmenting by type of food product is another common method. This could include segmenting the market by healthy food products, organic food products, or specialty food products.

Segmenting by consumer demographics is another option. This could include targeting specific age groups, income levels, or lifestyle choices.


Beauty Products

There are many different ways to segment the market for beauty products. Some standard methods include segmenting by age, gender, lifestyle, and geographical location. Age is a common way to segment the market for beauty products, as different age groups tend to have different needs and preferences. 

For example, teens and young adults may be more interested in fashion and trends, while older adults may be more concerned with anti-aging products.

Gender – a demographic factor – is another common way to segment the market for beauty products. Men and women often have different needs and preferences regarding beauty products. For example, women may be more interested in products that help with hair care and skin care, while men may be more interested in products that help with shaving and grooming.

Different lifestyles – psychographic factors – often require other segmentation processes for a product or service. Additionally,  if a beauty product company was looking to segment their market, they could target women aged 18-24 who live in urban areas. Or, they could segment their market by needs and target women looking for a natural beauty product.

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Bottom Line

In conclusion, market segmentation divides a market into distinct groups of consumers with similar needs or characteristics. There are four main types of market segments: geographic, demographic, psychographic, and behavioral. Businesses use market segmentation to identify target markets and develop marketing strategies. When done correctly, market segmentation can be a powerful tool for brands to increase sales and revenues.