6 Best Market Segmentation Examples

An integral component of any marketing strategy is to segment components of the large market into smaller, more manageable pieces. Market segmentation helps to create groups of leads that all have similar profiles that make clear communication easier to accomplish. B2B and B2C campaigns both benefit from this practice, but sometimes knowing how to segment a large market can be somewhat difficult.

There are a number of ways that a large market can be broken up so that it becomes more approachable. Here are a few examples for you to consider for your next marketing effort.

1. Geographic Segments

One of the most common type of market segments is based on geography. Where a potential lead matters when it comes to certain products and services. Let’s say that you’re trying to sell the latest innovation in raincoats. If you segment the market into geographic locations, then you’ll know that leads who are based in Seattle are going to be more inclined to look at your product than leads who are based in Phoenix.

That doesn’t mean that Phoenix leads aren’t going to be interested in your new raincoats. It just means that the message sent to Seattle leads must be different that Phoenix leads. Seattle gets lots of rain annually. People want to wear them. They’ll use them every day. For folks in Phoenix, the raincoats would more likely be a gift or used for travel. If the same message was sent to both geographic locations, the Phoenix leads would ignore the message of wearing raincoats because they don’t get much rain.

2. Individual Demographics

Although humans are all unique in their own way, people do fit into certain demographics that respond to similar messages. There are a number of different ways to segment a market based on this concept. Age is a common market segment, as is income, occupation, and marital status. Gender, religion, and ethnicity are also commonly used.

The reason to do this is pretty basic: clear communication. If you’re selling feminine hygiene products, how many men are going to be targeted in that marketing campaign? Not many. If you’re selling a product that retails for $1,000, how many of your customers are going to be in the under $15,000 annual income group? Not many. By breaking down the demographics, a marketing campaign can specifically target needs, show proof of concept by solving problems, and ultimately create more sales opportunities.

3. Lifestyle Segmentation

Sometimes this is called “behavior segmentation” or “psychographics.” This type of market segmentation means that you are separated leads based on their interests, hobbies, and activities instead of who they are, what they earn, or what they do for a living. This type of segmentation is particularly useful when trying to market a specific type of product.

In this example, let’s say that you’ve invented a brand new tent that keeps people warm at night without the need of a heater inside the tent. Who is going to initially want this new product? People who love to camp. People who spend 2-3 days hiking up a mountain to reach the summit. Anyone who loves some backcountry adventure. By identifying these interests, the marketing message can reach the segment by solving a problem [it's cold at night] across multiple demographics, but within specific interests.

In this type of market segmentation, the options are virtually limitless. The groups are diverse and can be broken down into several sub-segments for even more specific messages when necessary. You can also include multiple traits that people have in common to form a “new” demographic that you can focus upon with your marketing.

4. Choices

This type of segmentation is also sometimes referred to as “behavioral.” It groups people together based on the choices that they make when they engage brands in the marketplace. In every demographic, people will shop in several different ways and each method becomes a segment that can be targeted.

  • Some people will only purchase the most cost-effective product that meets their needs.
  • Others will choose one of the most expensive products in the market because it is used as a status symbol.
  • Brand loyalty can be a purchasing factor for many different people.

By understanding the purchasing decisions of a target segment, a specific marketing message can be developed to meet those needs. If people look for cheaper items, then offering coupons or discount codes can create the temptation to shop. For premium brand marketing, one only has to look at what Apple has done with their merchandise to see what should be done.

All choices have something in common: the provision of individual benefits. People shop in certain ways to receive certain rewards. Identify those rewards and you’ll be able to effectively market to any segment in this category.

5. Businesses

You don’t need to have a B2B focus in order to segment markets based on businesses. Many individuals today run their own businesses and have a need for certain products because of it. The business plan that is in place will often dictate what goods or services are purchased, but the size of the business or the goals of the business can also become segments. Different industries are also natural business segments to use. Writers, for example, are going to respond to a different message when compared to bankers.

6. Combine Any or All of Them

This is the part of market segmentation that is the most exciting. Once you’ve identified the specific segments and come up with a message that meets their needs, you can begin combining segments to create more niche marketing. If you have a business that earns more than $100k per year and is located in Phoenix, then you can create a specific message for that business and all others like it that can begin building the foundation of a relationship.

That’s ultimately why market segments are identified. Without a relationship, the prospects of incoming revenue are fleeting at best. The message sent to each specific segment communicates value AND it communicates understanding. You must understand a market segment to be able to communicate value. Without value, you won’t have many leads coming your way.

This effort also communicates to leads that you care about their needs. It says that you’re willing to put them first. In return, a cornerstone is laid that can be built upon with future marketing messages. In time, customers who are brand loyal to you will anticipate new products, want to purchase them, and may even pay a premium for the privilege of doing so.

Use these market segment examples to begin identifying who your target leads are going to be. When you do, you’ll be able to represent your goods and services much more effectively.

Consumer Segments Traits