Customer Experience
What is Market Segmentation : The Ultimate Guide
Article written by Athira Unnikrishnan
Just a plain soul enthralled by the power of words and the aroma of food!
17 min read
31 May 2024


Customer Experience
Article written by Athira Unnikrishnan
Just a plain soul enthralled by the power of words and the aroma of food!
17 min read
31 May 2024


Have you ever experienced that uncanny feeling when certain businesses seem to understand you perfectly? It feels like they’ve crafted their stuff just for you, like they’re mind readers, giving you exactly what you want. Well, it’s not magic. These brands excel at one fundamental aspect: market segmentation.
This blog will delve into this time-tested strategy’s what, why, and how!
Let’s start with the basics.
Market Segmentation is a concept of marketing where you divide your brand’s larger target audience into smaller subsets/segments based on certain characteristics like age, gender, region, etc. Each subgroup will contain customers with common interests.
By segmenting your customers, you understand them better, and this helps you formulate sales and marketing strategies that are more efficient. Market segmentation tells you how to develop your product further to resonate strongly with your customers’ needs.
Almost all risks of an unproductive marketing campaign are mitigated through this methodology! You can come up with strategies and promotional schemes as per the preferences of each segment of customers.

You’re not just selling products, you’re guiding your customers toward the perfect match for their needs and budget.
Imagine someone searching for a new smartphone. They’re unlikely to consider a high-end device with advanced features if they’re on a tight budget. Instead, they will move towards a more affordable option that still meets their basic requirements.
Similarly, a parent shopping for toys for their toddler wouldn’t browse items designed for older children or adults.
Understanding your audience’s behavior and preferences is crucial.
Market segmentation helps you customize your marketing to fit different groups of customers. This means you can create ads on platforms like social media that speak to specific groups of people, making them more likely to be interested and buy from you.

The first step is to…
But why is this so important?
Now is the time to collect data. For that, you need to…
Now, this is where you need the help of a market research tool. You can use SurveySparrow for this. The platform lets you create engaging conversational forms, share them via multiple platforms, and collect data from your target audience.
That’s not it! SurveySparrow will be handy for the entire process of conducting market segmentation. With the help of the executive dashboard, you can visualize it, analyze it, and make informed decisions based on the market insights you gained.
Here is a sample template for you to try. Feel free to customize it and make it your own.
Market Research Survey Template
Use This TemplateSegmentation strategy is a fundamental aspect of market analysis and customer relationship management.
Keep a keen eye on how the strategies are working.
By looking at essential numbers and getting feedback from your target audience, you can see what’s going right and what needs fixing. This helps you keep your strategy on track and improve over time. It’s all about staying competitive and ensuring your business remains competitive.
Now, since you know the importance of market segmentation, you would want to implement it. Here are the bases that will help you to filter and engage with your target audience for producing robust marketing plans:

