There are 4 types of Market segmentation which are most commonly used. Market segmentation is one of the oldest marketing trick in the books. With the customer population and preferences becoming more wider, and the competitive options becoming more available, market segmentation has become critical in any business or marketing plan. In fact, people launch products keeping the market segmentation in mind.
There are three ways to classify what the customer wants. It is known as needs, wants and demands. However, to decide the needs, wants and demands, you need to carry out segmentation first. And in segmentation, the first step is to determine which type of customer will prefer your products. Accordingly, that customer will be from your targeted segment. Who would want your product and whether it falls in the needs segment, the wants segment or the demands segment. Once you decide the product you are going to make, then you decide on the market segmentation.
There are 4 different types of market segmentation and all of them vary in their implementation in the real world. Let us discuss each of them in detail.
Types of Market Segmentation
1) Demographic segmentation
Demographic segmentation is one of the simplest and most widest type of market segmentation used. Most companies use it to get the right population in using their products. Segmentation generally divides a population based on variables. Thus demographic segmentation too has its own variables such as Age, gender, family size, income, occupation, religion, race and nationality. To read more, click on this link for demographic segmentation.
Demographic segmentation can be seen applied in the automobile market. The automobile market has different price brackets in which automobiles are manufactured. For example – Maruti has the low price bracket and therefore manufactures people driven cars. Audi and BMW have the high price bracket so it targets high end buyers. Thus in this case, the segmentation is being done on the basis of earnings which is a part of demography. Similarly, Age, life cycle stages, gender, income etc can be used for demographic type of market segmentation.
2) Behavioral segmentation
This type of market segmentation divides the population on the basis of their behavior, usage and decision making pattern. For example – young people will always prefer Dove as a soap, whereas sports enthusiast will use Lifebuoy. This is an example of behavior based segmentation. Based on the behavior of an individual, the product is marketed.
This type of market segmentation is in boom especially in the smart phone market. For example – Blackberry was launched for users who were business people, Samsung was launched for users who like android and like various applications for a free price, and Apple was launched for the premium customers who want to be a part of a unique and popular niche.
Another example of behavioral segmentation is marketing during festivals. Say on christmas, the buying patterns will be completely different as compared to buying patterns on normal days. Thus, the usage segmentation is also a type of behavioral segmentation. To read more in depth about behavioral segmentation, do read this article.
3) Psychographic segmentation
Psychographic segmentation is one which uses lifestyle of people, their activities, interests as well as opinions to define a market segment. Psychographic segmentation is quite similar to behavioral segmentation. But psychographic segmentation also takes the psychological aspects of consumer buying behavior into accounts. These psychological aspects may be consumers lifestyle, his social standing as well as his AIO. Do refer more to Activities, interests and opinions.
Application of psychographic segmentation can be seen all across nowadays. For example – Zara markets itself on the basis of lifestyle, where customers who want the latest and differential clothing can visit the Zara stores. Similarly Arrow markets itself to the premium office lifestyle where probably your bosses and super bosses shop for the sharp clothing. Thus, this type of segmentation is mainly based on lifestyle or AIO.
Read in detail – Psychographic segmentation.
4) Geographic segmentation
This type of market segmentation divides people on the basis of geography. Your potential customers will have different needs based on the geography they are located in. In the article on geographic segmentation, i have explained how people who are located in non municipal areas might require a RO water purifier whereas those located in municipal areas might need UV based purifiers. Thus, the need can vary on the basis of geography.
Similarly in cold countries, the same company might be marketing for heaters wheresa in hot countries, the same company might be targeting air conditioners. Thus, many companies use geographic segmentation as a basis for market segmentation.
This type of segmentation is the easiest but it was actually used in the last decade where the industries were new and the reach was less. Today, the reach is high but still geographic segmentation principles are used when you are expanding the business in more local areas as well as international territories.
Read in detail – Geographic segmentation | Geographical pricing.
Thus, the above are the 4 main types of market segmentation. Usage based market segmentation, Benefit segmentation, price based market segmentation, all these different types of segmentation are a derivative of the above 4 types only.
So what type of market segmentation can you use for business and how would you like to implement segmentation?
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This is a great article! It helped me so much in figuring out how exactly segmentation works! Thank you!
