Market segmentation is a very important part of a successful marketing strategy. It’s how you use the different types of market segmentation in your strategy that makes the difference. When it comes to business and e-commerce, the competition is tough. It’s critical for every business to know the importance of market segmentation and use it to stay on top of the game.

Effective communication is one of the best ways to differentiate yourself from the rest. When you use different types of market segmentation in your strategy, it allows you to communicate the right messages to the right customers at the right time. This helps you drive your customers to make that purchase, which eventually boosts your sales.

In this blog, we’ll talk about the 4 types of market segmentation along with some examples so that you can better understand how to use the different types of market segmentation in your strategy.

  1. The 4 Types Of Market Segmentation

  2. The 4 Types Of Market Segmentation With Examples 


The 4 Types Of Market Segmentation

There are 4 types of market segmentation that you can use in your marketing strategy. By dividing your audience into groups, you can curate the right messaging to target them. These market segmentation types are:

  1. Demographic
  2. Psychographic 
  3. Geographic
  4. Behavioral

Within these types of market segmentation, you have various subcategories that further classify customers and audiences. We’ll dive deeper into each of these types of market segmentation with examples for a better understanding.

The 4 Types Of Market Segmentation With Examples  

There are 4 types of market segmentation models you can use for your marketing plan. Businesses and brands can segment their markets based on lifestyle, age, gender and so on.

Let’s now explore the types of market segmentation with examples.

1. Demographic Segmentation: The Who

When you first hear of market segmentation, demographic segmentation is the very first thing that comes to mind. This is because it’s the most popular way of defining your customer groups. It’s a powerful model and one of the most commonly used types of market segmentation. It refers to identifiable traits and statistical data about different groups of people.

Demographic market segmentation examples are:

  • Age 
  • Gender
  • Income
  • Location
  • Annual income
  • Family situation 
  • Ethnicity
  • Education 

The above market segmentation examples are helpful for B2C audiences, but for B2B audiences, the following can be used:

  • Industry
  • Organization size 
  • Job function

Since demographic information is factual and statistical, it’s relatively easy to find using different sites.

Here are two demographic market segmentation examples:

  • B2C Demographic Segmentation: A luxury car brand manufacturer would likely target people from the higher-income group
  • B2B Demographic Segmentation: A brand that sells a marketing platform will want to target marketing managers at larger organizations

You can use demographic segmentation to target the right customers based on their income. You can do this to ensure you aren’t wasting your marketing budget on customers who can’t afford your services or products.

2. Psychographic Segmentation: The Why

Psychographic segmentation divides audiences based on certain factors such as characteristics and personalities. It focuses on your customer’s interests and what they like and don’t like.

Psychographic market segmentation examples are:

  • Hobbies
  • Personality traits
  • Values
  • Life goals
  • Lifestyles
  • Beliefs

This can be quite difficult to identify when compared to demographic segmentation. For this type of market segmentation, proper research is very important. When done correctly, psychographic segmentation allows for effective marketing. You can interact with consumers on a more personal level, which proves to be very effective.

For example, Omni Hotels & Resorts, a luxury resort brand, realized that a big sector of their target audience was always looking for the best prices they could get. The brand started a notification campaign targeting comparison shoppers only to achieve a 39% conversion rate increase.

3. Geographic Segmentation: The Where

Geographic segmentation is one of the easiest ways to identify and group your audience based on physical location. With geographic segmentation, you can categorize your customers based on their geographic borders.

Geographic market segmentation examples are:  

  • City
  • ZIP code
  • Country
  • Climate
  • Radius
  • Rural or urban
  • Region

With geographic segmentation, you can group customers that are within a set radius of a particular location. This is a fantastic option for live event marketers who are looking to reach out to local audiences. When businesses are aware of their customer’s location, they can consider all types of options when they advertise to their audience.

For example, an online store that sells shoes can show their different products depending on where their customers are based. So, boots for customers living in the countryside, trainers for city-dwellers, and so on.

4. Behavioral Segmentation: The How

This is a very useful segmentation model that’s great for e-commerce businesses. Just like psychographic segmentation, this form of segmentation requires a bit of data so that it can be effective. However, most of this data can be collected from your website itself.

Here are some behavioral market segmentation examples to use:

  • Purchasing habits
  • Spending habits
  • Brand interactions
  • User status
  • Browsing habits
  • Loyalty to brand

It’s all about knowing your customers’ actions and how they interact with your brand. It also includes other activities that may not be related to your brand. You can collect the following information from your website for behavioral segmentation:

  • Number of pages visited
  • Number of sessions to your website
  • Time spent on a website
  • URLs visited
  • Shopping cart value
  • Page types visited

For example, you can differentiate between first-time visitors and visitors who have visited your website multiple times but have never purchased. So, based on these findings, you can easily tailor your messaging accordingly.

These were the 4 main types of market segmentation that are commonly used. However, other types of market segmentation are also used by businesses. With market segmentation, you can recognize your customers’ needs and target your marketing directly to the right people without wasted messaging.

So, whether it’s sharing offers on barbeque products or telling your customers about a new product you’ve just rolled out, market segmentation offers you many ways to reach out to your customers in the right way. Harappa’s Create New Solutions pathway will help you explore this and various other marketing strategies. Become the problem-solver who uses solid principles to avoid common analytical errors while piecing solutions together. Stand out at work as a problem-solver. Sign up now!