Successful marketing starts with understanding your customers. Market segmentation is the process of dividing your overall market into specific groups based on shared characteristics. Market segments must be measurable, accessible, substantial and actionable in order to deserve your attention.
By using effective market segmentation criteria, you can tailor your marketing efforts, products, and services to the unique needs of each segment, leading to higher conversion rates and better ROI.
Bear in mind that not all market segmentation criteria are relevant and useful for every company.
For example: Car manufacturers would gain little by distinguishing between vegetarians and non-vegetarians. However, for a meat-producing firm, this may be one of the most important market segmentation criteria.
Key Criteria for Market Segmentation
Let’s explore the essential criteria you can use to segment your market:
- Geographic Segmentation: Divide your market based on location, including countries, regions, cities, and even neighborhood density. This helps focus your marketing campaigns geographically.
- Demographic Segmentation: Understand your customers based on factors like age, gender, income, education, occupation, and family status. Demographic data is often easier to obtain, making it a popular starting point.
- Psychographic Segmentation: Go deeper into customer psychology by segmenting based on lifestyle, personality traits, social class, and values. Psychographics helps you personalize messaging and resonate with customer motivations. (Check our guide on using psychographics in marketing)
- Behavioral Segmentation: Analyze customer actions like purchasing patterns, brand loyalty, product usage, and benefits sought. This reveals how customers interact with your brand and what they prioritize.
Combining Criteria for Powerful Targeting
The most effective market segmentation strategies often combine multiple criteria. For example, a clothing company might target young, fashion-conscious women in urban areas with a specific income level. By layering criteria, you create highly defined customer segments.
Below, you can find all the criteria including examples.
| Type | Variable | Example |
|---|---|---|
| Geographic | World region or country | Africa, Asia, Europe, North America, China, India... |
| Country region | England: East Midlands, Greater London... | |
| City or metro size (population) | Under 5,000; 5,000-20000; 20,000-50,000... | |
| Density | Urban, suburban, exurban, rural | |
| Climatic zones | Northern, Southern, Polar, Temperate, Tropical... | |
| Demographic | Age (years) | Under 6, 6-11, 12-19, 20-34... |
| Gender | Male, female | |
| Family size | 1-2, 3-4, more than 5 | |
| Family life cycle | Young, single; married, no children; single parents... | |
| Income | Under 20,000€; 20,000-30,000€... | |
| Occupation | A - Professionals and managers; B - ...; C - unemployed... | |
| Education | Terminal education age 16/18, university graduates... | |
| Religion | Catholic, Protestant, Jewish, Muslim, Hindu... | |
| Race | White, Asian, Hispanic, Black, Chinese... | |
| Generation | Baby-boomer, Generation X, Millennial... | |
| Nationality | North American, South American, British... | |
| Psychographic | Social class | Underclass, Working Class, Middle Class... |
| Lifestyle | Innovators, Thinkers, Believers, Experiencers... | |
| Personality | Compulsive, outgoing, authoritarian, ambitious... | |
| Behavioural | Occasions | Regular occasion, special occasion, holiday... |
| Benefits sought | Quality, service, economy, convenience, speed... | |
| User status | Non-user, ex-user, potential user, first-time user... | |
| User rates | Light user, medium user, heavy user... | |
| Loyalty status | None, medium, strong, absolute... | |
| Readiness stage | Unaware, aware, informed, interested, intending to buy... | |
| Attitude toward product | Enthusiastic, positive, indifferent, negative... |
Implementing Your Segmentation Strategy
Once you’ve segmented your market, use these insights to:
- Tailor Marketing Messages: Speak directly to the interests and pain points of each segment, using language and imagery that resonates.
- Develop Targeted Products and Services: Create offerings that align with the unique needs and preferences of a segment.
- Choose the Right Marketing Channels: Reach each segment through the channels they use most frequently (e.g., social media platforms, specific websites).
Example:
A sports apparel company might use segmentation criteria to create targeted campaigns:
- Geographic: Launch summer-wear promotions in warmer climates.
- Demographic: Market team sports gear to school-aged children and young adults.
- Psychographic: Target athletes who value performance and competitive spirit.
- Behavioral: Offer loyalty rewards to customers with frequent purchases.
Conclusion
Market segmentation is a foundational marketing strategy. Choose the criteria most relevant to your business and target specific groups with tailored marketing efforts for greater success. By understanding your customers on a deeper level, you’ll unlock the potential for more effective marketing, increased customer loyalty, and a stronger competitive edge.
