Aug 11, 2021 | Audience, Marketing Strategy, News

What is Market Segmentation and How Do I Use It to Make My Marketing Better?

Market Segmentation: What is it and why do you need it?

Market segmentation is a foundational element of successful marketing plans.  Segmentation enables focus and efficiency of marketing resources toward reaching the most valued audiences for your business and achievement of your business goals.

Market segmentation is defined as the process of aggregating prospective customers into groups or segments with common needs and who would respond similarly to a marketing action.  Market segmentation enables your company to target different categories of potential customers efficiently and effectively.  As importantly, by engaging in market segmentation you can reveal consumer experience insights, new product approaches, and ideas for building customer loyalty.

Segmentation helps local business to be more efficient in terms of time, money and other resources.  Market segmentation allows companies to learn about their customers, gain a better understanding of customer needs and wants, and tailor campaigns to segments most likely to purchase your products.

The Different Types of Market Segmentation

There are four basic types of market segmentation:

  • Geographic Segmentation is the most basic type of customer categorization and includes where those customers are physically such as current and previous location, city, state, zip code, climate, etc.
  • Demographic Segmentation focuses on key demographics including age, gender, income, education, ethnicity and more.
  • Behavioral Segmentation focuses on how a potential customer acts including purchase and shopping habits, spending habits, reading habits, interactions with particular brands, and more.
  • Psychographic Segmentation focuses on developing segments of potential customers based on their personalities and how they think, including personality traits, hobbies, activities, interests, lifestyle, social status, values, motivations, and more.


There are many benefits to developing an effective segmentation program including the ability to better understand your customers and potential customers to help effectively meet their needs and identify new business opportunities.  This helps you better direct your company’s resources and execute better marketing strategies.  Market segmentation will help you to:

  • Create stronger marketing messages and calls-to-action. Understanding your target market through segmentation enables you to speak more directly to your customer’s needs and wants.
  • Identify the most effective marketing tactics. With a plethora of print and digital tactics available to you, the better you know your customer the better you will understand how to most effectively reach them.  You can then design highly target advertising and messaging that strengthens campaign performance and helps you to make more calculated decisions that make your media spend more cost-effective.
  • Attract and convert quality sales leads. When your marketing messages are clear, concise and speaking to the right audience, you will attract a more ideal prospect who is more likely to convert to a customer.
  • Stand out from competitors. Stand out from the competition through specificity in your communication of your customer value proposition.  You can achieve differentiation when you focus more specifically on customer needs and characteristics than your competitor.
  • Identify new market opportunities. Through understanding your customers more completely through segmentation you will learn new ways in which your market can be served and discover under-served niche markets.
  • Staying focused and effective. Maybe most importantly, through segmentation you can laser focus every available marketing dollar invested toward the right audience.  You will avoid the market distractions that make your strategy inefficient.

A good way to start the process of effective segmentation is to take a look at your current customers to identify trends that exist within your current customer base.  Customer interviews, interviews with your sales team, and a review of available data can help to show how much customers spend, how often they frequent your physical location or website, where they live, types of products and services they buy, when they buy, and what types of websites referred them to you.  This analysis can help you to reveal segmentation that may have organically developed within your business, and you can leverage that information to find more customers that look and behave like your existing customers.

Further, creating buyer personas for your various customer-types and segments can help you to describe the specific customers you’d like to attract.  A buyer persona is a semi-fictional description of your ideal customer or groups of customers.  From these personas you can visualize the person and how you might speak and appeal to them.

Once you’ve identified your target segments and identified personas, you can take the next steps toward strategies that leverage this segmentation including targeting and positioning which presents the benefits of your product to the chosen target segment.

The River Valley Media Group are experts in marketing and market segmentation.  We can help you to identify your best customer segments and to develop a comprehensive marketing plan to reach and convert them.  Every day we develop effective programs for our clients and can do likewise for you.  Complete the form below or drop us a note to learn more.

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