Market Segmentation Strategy: What Is It and Why Is It Important?

Market segmentation is a framework used to break down markets into segments. It helps companies identify their target market, and communicate effectively with that group. Market segmentation is important because it allows you to develop marketing strategies tailored specifically for individual groups within the population of consumers in your industry.

Market segmentation is the process of dividing a market into groups with similar needs, wants, and concerns. Marketers can use this information for marketing purposes.

One of the first things to determine when building a marketing plan, according to textbooks, is the customer persona. However, the notion of a target audience becomes too wide and general over time to produce the best outcomes. 

This is when market segmentation enters the picture. This marketing strategy develops specific techniques that are necessary for attracting the attention of consumers who are already interested. In other words, rather than having to persuade people that the product you’re selling is good, you’ll be able to put it in front of those who are already interested.  

What is Market Segmentation and How Does It Work? 

The most fundamental definition of market segmentation is the division of your target audience into smaller groups with comparable characteristics. 

Here are a few examples of how this may help your business:

You’ll probably discover that some segments of your audience are more eager to buy during various seasons if you use market segmentation. Perhaps residents in various geographic locations are more interested in a particular subset of your items, and so on. 

Key Criteria for Market Segmentation

You are free to create your own consumer segmentation, although the following are some classic examples: 

  • Country/city, urban/rural, and so forth.
  • Age, religion, gender, income, socioeconomic level, education, and family size/status are all factors to consider.
  • Lifestyle, interests, hobbies, views, and influences are all psychographic factors.
  • Buyer journey stage, brand loyalty attributes, price sensitivity, buying style, and use rate are all behavioral factors.
  • Social media, television, newspapers, and search engine preferences
  • Customer service, quality, and other special demands are all advantages.


Segmentation by Location

This is one of the most basic strategies for segmenting target markets. You’ll separate your consumers into groups depending on where they live. You may divide them into groups based on: 

  • / / / / / / / / / / / / / /
  • The circumference of a circle around a point
  • Climate
  • Whether in the country or in the city

Consider a brand that offers a range of apparel styles as an example of regional market segmentation. They’ll want to divide their audience by climate in order to target folks who require warmer apparel during the winter and cooler clothing during the summer, depending on the season in their location.

Customers who reside near a brand’s physical site may be eligible for special offers from brands who have a brick-and-mortar shop but also sell their products online. 

Segmentation by demographics

One of the most successful strategies to target certain clients is to segment the market based on demographics. The reason for this is because you can simply discover your audience’s demographics. 

You may also use Facebook Audience Insight, Instagram Audience Insight, and Google Analytics to get demographic information. These simple tools will provide you with information on the following topics: 

  • Age / Gender;
  • Location;
  • Ethnicity;
  • the amount of money you make / how long you’ve been working;
  • When they’re most likely to be online;
  • Household, for example.

The ability to segment a target audience based on demographics might expand your marketing options. For example, new items that are solely relevant to women are coming to market, which will save marketing costs over time. Brands that offer luxury items will have a better chance of succeeding if they appeal to customers with greater incomes.

Although your target audience is likely to be adolescents or young adults, bear in mind that their parents may be interested in things when it comes to buying presents for them. When it comes to the dryer seasons, marketing to their parents might help you fill in the gaps. 

Segmentation by Psychographics

Segmentation by Psychographics is all about the target audience’s minds. By knowing what they care about on a day-to-day basis, you’ll be able to create content that they engage with consistently and share with family and friends. This includes learning their:

  • Personalities;
  • Interests / Hobbies
  • Values, goals, and convictions;
  • Lifestyles. 

When compared to demographics and geography, they may be far more difficult to see. However, if you have a thorough understanding of your audience’s psychographics, you’ll be able to personalize your marketing methods. 

Psychographic data may assist you create connections and rapport with consumers in addition to selling a product or service. You’ll be able to develop a loyal following of individuals that believe in your business!

