What is market segmentation in business? +15 comprehensive methods

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Among the activities that should be done at the beginning of any business, and every business should be aware of it, is market segmentation.
Market segmentation makes you choose the marketing strategy of your business knowingly and according to the characteristics of your customers.

what is market segmentation in business?

Market segmentation is the process of dividing a large market into various small segments that have similar or related characteristics.

Market segmentation in business

  • Market segmentation is a marketing concept that divides the entire market into smaller subsets of consumers with similar tastes, demands, and preferences.
  • A market segment is a small unit within a large market that consists of similar people.
  • A market segment is completely different from other market segments.
  •  A market segment includes people who think like each other and have common interests.
  •  People who are in a standard part of the market respond to market fluctuations in a similar way.

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market segmentation
What is market segmentation in business?


Types of market segmentation

There are various criteria for segmenting the market, among which we can refer to traditional criteria such as segmentation based on the demographic and geographical characteristics of the audience or modern factors such as behavioral and psychological criteria of people.

Of course, it should be noted that many other variables can be used in market segmentation, which we will mention below:

Types of market segmentation
Types of market segmentation

1. Demographic Segmentation

Demographic variables such as age, occupation, education level, gender, and income are among the most used variables in market segmentation.

The basis of market segmentation is based on demographic characteristics.

  • gender

Marketers divide the market into smaller segments based on the gender of the audience. Men and women have different interests and preferences and as a result, there is a need to segment the market based on gender in some markets.

Women do not buy a product designed for men, and vice versa.

Market segmentation based on gender is important in many industries such as cosmetics, shoes, jewelry, and clothing industries.

  • age category

Dividing the target audience based on age group is another way of segmenting the market. Of course, products and marketing strategies for teenagers are different from children.

If we want to review an example of major needs in different age groups:

  • The age group below 10 years: toys, diapers, baby food, baby carriage
  • Age group from 10 to 20 years: toys, clothes, books, school bags
  • The age group of 20 years and above: cosmetics, anti-aging products, magazines, clothes, etc.


  • Income

Marketers divide consumers into small segments based on their income. People are classified into different sectors according to their monthly income.

An example of classification based on income is:

  • High-income group
  • Middle-income group
  • Low-income group

Stores that cater to higher income groups have a wider range of products and strategies compared to stores that target lower income groups.

  • marital status
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Market segmentation can also be based on the marital status of people. For example, travel agencies consider different vacation packages and travel tours for single people and married couples.

Of course, the more accurate form of this criterion is the status of the person in the family (Family Life-cycle), which describes a more precise situation of people,

for example, young single, married young without children, the married young whose youngest child is under 6 years old, the young married person whose youngest child is over 6 years old, a married elderly person with a child, a married elderly person whose none of his children are under 18 years old, a single elderly person and…

  • Job

Compared to school students or students, office workers have different needs. Sometimes even the type of job people is effective in their interests, needs, and choices. The lifestyle and therefore the buying behavior of a culture can be completely different from that of a merchant.

  • Organization size

Market segmentation in B2B markets (meaning businesses whose customer is another business) is based on other factors such as the size of the organization.

For example, a company that operates in the field of designing and implementing organizational systems can provide services to large, small, or very small organizations and should note that the needs or behaviors of each of these organizations can be completely different. be different.

  • Type of business

Market segmentation based on business type means segmentation based on whether your customer is a wholesaler, a retailer, or an exporter.
This type of segmentation is also very widely used in B2B businesses.

  • Type of service

It will be possible to divide institutional customers based on their service type. For example, we can mention the division of services into specialized and non-specialized.

Psychographic Segmentation

The basis of market segmentation in this method is people’s lifestyles. People’s attitudes, interests, and values help marketers segment them into smaller groups.

Based on how consumers accept new products, Rogers divides the market into five groups, also known as the technology adoption life cycle.

The basis of market segmentation based on psychological characteristics

  • Innovators

This category of consumers is eager to try new ideas. Innovators have high courage and accept the sometimes bad experience of new products.

  • Early Adopters

Early adopters are influential people who generally try new things.

  • Early Majority

This group of people weighs all aspects before trying new products.
Although the members of this market segment play an important role in the acceptance of innovation in the market, they are rarely recognized as market leaders.

  • Late Majority

This segment of customers is cautious people who use new ideas after they have gained acceptance among the general public.

  • Laggards

Late adopters tend to the past. This group of people is generally pessimistic about change and usually when they accept a new product, that product has been replaced by a new product.

In segmenting the market based on psychological characteristics, it should be noted that purchasing behavior and consumer personality are oversimplified. Many factors affect consumer behavior, for example, a person may be an early adopter of a product and a late adopter of another product.