My pleasure and glad to be of help :)
Gud
Sir plz write more with easy language and take the basi examples
THANK YOU VERY MUCH IT IS HELPS TO MY STUDIES
your welcome
Thanks you help me in making my study become easy,infact you help in great way.
What about Zurich Insurance. What market segmentation it is?
Dear Nurul, Zurich insurance clearly has a mass market Demographic segmentation. This is because the company deals in general insurance, life insurance and several other types of insurance. As we know, life insurance can be applicable to college going students to people in their mid life. Hence, zurich insurance uses Demographic segmentation to target the right people.
Ohh i see. Thank you very much for your explanation. It is very helpful.
Hitesh
How does Samsung segment its Smart Tvs, specifically in Australia?
Hi, what possible data analysis can be done with this type of market segmentation? I need to show cost saving and revenue generation that can happen from proper segmentation
Dear Ada, Quote simply, segmentation data is important to know the scope of business that you can do with a particular segment. For example – if you were going to offer salt as a product, then there is no segment possible. Everyone needs salt or sugar. But still, there are nowadays sugar free sugar targeted towards diabetic patients. So segmentation data can help you increase revenue.
Cost saving part comes when you dont want to waste revenue targeting a particular segment. For toys, the segment is children yet the target is parents because the children are influencers and the parents are decision makers. Thus, by only targeting children they are wasting money. They need to create a brand in front of parents also.
may i ask when you writing this article?
even the market of salt and sugar can be segment as well interms of amount each customer can afford to buy,
Was wondering when was this article this article published. I’d like to use it as a reference. Very insightful.
Can you please clarify the statement, “And in segmentation, the first step is to define your target audience?” Isn’t the *point* of segmentation to define one’s target audience? Please explain.
yes you are right. I have changed the statement.
What type of market segmentation applies to the beverage industry since non alcoholic drinks target everyone but alcoholic can be broken down to mostly men.
Alcohol industry uses demographic segmentation. On the basis of gender, we have differentiation. Alcoholic beverages like Vodka, Breezers are targeted towards women whereas Beer and Rum is mainly targeted to men. Alcoholic drink is targeted towards men mainly because men are proven to have a better capacity / freedom when it comes to drinking alcohol. If the consumption is higher, sale will be higher too. Hence alcohol industry targets men. But otherwise, there are products targeted towards women as well. So i would say alcoholic or non alcoholic brands both use demographic segmentation.
Hello, please I have an assignment on market segmentation in the beverage industry and i’m a little confused as to how to go about the report. Do you have any write up on this and if no, can you be of help? Thanks
You will many reports and formats on Scribd. I have not started anything on report writing yet. But am planning soon to start a template section.
How do I know my product is an evoke set? Thanks.
Hi, nice article.
What kind of segmentation is prevalent in the healthcare industry?Mass demographic?If so, how would a healthcare startup target individuals to increase revenue?Will having different products for different age groups be a better idea than having a common product for all?
Hey Hitesh, Psychographic segmentation is the most difficult one for my team, maybe for everyone. Because this is the era where people do micro-searches while having a cup of coffee or while waiting for the traffic signal to turn green etc. It is really challenging to serve those people with the right content since the interest changes so dramatically.
Yes. Very true. And that is why companies like google step forward with their content based analysis. Ahrefs and many other sites are up for content analysis so that they understand what users want from internet searches. These can help you segment the market.
can u clarify the difference between bases of market segmentation and types of market segmentation
They are one and the same. The base of geographic segmentation is geography and the type is geographic segmentation. So bases and types are synonyms in this case.
What type of market segmentation base applies to low cost airlines operating domestically?
What type of market segmentation base applies to low cost airlines operating domestically?
Hi, That was a nice one.
So would market segments mean the same thing as market segmentation? If not, what’s the difference?
hi what about pldt, what type of market segmentation they used?thankyou in advance :)
Is any geographical Zara’s market segmantation?
hey please what kind of segmentation does a mobile data provider use? (that is a telecommunications company)
Demographic segmentation. Because youngsters are bound to consumer more data then Adults. Similarly they have to consider the budget of Post paid vs prepaid consumers and how likely are they to prefer the company over competitors.
nice article
targeting affluent customers with luxurious goods is an example of which segmentation
That’s helpng me a lot-anx
hi, nice work. How would a company producing a diet chocolate bar segment and create a target market?
