Types of Market Segmentation with Examples

With this article you will learn what types of market segmentation exist and how they allow you to correctly direct your marketing efforts to the right audience and ensure the success of your business.

Before getting to the details, we will start with the basics. Below you’ll find the definition of what market segmentation is, and the benefits of this method that helps you know your target audience. Plus, you will also find some examples of the types of segmentation such as behavioural segmentation and more information on how to know if you’re doing a correct segmentation. 

Do you know the types of market segmentation that exist? Market segmentation consists of dividing the market into subsets, creating groups of consumers called segments, which should be as homogeneous as possible, regarding expectations and responses to marketing actions. These also have to be heterogeneous so that the segments are differentiated.

This division of the market into homogeneous groups of individuals allows marketing actions to be better adapted and increase their effectiveness.

What are the types of market segmentation?

A market can be segmented in different ways. Depending on the brand, industry, and available customer information, the grouping will be different. Cross-reference groups can also allow more precise targeting. For example, to focus on women who live in a specific region of a country and who like cars.

The market can be divided according to different types of criteria: geographic, demographic, and psychographic. All these criteria allow you to make selections to distribute. 

types of market segmentation

For example, surveys to the right segment, making specific offers, or building loyalty plans suitable for your business.

Geographic segmentation:

It means dividing the market into geographic areas with sufficient similarities to be subject to the same marketing actions. It can be a geographic division at an international, national, regional, or local level.

Geographic segmentation is the first step in any international marketing initiative, even if national companies can benefit from local campaigns.

Demographic segmentation: 

Another type of market segmentation is demographic segmentation. It consists of segmenting the market based on variables such as gender, age, height and weight, profession, income, or educational level.

This type of segmentation is the most common. It is rarely used alone because behind a sociodemographic variable such as age or socio-professional category, there are significant disparities. The disadvantage of choosing this option is that sometimes who you are, does not condition what you do or like.

For example, among young people aged 20 to 25, there are young students living at home and young parents who have been working for several years. Both profiles have very different lifestyles, and expectations, in a large number of markets.

Psychographic segmentation:

Another type of market segmentation is psychographic segmentation. It often provides clarity concerning sociodemographic and geographic criteria, leading to a qualitative description of segments. It consists of dividing a market according to lifestyles, values, opinions, or individuals’ personalities. 

This type of market segmentation includes people whose behavior toward the product is homogeneous. We no longer seek to group individuals who would be similar in demographic segmentation. Instead, we aim to group individuals with similar behaviors, attitudes, or reactions to the product category.

Behavioral segmentation

Behavioral segmentation is the process of grouping customers according to their behavior when making purchasing decisions.

Market researchers are in charge of observing aspects such as readiness to buy, i.e., the knowledge they have about the product, level of loyalty, interactions with your brand or product usage experience, etc.

Types of behavioral segmentation

Behavioral segmentation is responsible for grouping consumers as follows:

  • Occasion-oriented behavioral segmentation:

It refers to when a product is purchased for a particular occasion. It may be repeated or never happens again.

  • Usage-oriented:

This refers to the number of times the consumer uses the product. It can be heavy, moderate, or minor usage.

  • Loyalty-oriented:

This type of segmentation is focused on customer retention rates. When the brand has a high level of loyalty, it does not have to worry about acquiring new customers.

  • Benefit-oriented:

There are certain benefits that people look for when purchasing a product. They look for availability, different varieties, or prices that meet their needs. However, some customers are looking for the product to give them the maximum benefit.

Behavioral segmentation is done to group people who exhibit the same behaviors and target all marketing efforts to a single group.

With this method, companies can promote and market their products effectively, meeting the needs of customers.

Characteristics of good segmentation

Correctly choosing one of the different types of segmentation should ensure that the segments are relevant, accessible, measurable, profitable, and exploitable.

Different types of segmentation don’t meet these requirements in the same way. Sociodemographic criteria make it easier to obtain measurable segments than psychographic criteria.

Multi-criteria segmentations generally lead to a quantitative and objective description of the segment, with criteria leading to a qualitative description of the segment, richer and more relevant but less easy to measure.

How to know if your market segmentation is relevant

A segment must be intrinsically homogeneous. Customers in the same segment must be very similar in the criteria that generated their segmentation (and in as many criteria as possible). Standard deviations should be small (a majority of customers close to the segment average), hence decide among the types of segmentation for markets and which one works best for you.

The segmentation must be operationally feasible: a segmentation can result from very high-quality statistical calculations. Remember that the most obvious criteria are not always the most appropriate.

The market for a product or service is rarely homogeneous, depending on whether customers are individuals, companies, or communities. They have different needs and their buying and consumption habits. You cannot expect to target all consumers effectively and consistently. Instead, the best option is to personalize your offer as much as possible to build customer loyalty.

We all have a natural tendency to target so-called objective criteria, such as income level, type of housing, etc., to build our marketing actions. However, these can often be optimized by more refined segmentation.

If you want to segment your market, it’s because you want to sell something.

  • Who are your products for?
  • How do you imagine your buyers?
  • How would you like to sell to them?
  • Where and when will you sell your products?
  • What are the benefits of your products?

Once you answer all these questions, you will have an idea of the scope of your market. Plus, you’ll be able to choose among the different types of segmentation for your market and select the one that suits you best.

Don’t forget that segmentation is about understanding your customers. By combining various sources, you can first identify different segments and then define different groups to create specific buyer profiles.

Data sources can include interviews, surveys, focus groups, sales and CRM data, customer loyalty data, web metrics, reviews, feedback, and social media data.

Remember, QuestionPro can help you create surveys that facilitate your segmentation. Find your niche market using online surveys.