If you’re not sure where to begin, consider inserting more questions in your emails, social media posts, and other communications. When it comes to their hopes and dreams, people are eager to answer simple questions about themselves. You may also inquire about their thoughts on current events or ask them “this versus that” questions. 

Business-to-Business (B2B) Segmentation

When it comes to segmenting consumers, B2B organizations must use a variety of approaches and strategies. Although it may seem more challenging than B2C, the following strategies can help you distinguish organizations just as successfully. 


Firmographics may be thought of as demographics for B2C market segmentation. You’ll consider the company’s size, culture, industry, location, and other factors. Because this information is very straightforward to get, it is one of the most common methods to segment firms.

It’s also simple to explain different corporate sectors to various divisions. Companies with 200 or more people, for example, will be readily prioritized by the sales department.


Customer tiering is determined by how well you believe a company can meet your organization’s objectives. Companies who can meet your monthly sales objectives, for example, may be at the top of your tier. You’ll be able to spend your marketing expenditures more effectively if you segment clients based on their customer lifetime value. 

This isn’t to say you’ll overlook businesses with a lower client lifetime value. Instead of attempting to entice them with offers that they haven’t previously valued, you may concentrate on the items and services they need. 


This is one of the simplest methods for segmenting B2B consumers. For example, if you provide remote HR solutions, you may categorize your clients depending on how often they use your services. This is also related to firmographics, since the size of a corporation, as well as its budget, may influence the solutions it seeks. 

It’s possible that some older businesses still prefer to place orders over the phone. Some businesses, on the other hand, need the ability to place orders online at any time. 

The biggest disadvantage of this form of division is that it makes communication with other departments more difficult. This may be addressed by creating detailed documentation for each firm based on their previous interactions with your organization. 


Finally, segmenting consumers based on behavior is a good complement to segmenting customers based on requirements. Because you’ll be watching how people connect and engage with the goods and services, this is a good idea. 

Perhaps a corporation is having trouble adopting your SaaS platform and is calling the customer support line for assistance regularly. If this is the case, you may be able to suggest simpler alternatives that will make things easier for them in the future. You’ll be looking at each customer to see whether there’s an opportunity to upsell them or if you’re at danger of losing them. 

How to Gather Market Segmentation Intel

While interviews and qualitative analysis should provide a lot of information about your client base, you can also obtain a lot of relevant data using a variety of tools:

  • You may utilize Webinomy’s Market Explorer tool to gather basic information on the in-market audience for external study, including demographics, maximum audience potential, media preferences, and social media habits.


  • Use the data from your CRM system and Google Analytics for internal metrics. The latter gives some basic demographic and user behavior information about your audience. You may use it to figure out how each client group reacts to different techniques and, as a result, who has the most influence. 

Implementing Market Segmentation: Proven Marketing Strategies 

You may use Hooley’s Segment Attractiveness and Resource Strength methodology to analyze each category’s attractiveness based on your internal resources after you’ve identified your major market segments:


However, the most important aspect of market segmentation is to utilize it to improve your targeting and positioning. The STP (Segmentation, Targeting, and Positioning) Model is built on the following principles:

  • Targeting: depending on numerous client categories, you may determine which ones are more likely to react positively to your product, resulting in more profits and/or longer brand loyalty.
  • Positioning: By thinking about your core market groups, you can figure out how to position your product in front of each one and narrow down your essential value proposition.

Investigate your market thoroughly.

Webinomy.Trends is a good place to start.

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Market segmentation is a strategy that companies use to identify and target specific markets for their products. Market segmentation helps companies achieve the maximum potential from their marketing efforts. Reference: importance of market segmentation pdf.

Frequently Asked Questions

Why segmentation is important in marketing strategy?

A: Because segmentation is the process where companies focus on a particular group of people who can be targeted with specific products.

What is a market segmentation strategy?

A: A market segmentation strategy is a way to divide the market into smaller groups with very different needs and wants, so that you can focus on marketing your product specifically towards each group.

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