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What is Market Segmentation
2 mins read

Market Segmentation

What is Market Segmentation

Definition of Market Segmentation

Market segmentation is an incredibly useful analysis method, to better understand a business’s target audience.

Depending on the size and scope of your audience base, it can be very overwhelming to look at them as one, big group. Instead, breaking the overall audience down into more manageable groupings — be that by age, location, need state, etc. — helps a business target and address their interests more effectively. 

Market segmentation is essentially the making of smaller sub-groups from your overall audience, based on characteristics such as age, gender, income, or various other defining features that might have an impact on tastes, interests and purchasing behavior.

But don’t be afraid to segment by whatever characteristics work for your product, not just the standard attributes of age, gender, etc. And always be ready to reopen and reevaluate your segmentation down the line — after all, people change!

Market segmentation also allows organizations to more accurately track changes in customer behavior, and improve internal processes based on what particular customers respond well too.

But before you can jump into market segmentation, you need a really clear understanding of who your target audience is.

How do you define your target market?

Defining a target market might seem simple, but it actually requires careful evaluation.

Knowing exactly who you are targeting with your products is vital, as very few businesses are able to offer something for absolutely everyone in the world. What’s more, trying to sell to the widest possible market can be problematic.

Defining your target market involves accepting that you can't please everyone. Instead, you should aim to engage the people who can bring the most value to your venture. Who, specifically, will benefit most from your product or service?

General FAQ

Why is market segmentation important?
Market segmentation is important for reaching the right audience. A business must conduct market research to understand its audience’s needs, expectations, and pain points if it’s to market products to them effectively. Audiences can be segmented into different groups based on their occupation, age, location, buying habits, etc. As a result, companies can tailor marketing campaigns to suit each segment for higher relevance and engagement.
How does market segmentation differ from market targeting?
Market segmentation refers to grouping different customer types (based on age, location, shopping habits, etc.) into different segments for more effective, valuable marketing. Market targeting, though, applies when a business focuses on a specific market segment in its marketing campaign. Knowing which customers make up a market segment is crucial to make sure market targeting is relevant to their interests, buying behaviors, and income. Writing buyer personas can help when segmenting target customers into groups.
What is market segmentation strategy?
A market segmentation strategy is a way in which audiences are segmented for marketing campaigns. One business may choose to base its market segmentation strategy on geography, requiring them to consider differences in customer cultures, climate, language, dialect, etc. For example, an outdoor clothing brand may choose to market its waterproof products to customers in a location known for its wet weather and market its summer wear to buyers in a warmer, drier spot. Alternatively, businesses may use a psychographic strategy instead. This would segment customers by lifestyle, motivations, values, interests, etc.
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