What is Market Segmentation? What are its Types and Benefits?


Market segmentation results in effective marketing, higher conversion rates, and increased sales and revenue. The different responses of customers should be clearly identified or measured for segmentation. It should be measured on the basis of data or information collected.

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The disadvantages of market segmentation are increased costs, complexity, cannibalization, and overlooking potential customers. By market segmentation, marketers can identify their rival organizations and can analyze their effects. Marketers become able to focus on their real competitors and identify their strengths and weaknesses. Since an organization faces fewer competitors in segments, true information about competitors’ strategy and marketing mix can be easily obtained. Proper production, distribution, pricing, etc. is possible through market segmentation.

If you have anything in your mind that I can add, feel free to comment. In simple words, boosting revenue is about better aligning your offerings to a specific customer pain point. Here are some of the top benefits of leveraging market segmentation in the hospitality industry.

Objectives Of Market Segmentation And Its Benefits

Immediately a customer makes a purchase, automatically add them to the “Recently Purchased” segment and include a precise timeframe based on when the purchases were made. For instance, if a large percentage of your customer base shares the same beliefs on reducing the intake of sugary drinks, you can launch a line of healthy natural drinks to target these customers. Customer biodata is easier to collect compared to other segmentation types. Segments must be accurate enough to be helpful but not so specific that they lose relevance. Businesses should utilise a combination of quantitative and qualitative data to generate segments that are accurate and relevant to solve this difficulty.

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As we establish, sales are emotional, the segmentation is conducted with every target audience, one of that is psychographic segmentation. If you are a performance marketer in a digital marketing company you need to have a thorough understanding of this. Doing so offers you clarity on highly relevant market segments, their characteristics, market potential, size, sales potential, and their acquisition and retention costs.

Market segmentation helps the marketers to plan and implement related methods to promote their merchandise amongst the target market. One of the major benefits of market segmentation for businesses is its capacity to aid within the identification of optimum distribution methods for brand spanking new merchandise/companies. For example, it helps firms determine the right distribution channels and retailers for products which are focused at various segments of customers. Other major advantages of market segmentation are its capacity to find out product pricing. It is important for companies to adopt completely different product pricings for various markets, considering the value sensitivity of the customers in each market. There is a huge need for market segmentation to effectively and efficiently use your resources.

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You can develop messages and email campaigns that resonate with each group. For instance, a cosmetic company may have different marketing strategies for women of different ages. Young women prefer trendy cosmetics, whereas, older women prefer the anti-aging benefits of cosmetics. Geographic segmentation refers to the division of groups of customers on the basis of geographic boundaries. Geographic location can influence the needs and interests of potential customers. This segmentation helps organizations discover what to sell and advertise in that specific geographic location, which will expand their business.

The study of market segmentation informs the tastes, habits, hobbies and nature of customers deeply. These types of researches are helpful in discovering the marketing opportunities. To create these custom made clothes it requires great attention to detail and maximum level of craftsmanship which are affordable only by a few consumers globally. The garments may be 10 times more expensive than the average products in the market.

Segregating your audience based on age, lifestyle, purchase power, product usage, etc., helps you spot and rank segments based on profitability. For B2B audiences, market segments can be bifurcated based on company size, location, revenue, etc. Age, Gender, Religion, Education, Socio-economic factors, Income are few great ways to differentiate your potential consumers. In such kind of segmentation, you may go for your customer’s actual age or focus on things like the product life cycle.

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Firmographic segmentation groups customers based on shared company attributes. It considers factors such as company size, status, industry, locations, and the number of employees. Market segmentation is a marketing term that refers to aggregating prospective buyers into groups or segments with common needs and who respond similarly to a marketing action. The segments must be identifiable so that the marketer can know which customers belong to a segment and which do not. Values are another psychographic segmentation variable to pay close attention to. IKEA, for example, released a sustainability report showing how to make more sustainable furniture and architectural choices.

Q: What steps are used in market segmentation?

Risk of customer cancellation of company serviceOne of the most common indicators of high-risk prospects is a drop off in utilization of the company’s service. Steady and continuous service in the distinct markets gives full knowledge of the market. The products, human resources, and organizational policies become customer-friendly. Designing your services and products according to the requirements of your customers will help increase your sales and also keep your customers satisfied and happy. It also makes customers feel like you understand their requirements and this can improve your brand’s reputation. As a result of the increased efficacy of your marketing campaigns, you incur fewer expenses because you maximize the revenue from each advertisement.

Positioning refers to choices about the way to present the provide in a way that resonates with the goal market. During the research and evaluation that types the central part of segmentation and focusing on, the marketer may have gained insights into what motivates consumers to purchase a product or brand. Market segmentation refers to the process of dividing a larger market into smaller groups of consumers who have similar needs, interests, and behaviors. The main motive of segmentation is to identify and target particular groups of consumers that may be interested in a product or service. It helps tailor marketing strategies and messages to segmented groups to meet their needs. It is the process of dividing heterogeneous markets into homogeneous markets.

