What is Market Segmentation and how to implement it?

What is Market Segmentation and how to implement it?

You have a great idea, created a product or service, and now the "only" thing that awaits you is to place that product or service on the market. Have you thought about who your customers are, where they are, what they do, how they behave, how they live, and what their needs and desires are?

Placing a product or service on the market is not the only thing waiting for you. The market is large and complex and requires research.

The worst-case scenario is that you enter many different markets, spend time and money, and do not see the result. It is impossible to sell a product or service to everyone. Everyone can't be your target group.

That is why it is necessary to research the market and find your place in it. The process itself consists of three parts. The process of segmenting the market must be done first, followed by the processes of targeting and positioning one or more selected segments.

We will get acquainted with the process of market segmentation in the continuation of this text, while the processes of targeting, and positioning will be treated in one of the following texts.

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What is market segmentation?


Market segmentation is one of the fundamental marketing processes. It involves perceiving a division in the market based on the unique needs, characteristics, or behavior of the customer, and where these different groups of customers require different marketing strategies.

The greatest possible satisfaction of customer needs and desires and the increase in sales and market share that goes along with, it is the goal of market segmentation.

Market segmentation allows you to get to know your customers, identify what is needed in your market segment, and determine how best to meet those needs with your product or service.

Advantages of market segmentation


The importance of market segmentation is reflected in the fact that it makes it easier to focus marketing efforts and resources on reaching the right customers and achieving business goals.

Once you know your target audience, you can determine the best solutions and ways to reach them.

1. Creating more compelling marketing messages


When you know the way of life, needs, and desires of a certain group, it is easier to create strong, impressive messages for that target group.

2. Designing the most effective marketing strategy


The problem can arise if you choose the wrong marketing tactics to apply. By conducting market segmentation, you also come up with a marketing strategy that will attract your ideal customers.

3. Attract quality potential customers


When your marketing messages are clear, direct, and targeted, they attract the right people. This way, you attract ideal customers, and you are more likely to turn potential customers into customers.

4. Differentiate your brand from the competition


Knowing your target audience and precision in creating messages and how to convey them also allows you to stand out from the competition. Instead of merging with other brands, you can differentiate your brand by focusing on the specific needs and characteristics of the customer.

5. Identifying niche markets


Within each market segment, there are smaller groups that have special needs these groups are called market niches. Niche markets can be very profitable, and in them, the competition is even less than in the market segment.

Types of market segmentation



You can perform market segmentation in several ways. What you need to pay attention to when segmenting is whether you are interested in the end market, i.e. customers (B2C) or business market (B2B). Segmentation is carried out on the basis of various factors and, in relation to them, can be:

Types of market segmentation infographics

Geographic segmentation


It implies the division of the market into different geographical units such as region, state, province, city, and even neighborhood.

Demographic segmentation


Market division is based on variables such as age, gender, life cycle, occupation, income, education, religion, ethnicity, and generation. While these factors are useful in customer segmentation (B2C), if you want to segment the business market (B2B) you will find more useful factors, such as the size of the company, the industry in which it operates, and the functions it performs.

Market segmentation based on these factors is the most popular way to segment customers.

Psychographic segmentation


This type of segmentation divides customers based on social affiliation, lifestyle, personal characteristics, and values. These factors are harder to spot than geographical or demographic because they are quite subjective. Therefore, people belonging to the same demographic group may have different psychographic characteristics.

Behavioral segmentation


While previous types of segmentation focus on who the customer is, behavioral segmentation deals with how the customer behaves. This way of customer segmentation takes into account variables such as customer attitudes, shopping habits, brand loyalty, how they use the product, and customer status.

Rarely do marketers conduct market segmentation based on one or more variables. Moreover, more variables are much more often used in market segmentation to define the target groups of customers as precisely as possible.

How can you implement market segmentation?


Now that you know what market segmentation is, what is the benefits of implementing it are, and how market segmentation can be implemented, it’s time to talk about how you can implement it.

1. Analyze existing customers


If you have existing customers, it is best to start market segmentation from there by conducting an audience analysis. This analysis will help you get to know your customers and their behavior, but it will also help you identify trends that exist among your current customers.

Examine your existing customers by asking them a variety of questions that will guide you through all four types of market segmentation.

Examine employees who are in contact with customers. They are constantly in communication with customers and therefore are familiar with customer behavior and trends that exist among customers.

Investigate where your customers come from and what their interests are. With the help of various tools, you can find out where the visitors of your site come from, what they are searching for, and what their interests are. This can help you with geographical and psychographic segmentation.

Analyze your company's website. Using various tools, such as Google Analytics, you can get data related to all four types of marketing segmentation. The number of site visits, the pages that users visit, how long they stay on your site, and the way they get to your site can help you find out how your customers are behaving.

2. Create a profile of your ideal customer


Now that you have analyzed your existing customers, you have a good insight into who they are. But that doesn’t necessarily mean that they are your ideal customers for the new product or service you want to market.

That is why, in the next step, you need to create a profile of the ideal buyer (buyer persona) of your new product or service.

A buyer persona is a description of your ideal customer. It allows you to present the person your brand is trying to attract. A person who represents the ideal customer of your new product or service. Knowing who you want to work with will make it much easier for you to find the right market segment opportunities.

3. Identify the opportunities in each of the selected market segments


When you have created the ideal customer, you are aware of your target group, and who you want to attract, but that is not all. It is necessary to research the observed market segments in which your ideal customer is located. To see the chances in selected market segments, first ask yourself questions such as:

  • What problem does our product/service solve?
  • What problems can we solve better than our competitors?
  • What makes us stand out?


After that, look at the analysis of the audience and the profile of the ideal customer and ask yourself the following questions that will reveal your chances in certain market segments.

  • What large segments stand out?
  • What characteristics or qualities of the customer are most common?
  • Which segments are not currently served?
  • In which segments are your brand uniquely qualified to operate?


4. Explore potential segments


Once you have noticed the chances in certain market segments, it is necessary to investigate whether they are potential before you place a product and marketing campaign. This way, you also check if the market segmentation you have done makes sense.

Segments must be:

Measurable - their size, purchasing power, and profile can be determined.

Available - can be effectively reached and served.

Big enough and profitable - the segment should be neither too big nor too small.

Different - they must be conceptually different and respond differently to different elements of the marketing mix and marketing strategy.

Susceptible to action -
they can develop an effective marketing strategy to attract and serve the target group.

What when you finish market segmentation?


The result of all these steps you will go through when you embark on market segmentation is one or more segments that are most suitable and most profitable for marketing your product or service. Segment or segments to which all effort and resources, should be directed.

What follows after market segmentation is the creation of other elements of the marketing mix tailored to specific segments and their release on segments as a form of testing. Test each of the elements of the marketing mix with the target group for which it is intended.

When you have finished testing and determined your target market start with a promotional campaign. As mentioned earlier, now that you know who your target audience is, create marketing messages specifically for them. Adapt to your target audience.

Once you are done with market segmentation, targeting, positioning, and placing the product in a particular market segment, the process does not end. The market is a complex whole that changes from day to day and therefore requires constant monitoring and measurement. Stay up to date with the happenings and changes that are happening around you, adapt to them, and develop and use them in the best possible way.

Jasmin K.

SEO Blogger Tips The main goal of this site is to provide quality tutorials, tips, courses, tools, and other resources that allow anyone to work online and master digital marketing.

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