Market segmentation is a basic concept in marketing that divides a broad target market into consumer subgroups with common needs, interests, or characteristics. This strategy allows companies to tailor products, services, and marketing campaigns to specific groups, creating more efficient and effective marketing campaigns.
There are four main types of market segmentation:
psychographic segmentation
behavioral segmentation
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Demographic segmentation
Demographic segmentation divides markets based on characteristics such as age, gender, income, education, and occupation. This is one of the most common and straightforward methods of differentiation. Example: A clothing retailer might segment the market based on age and gender, offering different product lines for teens, young adults, and seniors.
geographical segmentation
This type of segmentation divides the market based on geographic criteria such as countries, regions, cities, and even neighborhoods. Example: A restaurant chain might offer different menu items along the coast and inland to cater to local tastes and preferences.
psychographic segmentation
Psychographic segmentation focuses on a consumer’s lifestyle, values, attitudes, and interests. Example: An automaker might segment its market based on lifestyle, targeting environmentally conscious consumers with hybrid or electric models.
behavioral segmentation
This approach segments markets based on consumer behavior, such as buying habits, brand loyalty, or product usage. Example: An online retailer might segment customers based on their browsing and purchasing history to provide personalized product recommendations.
