When trying to reach customers with a marketing message or ad campaign, targeting the right market with the right message is essential — If you aim too broadly, your message might reach a few people who end up becoming customers, but you’ll also reach a lot of people who aren’t interested in your products or services. When your messaging isn’t optimized for your audience, you’ll end up with a lot of wasted advertising dollars.

Market segmentation can help you to target just the people most likely to become satisfied customers of your company or enthusiastic consumers of your content. To segment a market, you split it up into groups that have similar characteristics. You can base a segment on one or more qualities. Splitting up an audience in this way allows for more precisely targeted marketing and personalized content.

11 Types of Market Segmentation

Market segmentation is the process of breaking up a large market into smaller groups of customers with similar needs, traits, or ways of behaving. There are 5 types of market segmentation. Below, we describe each of them:

4. Behavioral Segmentation

Behavioral segmentation relies heavily on market data, consumer actions, and decision-making patterns of customers. This approach groups consumers based on how they have previously interacted with markets and products. This approach assumes that consumers’ prior spending habits are an indicator of what they may buy in the future, though spending habits may change over time or in response to global events.

Common factors to base behavioral segmentation on include:

• Purchasing reason

• Product benefits

• Buyer journey

• Engagement level

• Brand interactions

• Browsing habits

• Purchasing habits

• Spending habits

5. Demographic segmentation

Demographic segmentation is one of the most common types that marketers use to section a group of people. It involves using easily identifiable traits to segment groups of people together because they’re likely to have similar needs, wants, and habits. This information is often easy to find through third-party sources or by asking customers directly through market research.

It’s possible to use this type of segmentation to separate audiences based on a variety of demographics, such as:

• Age

• Ethnicity

• Gender

• Education

• Family status

• Income

• Nationality

6 other types of market segmentation

While these are less common, some more types of market segmentation include:

1. Generational segmentation

Generational segmentation groups customers based on their generation, such as the Silent Generation, Generation X, Millennials, and Generation Z. This type of segmentation assumes that consumers in the same generation have similar preferences, beliefs, and behaviors.

2. Value segmentation

Value segmentation separates customers depending on the amount they’re likely to spend. This requires evaluating purchase habits, such as the value of the items purchased, how often customers purchase items, and how many purchases they make.

3. Lifestage segmentation

Lifestage segmentation creates groups based on certain life events that require customers to buy particular items. This may include having a baby, going to college, getting married, buying a house, or other important life milestones.

4. Seasonal segmentation

Seasonal segmentation divides customers based on purchasing different items at specific times of the year. Holidays often affect purchasing behaviors, particularly with certain types of food or spending more on gifts.

5. Technographic segmentation

Technographic segmentation lumps customers based on their relationship with technology. It may involve segments like early adopters for people who use technology frequently or Luddites for people who are slow to adopt new technology.

Market segmentation: What it is & Types & Examples

6. Transactional segmentation

Transactional segmentation splits customers based on a customer’s previous interactions with the brand and their behaviors. It may concern how the customer found the business, the last time they purchased from it, or how many times they purchased from it.