Market Segmentation Strategy - Definition and Different Types

Marketing segmentation is an essential part of any marketing strategy. The buyer persona is one of the first things to figure out when a business starts planning its marketing and advertising efforts. But what is this kind of strategy, and why is it important?

The market segmentation strategy is the process of dividing a target market into smaller, more manageable groups. This strategy is used to understand each group’s needs and tailor product offerings, marketing messages, and sales strategies to each group. In other words, you are putting your brand in front of people already seeking them instead of trying to attract attention from those who are not.

Let us learn more about the definitions and types of market segmentation strategies.

What is Market Segmentation Strategy?

A market segmentation strategy categorizes your consumer or company base based on demographic, geographical, behavioral, or psychographic lines—or a combination of these.

Market segmentation is a form of organization marketing plan that divides a target market audience into smaller, more manageable groups. A tailored customer experience results in brand loyalty and increased revenue for a product or service.

Determining your firm’s proper marketing segmentation strategy might be as simple as using or combining demographic, geographic, behavioral, and psychographic segments to reach a more specific consumer or client base.

Marketing segmentation methods assist your organization in anticipating where its goods and services are most desired, allowing for greater client pleasure, loyalty, and niche marketing. Demographic, geographic, behavioral, and psychographic market segments are often used to categorize customers. Each segmentation technique has marketing tools that may be utilized when combined segments are examined.

What is the Importance of Market Segmentation Strategy?

Market segmentation aims to help you better define and understand your target audiences and ideal customers. It allows marketers to identify the correct market for their items and seek their marketing more successfully. Similarly, publishers may utilize market segmentation to provide more finely targeted advertising choices and tailor their content based on audience profiles.

For instance, you can split an audience into segments based on whether they have a dog and then divide that group according to their breed. You could then show them advertising for food tailored to their dog breed. A publication might use this data to provide content about dogs to people that own or like dogs.

Rather than trying to reach every single person with a generic message, market segmentation allows you to target your content to the correct individuals in the most efficient way possible. It increases the odds of people responding to your ad or piece of content, resulting in more effective campaigns and higher ROI.

How does Market Segmentation Strategy Arrange Customers?

There are four basic strategies for arranging customers in market segmentation. These are the following:

1. Demographic

2. Geographic

3. Behavioral

4. Psychographic Lines

1. Demographic

In the demographic market segmentation strategy, the arrangement is based on some characteristics of the population. The most common features are age, gender, income level, education level, and occupation.

It is the most effective way of targeting specific customers because you can determine who your audiences are. There are also several ways to gather demographic information using social media platforms such as Instagram, Facebook, and Google Analytics. These tools can provide you insights into the following:

  • Age
  • Gender
  • Location
  • Employment Status
  • Ethnicity
  • Household
  • Buying hours

Segmenting a target audience based on demographics may provide new marketing options. For example, unique goods initially designed for women but now being marketed to men will save money over time due to their gender-specificity. By marketing to people with higher salaries, brands selling luxury items will have a greater chance of success.

You’re indeed targeting teenagers or perhaps young adults, but keep in mind that their parents may be interested in products when it comes to buying gifts for them. When it comes to dryer seasons, marketing towards their parents can assist you in filling in the blanks.

2. Geographic

Arranging your audience using geographic market segmentation is the easiest strategy. This method allows you to divide the customers based on their location. You can gather insights about their

  • City / State / Country / Zipcode
  • Climate
  • Rural or urban
  • Radius around a location

An example of this would be a brand that sells various clothing styles. Such a company would want to divide their audience according to the climate to effectively target people needing warming clothing versus those who need cold weather clothing.

In addition, brands that own a physical location and sell their products online may offer unique incentives to consumers who live near the store.

3. Behavioral

Behavioral segmentation is a relatively new technique that accounts for data accumulated through customer data reports, surveys, or marketing trends. Using this marketing segmentation strategy will give you information about your audiences’:

  • Buying patterns
  • Price preferences
  • Customer Loyalty
  • Benefits Anticipated

Consumers want the best brands and lowest prices, and their buying habits reflect that. When you buy a book on grilling, Amazon’s algorithms know you’re more likely to purchase seasonings or barbecue tongs if you bought a book on grilling.

Restaurant menus are also categorized into price levels based on customer behavior, offers, and seasonal items.

4. Psychographic Lines

Finally, psychographic segmentation is all about the target audience’s mental state. You’ll be able to develop content they enjoy and share with family and friends if you know what matters to them daily. You can gather information such as the following:

  • Customer goals or beliefs
  • Buyer personalities
  • Interest and Hobbies
  • Lifestyle

It’s much more challenging to identify psychographics than demographics and location. However, once you understand your target audience’s psychographics, you’ll be able to personalize your marketing efforts in a more targeted way.

Using psychographic data in your marketing can help you form relationships and rapport with customers by adding a personal touch. You’ll be able to cultivate a loyal following of consumers that trust the company!

Consider including additional questions in your emails, social media postings, and other places if you’re unsure where to begin. People are happy to respond to brief queries regarding their objectives and goals. You may inquire about their opinions on current events or “this vs. that” comparisons.

What is the Most Common Market Segmentation Strategy?

The most common market segmentation strategy is demographic segmentation. It is because it is generally the easiest to identify and understand. Additionally, it does not require a lot of data to be effective. All you need to know is basic information about your target audience, such as their age, gender, income, etc.

However, it is essential to remember that other market segmentation methods can be just as effective. It depends on your specific product or service and your target audience.

Which Market Segmentation Strategy is most suited to the location of customers?

The geographic market segmentation strategy is most suited to the location of customers. It allows you to target a specific group of people based on their site.

This strategy can be helpful if you have a physical store and want to offer incentives to people who live near it. Additionally, it can be beneficial if you want to target a specific region or city with your marketing efforts.

Why would a Company Employ a Market Segmentation Strategy?

There are many reasons why a company might employ a market segmentation strategy. The most common reason is to improve the effectiveness of their marketing efforts. By targeting a specific group of people, you can ensure that your message is more relevant to them and that you are reaching the right audience.

Market segmentation can also help you save money on your marketing budget. It is because you will not be wasting money on advertising to people who are not interested in your product or service.

Is Market Segmentation a viable Strategy?

Yes, market segmentation is a viable strategy. In fact, it is one of the most common marketing strategies employed by businesses today. It can effectively improve your marketing efforts and lead you toward your business goals.

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