The Importance of Market Segmentation

Ajay Ohri


Businesses may not get a chance to satisfy all of their consumers every time. It will be always hard to meet the exact expectations of individual customers. The needs and deeds of people will change with everyone so that they do not possess any identical preferences. One product can only satisfy a certain group. Therefore, many organizations usually adopt a method called market segmentation. This method involves dividing the market into smaller segments, which will help the organization to address the requirements of diverse individuals. Based on this segmentation tool, products and services will be offered. This article lets us understand the Importance of Market Segmentation.

In this article let us look at:

  1. What is Market Segmentation?
  2. Different Types of Market Segmentations
  3. What are the Advantages of Market Segmentation?

1. What is Market Segmentation?

Market segmentation is a logical strategy that is used to divide the target market into vivid and smaller categories. These market segments can be an organization, groups, or a bunch of individuals. The consumer segments may possess similar requirements and needs. The businesses should determine the needs of customers and serve them by categorizing and distinguishing their segments inappropriate ways.

Market Segmentation is completely a consumer-related approach that is employed by most organizations. Segmentation of market is carried out based on factors such as common interests, common needs, lifestyles, or even location. Different segments of market segmentation require diverse marketing programs to satisfy various customers. Diverse individuals are targeted through different offerings, promotional strategies, prices, or some other variables of marketing. For example, phone companies launching mobile phones in different price range and with various specifications is the market segmenting strategy they are using not to lose diverse consumers 

Customers would have their own preferences, some will focus on good quality services, some will be price-sensitive, and so on. Businesses should keep a track of customer preference and want to perform the segmenting of markets wisely. The overall aim of this market segmenting is to find the most yielding segment.

2. Different Types of Market Segmentations

There are mainly four different types of market segmentation strategies are used, which will help in effective marketing and thereby increased sales. 

A) Geographic Segmentation

This involves portioning of the market into segments based on consumer locations. Even though it is the basic form of market segmentation it is highly effective. The Geographic variables depend on factors such as climate, population density, terrain, and natural resources.

While dividing market segments based on the location, marketers need to be even more specific with targeting and messaging. They need to focus more on the language of locality while marketing, to attract more local people. By following the location of customers, companies can target their customers with location-specific ads.

In location specified segmentation, it will be easier to find customer preferences and perform segmentation. For example, the people in snowy locations will choose sunny locations for tours. This information can yield a better profit for tourism, airline, and other sectors.

B) Demographic Segmentation

Demographic Segmentation divides the market into real-world and physical segments. The target audience will be divided based on factors such as age, gender, occupation, education, income, nationality, religion, family size, and marital status. These factors are easier to measure, hence it is a popular way of market segmentation

Tracking demographic variables is a lot more profitable compared to other market segment strategies. They can be easily obtained which will specifically reduce the expanses of segmenting.

For example, a product such as perfume, while they undergo segmentation based on demographic variables, a separate perfume for men and women will evolve.

 C) Behavioral Segmentation

Behavioral Segmentation is the process of dividing market segments based on consumer purchase behaviors. It depends on some factors such as certain purchase behavior, shopping frequency, and volume of purchase. a company can segment their market based on consumer’s behaviors. Dividing your target audience based on their behavioral trends will help the organizations to perform marketing strategies such as sending special emails and messages regarding their favorite brand sale, discounts, etc.

D) Psychographic Segmentation

Psychographic segmentation could be used to segment markets based on personality traits, values, lifestyles, and interests. Psychographic variables are mainly used when the consumer purchase behavior is related to the attitude or lifestyle of the consumer. It deals with the mental and emotional attributes of customers. Diverse customers will address marketing strategies differently. The way of responding of a common man and a millionaire will be totally different

3. What are the Advantages of Market Segmentation?

Market segmentation will make it easier for marketing teams to develop highly targeted and effective marketing campaigns and plans. The following are the several benefits of market segmentation.

A) Greater Company Focus

When an organization differentiates specific market segments, it will help them to focus on what segments they want to target in the case of specific products and services. If the consumers accept a certain product a lot compared to others, an organization can yield a good amount of profit from manufacturing that most wanted one.

B) Betterment in serving customer’s needs and wants

Having defined segments enables an organization to satisfy customer needs by providing different offers (such as buy one get one offer). Different promotional activities can be carried out for different segments based on that segment’s requirement and acceptance

C) Product Designing

Market segmentation will help the organization to fetch the consumer expectations and needs so that the organization can build new products based on customer needs. It will make the organization more accepted.

D) Market Expansion

With geographic market segmentation, market expansion is possible within no time. When a company understands its segments and marketing role in a particular location, it can expand its business immediately to another location. If segmentation is based on demographics variables, then once the organization finds out their demographic market segments, they can expand the sales of that specific product based on that.

E) Efficient Use of Resources

Once the organization realizes the market trends with market segmentation tool, they can effectively make use of marketing resources such as workforce and money in more yielding segments.


Market Segmentation is the identification of customer groups who share similar characteristics. This process has several advantages and enables a marketing manager to design an effective plan for each segment. Usually, most companies segment their market by using demographic, geographic, psychographic, behavioral variables extensively for better sales. It is virtually impossible to satisfy all customers, so it is up to the company to select the specific parts of the market which they can best serve. Therefore, businesses could identify market segments, select a few profitable segments, and develop products and marketing mixes aimed at particular customers. Market segmentations play a vital the organization’s growth and create a positive impact among the consumers.

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