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Behavioristic Segmentation

In this customer segmentation method, people are divided based on their knowledge, attitude, and how to use the product or its different features. Each of the variables that we will mention below can be used in this way.

The basis of market segmentation based on behavioral characteristics:

  • Purchase Occasion

Buyers’ behavior can be different depending on when they use a product or service. For example, those who travel by plane may use this service for a business trip or vacation, in each of these two cases, the behavior, experience, and level of expectations of customers are completely different from each other.

  • Benefits Sought

What benefits people are looking for in using a product or service can be used as a basis for customer segmentation.
For example, high quality, low price, good taste, speed, and attractive appearance are examples of desirable benefits that customers consider.

  • User Status

Potential customers can be divided into users who use the product or service regularly (also known as loyal customers), users who use the product or service occasionally, and users who use the product or service but Do not use the service, divided.

For example, marketers can offer new products or new ways of using an old product to one of these groups.

Geographic Segmentation

Geographical segmentation refers to the classification of the market into different geographical areas. A marketer cannot consider the same strategies for people living in different geographical areas. Geographical location is one of the simplest methods of market segmentation.

For example, the banking services needed by people living in villages are different from those of those living in cities, especially big cities. Even in a big city, bank branches located in the northern areas of the city attract more customers than other branches.

Why do we need market segmentation?

A situation in which two or more parties (called buyers and sellers) participate in the exchange of goods or services for money is called a market. In the market, sellers sell their goods for money from consumers (buyers).

A market cannot employ the same strategies for all consumers. The formation of small segments that include like-minded people in a large market is called market segmentation.

Not all people have the same needs. A man and a woman have different interests and preferences for different products. A child does not need or desire what an adult needs.

A student has different needs than an office worker. Market segmentation helps marketers gather people with similar choices and interests on a common platform.

  • Market segmentation helps marketers to employ appropriate marketing strategies and advertising plans according to the tastes of a specific segment of the market. For example, a male model will not have a place in advertising women’s products. Marketers must be able to relate their products to target market segments.
  • Market segmentation helps marketers to understand the needs of the target audience and adopt specific marketing plans based on that. Organizations can also adopt a more focused approach as a result of market segmentation.
  • Market segmentation provides customers with a clear view of what is being bought and what is not. Simply put, the segmentation process goes a long way in influencing consumers’ purchasing decisions.
  • Market segmentation helps organizations provide the right product to the right customers at the right time. Geographic segmentation also classifies consumers based on their locations.
  • Segmentation helps organizations to know and understand their customers better. Organizations can now reach a wider audience and promote their products more effectively; This allows organizations to focus their marketing activities on the target audience and achieve more acceptable results.
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Market segmentation in plain language

Divide the market into different segments or categories. Each category has the same characteristics that you are looking for in the target audience for that category. Then plan and implement your marketing plan for each of these segments.

In simple terms, a market segment (or segment) is a group of consumers (active or potential) with similar or similar needs and desires.

Anyway, don’t worry. You don’t have to design everything from scratch for each part. Sometimes changing the tone of your message or creating a different banner can promote your business to each market segment.

5 points in market share

When you want to segment your market; Note that each section should have these 5 features:

  • Be measurable
  • Grab your social networks and ads.
  • Their response to our marketing activities may vary.
  • May you live long (may you not die quickly).
  • They have substantial profitability.



Remember that market segmentation is recognized as a necessity that will help promote your business and brand in the long run, and neglecting it may lead to the waste of your marketing budget, and compliance with marketing principles is very necessary. Yes, because the brand’s marketing plans may not match the needs of the audience, and even worse, the brand may spend its budget and effort on a group that is not a potential customer of the product.

Therefore, we recommend that you do your marketing activities more purposefully than before by segmenting the market.


Frequently Asked Questions

What is market segmentation in business?

Market segmentation is a marketing concept that divides the entire market into smaller subsets of consumers with similar tastes, demands, and preferences.

Market segmentation is based on what criteria?

This article mentions more than 15 criteria for customer segmentation. There are various criteria for market segmentation, including demographic criteria such as age, gender, marital status, occupation, etc.

Why do we need market segmentation?

Achieving a correct understanding of the audience’s needs, preparing a suitable marketing plan, designing and developing new products, etc.

What are the types of market segmentation?

Demographic Segmentation
Geographic Segmentation
Behavioristic Segmentation
Psychographic Segmentation


In this article, we answered the question “What is market segmentation in business?” and tried to examine all aspects of it. If you also have experiences that can make this article comprehensive, share them with us.

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