Market Segmentation is essential for developing an effective marketing plan because it distinguishes the different groups of customers that the company wants to attract. It enables marketers to be strategic with customer research, journey mapping, persona development, branding, and promotional efforts, among other activities, in order to increase brand awareness and loyalty from the target customer groups based on their unique needs and attributes. There are different types of segmentation based on certain core differences that differentiate customer groups. A brief overview of the most common types is provided below:
Psychographic: Psychographic segmentation is what is most frequently thought of in terms of segmentation, as it refers to common lifestyle and psychological characteristics such as interests and hobbies, motivations, emotions, beliefs, and attitudes. These qualities are often identified via qualitative research, including in-depth interviews and focus groups, which provide insight into the customer’s view of the world.
Demographic: Demographic segmentation is based on gender, age, education, occupation, and housing type.
Geographic: Geographic segmentation is based on customer differences across various types of regions. Branding efforts may vary by country, region, state, community, city etc.
Price: Income is a common segmentation strategy that allows companies to develop a suite of products and services aimed at different socioeconomic strata.
Other strategies include distribution, media, time, and occasion-based segmentation.