Market segmentation is an excellent method for companies to determine and personalize their target group of consumers. A market segment is defined as a subgroup of individuals or businesses who share characteristic(s) that lead to similar product needs. The basic criteria considered in segmentation consists of substantiality, identifiability, accessibility and responsiveness. Marketers tend to segment consumers based on geography, demographics, psychographics and behaviors.
Geographic segmentation targets consumers based on their size, location or climate. This type of segmentation is useful for businesses to react more quickly to competition as well as learn which brands sell best depending on specific regions. Demographic segmentation groups consumers based on demographic information such as age, gender, income, ethnicity and family life cycle. Appealing to demographic information allows companies to customize their marketing efforts to that specific target group which can increase brand loyalty and lead to future purchases.
Psychographic segmentation divides consumers into target groups according to personality, motives or lifestyles. This form of segmentation can be utilized individually or combined with other segmentation variables. Advertisements that appeal to psychographic factors found within target consumers tend to be more successful in generating sales. Behavioral segmentation focuses on types of shopping and buying behaviors. Companies that appeal to behavioral segmentation must consider whether their target consumers shop online or at the stores, and whether they are impulsive or cautious shoppers.
If you are a representative for an organization that is considering to undergo market segmentation, it is recommended to complete the process following these steps: