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4 Types of Market
Segmentation With
Examples
Using different types of market
segmentation allows you to target
customers based on unique
characteristics, create more effective
marketing campaigns, and Bnd
opportunities in your market.

See how you can leverage market

segmentation by learning:

What market segmentation is

Why market segmentation is
important
The four types of market
segmentation
How to create a market segmentation
strategy

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

Eight BeneBts of Market

Segmentation
The importance of market segmentation is
that it makes it easier to focus marketing
efforts and resources on reaching the most
valuable audiences and achieving business
goals.

Market segmentation allows you to get to

know your customers, identify what is
needed in your market segment, and
determine how you can best meet those
needs with your product or service. This
helps you design and execute better
marketing strategies from top to bottom.

Market segmentation helps

you get to know your
customers, identify what's
needed in your market
segment, and determine
how you can best meet
those needs with your
product or service.
CLICK TO TWEET

1. 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.

2. Identify the most effective

marketing tactics
With dozens of marketing tactics available,
it can be diOcult to know what will attract
your ideal audience. Using different types
of market segmentation guides you toward
the marketing strategies that will work
best. When you know the audience you are
targeting, you can determine the best
solutions and methods for reaching them.

3. 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
deBne your audience, you know these
detailed characteristics and can use them
to create more effective, targeted digital ad
campaigns.

4. 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.

When your marketing

messages are clear, direct,
and targeted they attract
the right people.
CLICK TO TWEET

5. Differentiate your brand

from competitors
Being more speciBc about your value
propositions and messaging also allows
you to stand out from competitors. Instead
of blending in with other brands, you can
differentiate your brand by focusing on
speciBc customer needs and
characteristics.

6. Build deeper customer

aOnity
When you know what your customers want
and need, you can deliver and
communicate offerings that uniquely serve
and resonate with them . This distinct
value and messaging leads to stronger
bonds between brands and customers and
creates lasting brand aOnity.

7. Identify niche market

opportunities
Niche marketing is the process of
identifying segments of industries and
verticals that have a large audience that
can be served in new ways. When you
segment your target market, you can Bnd
underserved niche markets that you can
develop new products and services for.

8. Stay focused
Targeting in marketing keeps your
messaging and marketing objectives on
track. It helps you identify new marketing
opportunities and avoid distractions that
will lead you away from your target market.

The Four Types of Market

Segmentation
The four bases of market segmentation
are:

Demographic segmentation
Psychographic segmentation
Behavioral segmentation
Geographic segmentation

Within each of these types of market

segmentation, multiple sub-categories
further classify audiences and customers.

Demographic Segmentation
Demographic segmentation is one of the
most popular and commonly used types of
market segmentation. It refers to statistical
data about a group of people.

Demographic Market Segmentation

Examples

Age
Gender
Income
Location
Family Situation
Annual Income
Education
Ethnicity

Where the above examples are helpful for

segmenting B2C audiences, a business
might use the following to classify a B2B
audience:

Company size
Industry
Job function

Because demographic information is

statistical and factual, it is usually relatively
easy to uncover using various sites for
market research.

A simple example of B2C demographic

segmentation could be a vehicle
manufacturer that sells a luxury car brand
(ex. Maserati). This company would likely
target an audience that has a higher
income.

Another B2B example might be a brand

that sells an enterprise marketing platform.
This brand would likely target marketing
managers at larger companies (ex. 500+
employees) who have the ability to make
purchase decisions for their teams.

Psychographic Segmentation
Psychographic segmentation categorizes
audiences and customers by factors that
relate to their personalities and
characteristics.

Psychographic Market Segmentation

Examples

Personality traits
Values
Attitudes
Interests
Lifestyles
Psychological ineuences
Subconscious and conscious beliefs
Motivations
Priorities

Psychographic segmentation factors are

slightly more diOcult to identify than
demographics because they are subjective.
They are not data-focused and require
research to uncover and understand.