Your buyer population might have expanded. New buyers will have joined your existing group. When that’s the case, you must diligently segment your older buyers from recently joined ones. Such a step ensures a healthy relationship, and you will know how to engage with each segment.
You can also segregate your customers based on the products they prefer or their buying cycle so that the future purchases of the customers hinge on the inference you have drawn from segmenting them. You should be able to put out products according to their buying behavior. Trust me, this works like magic. The buyers will have bought your product before they even know.
We live in an era powered by digital platforms, which is why this is one of the integral steps. You need to identify the social channel that boosts your brand effectively. The social channel should be able to leverage your content to find a sizeable, unique audience for you.
This way, you can realize what products they prefer, when, their purchase behavior, the circle of individuals they interact with, and why. You can even discover the preferences of your customer’s connections. Segmentation is as close to a cakewalk as social media.
You should target your audience after segmenting them. Once you are done with segmenting your customers, you should focus on tips and tricks to entice them towards your product or revamp it to suit their needs. Marketing Campaigns and schemes should be curated to address your customers’ needs and match them with your product in the best possible ways.
Your product should be the solution to fill the ‘void’ of their requirements. Build your programs by keeping the buyer persona and demographics as the foundation to deduce the features and requirements valued by the audience.
Once the part of marketing communication is taken care of, you need to dive deeper into the results. You will want to know why a certain section of customers didn’t show up for the purchase. You will also want to find ways to interact with, engage, and retain customers who responded to your marketing programs and made a purchase.
Why didn’t your customer open your mail? Why did he/she not stay on your website for long enough? Now, this calls for retargeting. The retargeting techniques use cookies to trace the activities of your audience once they leave your website. The cookies aid in reaching your targeted ads to this particular section of people who have left your site after a visit or two.
The main aim of retargeting is to engage your audience in real time to lure them to your site and purchase your products. If you aim for conversions across numerous platforms, you can incorporate it with both inbound and outbound content marketing.
Retargeting never fails you. Yes, it may or may not fail in retaining the customer, but it sure gives you adequate information to restructure and strategize your product marketing.
You can segment your audience depending on the customer information collected, the industry, and the brand. Ideally, there are four types of segmentation:
The customers are separated into different groups based on demographic characteristics like age, gender, marital status, income, occupation, etc. Demographic segmentation is quite popular among marketers and is used widely.
People from different regions would have different requirements. Geographic segmentation addresses this matter by dividing the audience based on their location. Geographic Segmentation is of great help when it comes to International Marketing.
This segmentation helps you categorize audiences based on their lifestyles, their likes, dislikes, opinions, and activities. Psychographic segmentation helps you connect with your customers and engage with them on a topic of their interests that matches your product, thereby helping you develop or modify it accordingly.
In this segmentation, your audience is divided into subsets based on the knowledge or relation the customer has with your product. The factors include customer loyalty, product usage, consumption rate, etc.
Here’s a look at the benefits of market segmentation:
You will be able to create to-the-point marketing messages, addressing the needs and requirements of the customers.
When you segment your market, you understand the customers better. Therefore, you can find the most effective methods to woo them.
Market Segmentation helps you be more specific with your prepositions and focus on the unique needs of your customers. This eventually differentiates you from your competitors to grow into a ‘customer’s brand.’
Identifying the larger audience of particular industry segments and finding new ways to serve them is often referred to as niche marketing. By employing market segmentation, you can develop new products or services by identifying the underserved section of the niche market.
You can save money on marketing by targeting specific groups rather than reaching everyone. This means you spend your marketing budget more wisely.
When you understand your customers better, you can provide them with what they need, making them happier and more likely to stay loyal to your brand.
Market segmentation helps you stay flexible. You can quickly adjust your strategies to match new trends or shifts in customer preferences, staying relevant in the market.
Now that we have a clear idea of the what and why, it is time for the how!
How do we make marketing segmentation effective? Well, it requires thoughtful strategies. Here are some simple ways to enhance the effectiveness of your market segmentation efforts:
Here are some use cases to highlight its significance:
Car manufacturers use market segmentation to tailor their vehicle models to consumer segments. For example, they create luxury models for high-income customers, compact cars for urban dwellers, and family-friendly SUVs for households.
Pharmaceutical companies segment the market to understand the unique needs of various patient groups. They develop medications and treatment plans for different medical conditions or age groups.
Streaming platforms like Netflix and Spotify use market segmentation to curate content playlists and recommend movies, TV shows, or music based on user viewing/listening history and genre preferences.
Fast food restaurants customize their menus and promotional offers based on regional preferences. For instance, they might offer different types of spicy food in regions where spicy cuisine is popular.
Banks and credit card companies segment their customers to offer tailored financial products. For example, they might provide different credit card options for students, travelers, or business professionals, each with specific benefits and features.
Airlines and hotels segment customers based on frequent flyer status, travel preferences (business or leisure), and loyalty program participation. This helps them offer personalized perks and rewards.
Need more motivation? Here is a use case to understand things better. And what better example to begin with than the e-commerce giant Amazon!
Stats say that a whopping 76% of shoppers do their holiday shopping from the ever-growing e-commerce platform Amazon. That is huge!
So, what sets Amazon apart? What makes them the talk of this ‘highly competitive business’ town? Look no further, for there’s just a single answer. Market Segmentation at its best!
Let’s break it down:
Know more, boost sales! Filter and reap more!
According to studies conducted by Bain and Company, firms that followed well-defined segmentation strategies savored a 10% higher profit. And yes, indeed! Market Segmentation is one of the best things that could happen to your business. The process helps you to make the most out of your marketing schemes.
I agree. It’s no science, but at the end of the day, it helps you level up your game. And that’s what you need ultimately.
The interesting thing is that market segmentation has been here since time immemorial. Evidently, it wasn’t as advanced as it is now, nor was it termed so. Come to think of it, why do ice cream vans pull over near schools and not offices?
Another simple example of market segmentation! Segmenting and focusing on particular sections of customers has been a part and parcel of marketing. Well, it doesn’t matter when and where it all began. But yes, certainly, market segmentation is here to stay.
Before you go, why not give SurveySparrow a try? Easily streamline your market research process and make informed decisions.
And hey, it’s free!

Thousands of brands trust SurveySparrow to turn feedback into growth. Try it free today!

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