Different Types of Market Segmentation

Market segmentation allows your business to maximize its marketing efforts and create effective strategies. It divides a target audience into groups that share similar characteristics like age, income, personality traits, behavior, and interests.


By knowing your customers, you can customize products and services to their needs and increase brand loyalty. This way, your marketing budget will be spent wisely and your messaging will be effective.


Demographic segmentation is one of the most basic forms of market segmentation and takes into account factors such as age, sex, education level, social status, occupation, and income. It is among the most widely used types of customer segmentation because it is relatively easy to gather data that is useful to marketers. Data on demographics can be found through analytics software, CRM systems, online reviews, and surveys, as well as public census information.

Segmenting your audience based on their demographics is helpful in that it allows you to create more personalized marketing campaigns. This makes your customers feel heard and understood, which in turn fosters brand loyalty. This type of marketing also helps you save on resources by targeting the most likely buyers rather than spreading your marketing budget across all potential customers.

However, it is important to note that demographic data offers a limited perspective on the needs and preferences of customers. It is important to constantly collect customer feedback to ensure that your understanding of the demographics of your audience is accurate and up-to-date. In addition, you must be careful to remain compliant with privacy laws and regulations. Otherwise, you run the risk of alienating your target audience by assuming that they all fit into a specific demographic mould. For example, what appeals to a 23-year-old art history major may be completely different to the needs of an Asian-American 50-year-old attorney.


Unlike demographic and geographic market segmentation, which focus on quantifiable data, psychographics focuses on internal characteristics of individuals. This type of marketing enables companies to better understand their customers’ needs, wants and desires. By doing so, they can create more relevant products and messaging for each group of consumers. For example, if a company analyzed that some people love horror movies while others prefer comedy, they can create a new line of products geared toward their specific preferences.

Another advantage of psychographic marketing is that it can reveal why a consumer buys certain things. It helps marketers understand their target audience’s beliefs, values, and attitudes, which can affect their buying habits. For example, a person’s social status may influence their decision to purchase luxury goods or basic items. Similarly, their opinions and beliefs could influence their priorities, communication preferences and purchasing decisions.

For example, if a consumer believes in “the power of the individual”, they may be more likely to support brands that promote healthy living and sports. Moreover, they would be more likely to stick with a brand that supports their values and interests, resulting in higher customer loyalty and a competitive edge over other brands.


Behavioral market segmentation looks at how customers interact with your business and products. This can include things like product usage, loyalty, purchase behavior and more. Using this information, marketers can create targeted marketing messages that will resonate with the customer, improving conversion and retention rates.

For example, a coffee shop might use behavioral segmentation to target their regular morning customers with incentives to come back for after-work drinks later in the day. They could send them email marketing or push notifications within their mobile app to inform them of a happy hour event. This type of personalized marketing will increase brand loyalty and revenue for the coffee shop.

In addition, businesses can use behavioral data to understand their current customer journey and identify any pain points or sticking points. For example, if customers are repeatedly leaving their carts empty on an e-commerce site, it may indicate that there is a problem with the checkout process. Behavioral segmentation can help businesses find solutions to these problems, leading to increased sales and a better user experience for their customers.

Behavioral segmentation is an important tool for marketers because it helps them better understand their customers and improve the customer experience. Taking the time to analyze your data and identify the segments that will provide the most return on investment can help you maximize your budget, save time, and avoid unnecessary expenditures.


Geographical market segmentation takes into account the physical location of potential customers. This can include the country, state, city or neighborhood they live in. It also factors in climate, culture, population density and language. This information can help a business determine what products to sell in certain areas. For example, a company that specializes in beachwear may find it more effective to promote their product in areas with warm weather. Similarly, companies that produce snowshoes might prefer to advertise their product in colder climates.

This type of market segmentation can be beneficial for a business because it allows them to better understand their audience and develop targeted marketing campaigns. It also helps them increase profits by focusing efforts on specific audiences instead of targeting the entire market.

For instance, a restaurant may use this method to determine the purchasing habits of their lunch and dinner audiences. They can then tailor their menus to better suit these needs. They can also create more relevant marketing messages by using local cultural norms and languages when communicating with their audience. This can foster stronger connections with potential customers and lead to long-term relationships. Additionally, this approach can help businesses save money by reducing the amount of resources they need to invest in advertising campaigns. This can be particularly useful for newer companies that are struggling with limited budgets.