For example, the luxury car brand may

choose to focus on customers who value
quality and status. While the B2B enterprise
marketing platform may target marketing
managers who are motivated to increase
productivity and show value to their
executive team.

Related: 4 types of market research to fuel

your marketing strategies

Behavioral Segmentation
While demographic and psychographic
segmentation focus on who a customer is,
behavioral segmentation focuses on how
the customer acts.

Behavioral Market Segmentation

Examples

Purchasing habits
Spending habits
User status
Brand interactions

Behavioral segmentation requires you to

know about your customer’s actions. These
activities may relate to how a customer
interacts with your brand or to other
activities that happen away from your
brand.

A B2C example in this segment may be the

luxury car brand choosing to target
customers who have purchased a high-end
vehicle in the past three years. The B2B
marketing platform may focus on leads
who have signed up for one of their free
webinars.

Geographic Segmentation
Geographic segmentation is the simplest
type of market segmentation. It
categorizes customers based on
geographic borders.

Geographic Market Segmentation

Examples

ZIP code
City
Country
Radius around a certain location
Climate
Urban or rural

Geographic segmentation can refer to a

deBned geographic boundary (such as a
city or ZIP code) or type of area (such as
the size of city or type of climate).

An example of geographic segmentation

may be the luxury car company choosing
to target customers who live in warm
climates where vehicles don’t need to be
equipped for snowy weather. The
marketing platform might focus their
marketing efforts around urban, city
centers where their target customer is
likely to work.

How to Create a Market

Segmentation Strategy
Now, you know what market segmentation
is, why it’s important, and the four types of
market segmentation. It’s time to put this
information into practice.

Use the following market segmentation

process to learn about your audience and
Bnd new marketing and product
opportunities.

1. Analyze your existing

customers
If you have existing customers, start your
market segmentation process by
performing an audience analysis. An
audience analysis allows you to learn about
your customers and begin to identify trends
that exist within your current customer
base. Use these market research
questions to guide your research.

Interview your customers.

Go right to the source and conduct

interviews with existing customers, past
customers, ideal customers, and prospects
and leads. Ask questions that help you Bll
in the details of all four types of market
segmentation.

Interview your sales team.

If you have a sales team that spends a lot

of time working with customers, use them
as a resource. Interview them to Bnd
commonalities or trends they often see
while working with your customers.

Refer to your business data.

Your business likely has loads of data that

can help you get to know your customers.
Use your customer relationship
management tools and point-of-sale
systems to Bnd trends related to behavioral
segmentation. Pull data that shows how
much customers spend, how often they
visit your store, and the type of products
and services they buy.

Use your website analytics.

Your website also has data that can help

you learn about your audience. Use Google
Analytics to Bnd details related to all four
types of market segmentation. For
example, you can learn about customer
behavior by seeing what pages users visit,
how long they stay on the site, and what
referral sites led them to your site.

Research audience geography.

Get details for graphic segmentation and

Bnd out where your audience lives using
Alexa’s Site Overview tool. Enter your site
URL, and the report shows you where your
website visitors are located across the
world.

Research audience interests.

Knowing your audience’s interests can help

you identify psychographic segments
within your customer base. Use Alexa’s
Audience Interest tool to Bnd topics and
categories that your audience cares about.
Enter your site URL to produce a report of
categories that your audience is interested
in.

Learn more about your audience by seeing

what other websites they use. Enter the
URL of your website in Alexa’s Audience
Overlap tool to create a cluster map with
dozens of other sites that your audience
regularly visits.

See what your customers search for.

Knowing what your customers search for is

a great way to get inside their minds and
see what they want and need . To see
what terms your audience searches for, use
Alexa’s Audience Overlap tool and
Competitor Keyword Matrix tool.

Start by using the Audience Overlap tool to

create a list of sites that your audience
visits. Then, toggle to the list view, select
up to 10 sites, and run the sites through
Alexa’s Competitor Keyword Matrix.

The tool produces a report of the top

keywords driving traOc to the listed sites.
Use this data to identify the topics and
themes that matter most to your target
market.

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