A new telecom is entering into the market with two existing giant players. So, what would be the best market penetration strategy for new telecommunication company? How can they build a strong brand image and the best segmentation strategy to penetrate the market? All in all, what would be the best suited marketing and branding strategy they can adapt to?
Hi, pls what segmentation method can you suggest for a small entrepreneur starting up his own business of selling T. Shirts and justify why you suggest that method. Please I really need your help its an assignment. Thanks
I would suggest demographic segmentation. T-shirts can be many types. The really cute types for children. The rock type for teens. The one liner types for college crowd etc etc. So you need to know which type of T-shirt is targeting whom. Besides this, you can put in geographic segmentation as well. Because of E-commerce, you can sell your T-shirts far and wide. you might be able to sell it in bulk to dealers and distributors also. So a geographic segmentation will help you decide your distribution strategy as well. And once you know the geographies you are targeting, you will have more demographic data.
Thanks it really helps me in my studies
How can a person apply a market segmentation in his daily life.?
Hi Hitesh Bhasin. Could you explain what is the most important changes in our society that most likely will affect the segmentation variables in the future?
I think the digital life that we are leading will affect the segmentation variables. The core principles might remain the same. Example, browsing in itself is a behavioral type of segmentation. You might have an app for people who browse a lot and this may be called behavioral segmentation. However, there may be specific and situational type of segmentation which might be used. Read my article on E-commerce segmentation.
hi
Interesting article and responses. in the B2B concept supplying tyres, what segmentation method can one use?
Kind Regards
Supply of tires will use geographic segmentation. Because transportation is a major cost in distribution. So you can only target segments where you can reach i.e geographically. Example – If you have a warehouse in City A and there is no mode of transportation to city B, then you cannot target the City B segment. So this ways, geographic segmentation can be applied in any B2B industry.
Hi Hitesh How Can I Go With Cosmetics In Segmenting The Market Especially In Nivea Oil
A good article. thank you !!
Good Morning! I have one question, what bases you suggest that could marketers should use to segment the coffee market?
Thank you in advance
Br, Elena
As coffee is generally a Mass product, it will use a combination of Demographic and Geographic segmentation. But geographic will be higher because the production of coffee and its sourcing plays a major role in the geographies that you can expand in.
Thnk u so much this has widened my knowledge as a tourism student here in Uganda under the course unit is marketing and advertising thank u so much.
You are welcome and i am glad i could be of help :)
HI Hitesh,
Indeed many thanks for your articles, they are real supportive. I would like your adivise for a SOLAR PV company wanting to invest in East africa, what market segments will be appropriate for the company. Thanks!!!
Hii. This is a targeted segment and Differentiated segmentation will come of use. U need to study the complete market and then create your offerings which are different from others. At the same time, you need to market to a selected crowd which has NEED of the solar products. If u are marketing in Urban area where there is no need of Solar power then u r wasting money.
Hi. Hitesh,
What method of Market segmentation do i need to apply for ICT Organization that has; Computer Institute , Graphic design studio/ Printing press and software maintenance/ Network installation and maintenance. thanks
Reply.
what are the market segmentation in poultry please
Educating! Please what type of market segmentation do I use for perfume products in this jet age? Thanks!
HI HITESH,
Thanks for everything.
I work in a grain and milling company in one of the African Countries.What type of market segment can I use to market maize flour,maize grains,beans,sorghum and other grains in large quantities?
Hii. These products are mass marketing products so u can use demographic segmentation or geographic segmentation. If u speak about “Large quantities” then u have to look at geographic segmentation. How far can u distribute these large quantities. Accordingly u will be able to reach ur correct market.
Please,what type market segmentation will I used if to start Tire repair services Center?
Great guide! How would you define the segmentation you do with tools like Google ads and Facebook ads? I guess it falls under all the main segmentation factors, from demographics to psychographics. What do you think?
If you ask me, they are more demographic in nature. Because they target on the basis of 1) Geography and 2) Age. A bit of behavioral segmentation is also involved because you can target people based on what they like! Keywords like marketing or branding can be used to target people. And if their online behavior shows the user liking anything about marketing or branding, then these users will be targeted by the ad platform. So yes – google ads and facebook ads are a combination of demographic and behavioral / psychographics.