Market segmentation is the first step in determining who your marketing should target. Segmentation helps you know which groups exist so you can later identify which groups to target.

Using different types of market segmentation allows you to target customers based on unique characteristics, create more effective marketing campaigns, and find opportunities in your market.

What Is Market Segmentation?

Market segmentation is the process of dividing a target market into smaller, more defined categories. It segments customers and audiences into groups that share similar characteristics such as demographics, interests, needs, or location.

Segmentation creates subsets of a market based on demographics, needs, priorities, common interests, and other psychological or behavioural criteria used to better understand the target audience. Traditional market segments are identified using characteristics such as:

  • Demographics
  • Psychological aspects
  • Behavioural activities
  • Geographic


Here are 5 of the most crucial types of market segmentation:

Demographic Segmentation

Demographic segmentation sorts a market by demographic elements such as age, education, income, family size, race, gender, occupation, nationality, and more. Demographic segmentation is one of the simplest and most commonly used forms of segmentation because the products and services we buy, how we use those products, and how much we are willing to spend on them is most often based on demographic factors. Use market segmentation to grow your business to new heights by identifying key demographics. 

Behavioural Segmentation

Behavioural market segmentation divides markets by behaviours and decision-making patterns such as purchase, consumption, lifestyle, and usage. For instance, younger buyers may tend to purchase body wash, while older consumer groups may lean towards soap bars. Segmenting markets based off of purchase behaviours enables marketers to develop a more targeted approach. Use market segmentation to grow your business to new heights by identifying key behavioural commonalities. 

Psychological Segmentation

Psychological market segmentation takes into account the psychological aspects of consumer behaviour by dividing markets according to lifestyle, personality traits, values, opinions, and interests of consumers. Large markets like the fitness market use psychological market segmentation when they sort their customers into categories of people who care about healthy living and exercise.

Geographic Segmentation

Geographic segmentation creates different target customer groups based on geographical boundaries. Because potential customers have needs, preferences, and interests that differ according to their geographies, understanding the climates and geographic regions of customer groups can help determine where to sell and advertise, as well as where to expand your business.

Segmenting and identifying your target audience is extremely beneficial for your marketing activities, specifically in digital marketing. By targeting a specific and defined audience on the likes of Facebook and Google, it will become cheaper to acquire high quality leads. 

Here are 3 extremely powerful benefits of segmenting your target audience:

Create stronger marketing messages

When you know whom you’re talking to, you can develop stronger marketing messages. You can avoid generic, vague language that speaks to a broad audience. Instead, you can use direct messaging that speaks to the needs, wants, and unique characteristics of your target audience.

Design hyper-targeted ads

On digital ad services, you can target audiences by their age, location, purchasing habits, interests, and more. When you use market segmentation to define your audience, you know these detailed characteristics and can use them to create more effective, targeted digital ad campaigns.

Attract (and convert) quality leads

When your marketing messages are clear, direct, and targeted they attract the right people. You draw in ideal prospects and are more likely to convert potential customers into buyers.

Need help with your segmenting your target audience? Our team of marketing experts are highly experienced in identifying key target audiences that deliver profitable result