How Market Segmentation is Done? Types, Process, Pros & Cons

That makes it important to understand exactly what is marketing segmentation, and why you should care about it. A variety of strategies, including demographics, existence and utilization patterns are used to determine market segments. The means of identifying and targeting distinct buyer segments has significant benefits in advertising. The benefit segmentation is a type of market segmentation based on the differences in particular benefits that different teams of consumers look for in a product. Here, advertising supervisor can section the market based mostly upon high quality, performance, customer service, special features, or other benefits. Many business enterprises use this kind of segmentation similar to auto, clothes, furnishings, client electronics industries, and so on.

You can gather this data via surveys, focus groups, or other research techniques. Businesses can develop segment-specific marketing efforts after the data has been reviewed. Companies can target particular regions with particular age groups or income levels, for instance, by combining demographic and geographic segmentation.

However, when they look at customer behavioral data, they might notice that a lot of their customers love to shop online. With this information, the brand could either decide to open an online store or advertise their existing online store more. For example, you’re an automotive business owner and your main market segments are middle-class people and families.

what are the advantages of market segmentation segmentation helps to target specific customers who are more likely to be interested in those products or services. Kids watching cartoon channels will be more likely to be attracted by advertisements for toys. For segmentation, the market segmented should be reachable through existing marketing institutions such as channels of distribution, advertising media, salesforce, etc. Is to identify areas or segments that you’re not reaching with your marketing efforts. Market segmentation gives you valuable insights and data about your audience that you may have missed or not realized. When you have proper market segments, you can create your product offerings based on those segments.

Helps you identify the right market so that you can target your marketing accordingly. Similarly, market segmentation works for publishers as well because they can use it to offer targeted solutions to different groups. Hence, it can be concluded that segmentation of customers in the market on the basis of their personality traits, lifestyle, or values is called psychographic segmentation. It is mainly conducted on the basis of “how” people think and “what” do they aspire to their life to be.

And in this internet-driven era, hotel customer segmentation has become a really important aspect. Refined segmentation takes market segmentation to the next level by using more sophisticated tools and techniques to create even more precise and targeted customer segments. Doing market research is necessary to understand the demands and preferences of each consumer category properly.

  • Market segmentation is helpful in increasing the quantity of sales of the enterprise.
  • Marketing Segmentation is the way of segment customers on the basis of demographic, psychographic, geography, behavior.
  • Customer attitudes towards a brand and how it is useful to them help in behavioral segmentation.
  • Businesses can develop segment-specific marketing efforts after the data has been reviewed.
  • Demographic segmentation helps to target specific customers who are more likely to be interested in those products or services.

Ultimately, it’s critical to keep an eye on the success of marketing initiatives and make any required adjustments. Metrics like customer interaction, conversion rates, and sales monitoring can help. Businesses may find areas for improvement and alter their strategies to increase their efficacy by tracking the performance of marketing initiatives.

These could be product /technology-related, market-related, or non-product/market-related diversification. For instance, a major infotech solutions provider undertook a market opportunity analysis spanning specific geographies to gain an in-depth view of the indirect taxation software market. Market opportunity analysis is the process of defining the opportunities available in an organization’s operating environment in terms of external, financial, and internal considerations. With the new normal unfolding new consumer demands, agile businesses are eager to turn these disruptions into opportunities to impress customers and bolster their market resilience. On the ground of market segmentation, different marketing programmes are formulated for different segments.

The more in-depth understanding you have, the better you can cluster your guests. If you think that the above-mentioned segmentations are a little overwhelming for you and your hotel, you can always take another approach. Not to mention, it also plays a crucial role in behavioural segmentation. Geographic segmentation is about grouping guests based on their physical location such as city, state, country, or economic status). An online programme designed for individuals who are looking forward to set up their own business using their ability and talent. Contribution by segment provides a way not just to increase revenue but also profitability across the entire operation.

  • Continuous and steady service in the different markets gives a full understanding of the market.
  • Higher demand means that companies can achieve economies of scale with production concepts in focus.
  • Occasion-based purchasing can also occur in a customer’s daily routine.
  • Demographic market segmentation can be useful for companies because it allows them to reach their target market and increase the relevance of their marketing efforts.
  • Your marketing plan will definitely fail whenever you offer a service or product and don’t consider segmentation.

The segments created are composed of consumers who will respond similarly to marketing strategies and who share traits such as similar interests, needs, or locations. The four types of market segmentation are geographic segmentation, demographic segmentation, psychographic segmentation, and behavioral segmentation. Market segmentation helps a company focus its marketing efforts on the needs and wants of customers. It helps the company better serve its customers, which is the ultimate goal of any business. A sort of market segmentation called geographic segmentation divides potential customers into categories according to where they reside. Geographic segmentation enables marketers to target consumers in a country, city, or area with message that appeals to their particular wants and needs.


You’ll mostly design your cars with a lot of space, seating and legroom. You’ll also make sure to have mid-range pricing that’s economical and reasonable. In this blog, we will talk about the objectives of market segmentation and its benefits.

Are to reduce the risk of marketing to an audience who may not be interested in your services or products. It also works to increase your marketing efficiency by reaching out to the right audience in a consistent manner. Continuous and steady service in the different markets gives a full understanding of the market. As a result, the organization’s products and policies become more customer-friendly. One objective of market segmentation can be to figure out what features to add to a product.

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